Return of Higher Volatility indicates formation of Short term Top!

September Series ended on positive note and gave 7% gains over August Series. Settlement Day witnessed highseer volatility after a long time. Global markets enered correction cum distribution pattern, thus our markets too shall follow suit. October Series being very lengthy, and expectations on results will be analysed all fund managers, run away posting of daily, weekly gains on indices shall take a pause now. Infosys will come out with 2nd quarter performance on 09.10.2009, which might be good, but, might invite much awaited correction. Another important event to be watched during October is 'Diwali' which is considered very auspicious by most of the business community and trading community in most parts of the country. Markets might hold uptrend with volatility till  then and might go into correction of larger magnitude.

 

US markets tanked last night due to disappointing housing data, and Singapore Nifty futures indicating negative opening with 65 points gap suggests that we will have rough day today. Today being the last day of the week and monday our markets are closed for 'Vijaya Dasami' holiday, naturally force traders and investors to take profits home.

 

Nifty might move in the range of 4880 to 5020 today. Bear Spread strategy is suggested in view of short term bearish view explained above.

 

Happy trading!

 

 

Re: [Trading for Profit on Nifty (India)!!!] New comment on Outlook for Friday " Infosys delivers what promise....

Dear Rajesh,

First thing is you have sold shares of Hindalco which are assets and will move in value in tandem with markets or company performance.

Later bought 5300 Call Option(CE) on the advise of broker, which is a derivative instrument where the underlying is Nifty Index, the value of the option moves based on movement of price of underlying i.e., in this case Nifty, the value of premium will move on the principle of 'time value for money' and also based on cost of carry.

Selling the options held also invites another leg of brokerage, usually, which if you can avoid pressurising the broker, then you may be able to recover at least current value.

Nifty moving to 5300 before this expiry i.e., 24.09.2009 is impossible.

with best wishes,

bkvrkrao

On Wed, Sep 16, 2009 at 10:42 PM, Rajesh Haldar <rajeshrocks.kolkata@gmail.com> wrote:

Hi,

Thanks for your kind effort and reverting back to me. Actually I am absolutely new in this stock market. What happend is, I was holding 19 Hindalco shares, suddenly the my RM from the India Bulls called me and told me to sell the Hindalco when it was going @121/share and also instructed me to buy 500(quantity) of Nifty 5300CE-Sept-24-2009 @ 2.10/share. I did not have any idea about the CE & PE shares. So I purchased that. My RM said that this share will reach by Rs.7 to 9, so it will result a huge profit. But when they sent me the electronic contract note then I found a double charge. Here goes the details:
500 shares @2.10= 1050
Service Tax =153

So total price was 1,153. But at the end of the contract note I found a charge of Rs.1000 extra and they mentioned that I need to pay 2153.

As on date this call is going @1.75. So I don't find any chance of profit. So what should I do now?

Please suggest.

Thank you inadvance.

Warm regards,
Rajesh Haldar

On Wed, Sep 16, 2009 at 10:52 AM, vrk rao <vrkr4u@gmail.com> wrote:

Dear Rajesh,

Your querry is not clear, since u have posted it on an old article written by me.

Please read the latest posting and give full details of the strategy whether it is for this month expiry and quantity bought etc., for enabling me to give my view.

Thanks

bkvrkrao

On Tue, Sep 15, 2009 at 10:04 PM, Rajesh <rajeshrocks.kolkata@gmail.com> wrote:

Rajesh has left a new comment on your post "Outlook for Friday " Infosys delivers what promise...":

Hi, I am new in your blog. I desperately needyour suggestion. actually I am very new in stock trading. Yesterday my RM from IndiaBulls gave me a call and suggested me to purchase Nifty 5300CE @2.15 and I did so, he told me to sell it within next few days and the price is expected to rise by Rs.8. So please suggest me what should I do now? Please help me. My email id:rajeshrocks.kolkata@gmail.com. Thanks..



Posted by Rajesh to Trading for Profit on Nifty (India)!!! at September 15, 2009 10:04 PM

An upward breakout on good advance tax data!

What a out performance of Indian stock markets!!!!!!! Everyone on the street was caught unware of what was coming on 15.09.2009, thanks to the robust advance tax(income tax) payment, known from sources, gave phillip as relentless buying by all round participation, lead for posting new 52 week highs on both Sensex and Nifty.

 

US markets too have closed with gains overnight and SGX Nifty is indicating positive opening for our markets. No doubt the abundance of liquidity chasing Indian Blue Chips is making the indices move upward, as every dip/weakness is immeditely being bought.

 

The mute question is whether this bullish ness continues like what we have seen in 2007???? The answer is strong No according to me, as the economic indicators do not support this time around. The irony is one cannot be too bearish also at the current juncture, and certainly this is not the time or level at which new entrants to begin port folio building.

 

One should be cautious when consensus builds up in one direction, because trend reversal takes place when every one is 'off guard'.

 

In my view increase in volatility shall be first sign of big fight to unfold between bulls and bears. Watch for indications.

 

Trend for the Day: Nifty might trade in a band of 4840 to 4940 today.

Government of India announces Austerity Measures!

Finance Minister has announced austerity measures to control and cut non-plan expenditure. All the Ministers and M.P.s cutting across party lines welcomed the measures and started implementing too immediately, is a welcome measure. Monsoon reported to scanty in some parts and agcultural product prices not cooperating to come down, poses greater threat our country which has to fed second largest population in the world. Raising inflation will pickup further in the months and higher inflation will hurt the recovery of economic growth which is showin signs of stabilization.

Today is the last day for depositing 'Advance Tax' ...by Corporates and the figures will be available to market players and analysts, who would like to guage the profitability for this quarter and the performance of economy for the first half of 2009-10 will be known. Coming to Stock markets, OIL stock is allotted at Rs.1050 (higher end of price range). Nifty is holding 4780 in a tight range of volatile trade on monday if making lower tops and lower bottoms since last tues day, indicating lack of conviction to move on after huge rally from 4580 levels to 4890 at a stretch.

With US markets closing in positive territory, after initial weakness overnight, confirms that liquidity strength pushing the indices world over, with no real palpable positive economic news being visible, is to be taken note. One interesting feature is US Dollar is weak in general and INR also showing weakness makes things complicated for predicting the trend. However, our indices are moving a narrow band and it could be consolidation or distribution by large players, as indices have doubled from march lows. Break out or Break down requires one external factor which will confirm the formation of intermediate top and reversal of the trend. Many analysts voicing that new bull market has started since a bottom was in place, reminds me of 'consensus theory' generally markets ignore and surprise every one moving in opposite direction.

Be watchful and careful if you are a day trader. It is not a bad idea to take some profits out of the markets and increase cash levels.

Are we at the end of current Bull Run ???

Well all readers should be wondering why I am absent for such a long time! I am back now, having completed some project on hand. Recently all stock markets have broken out of trading range and are inching up where many analysts are confirming that a bottom was formed already. The hope is again building up that inflation under control and fears of recession fading out in developed economies, equities as an asset class are  being looked by small and retail investors.

 

No doubt that our markets are in firm bull grip, thanks to the liquiity flowing from developed economies long only funds, indices are moving up. Well are we into a new bull phase?? My answer is strong 'No'. The previous highs are not going to be taken so easily, as lot of pit falls and land mines are on way down. One interesting and wondering feature, I notice is Rupee is weak, in spite FII flows and markets doing well, suggests that the fiscal position of Indian Economy, interest rate scenario in future might be a cause of concern.

 

However, if one wishes to have some risk taking appetite, can play with Nifty  Options. One can buy 4800 Straddle of current month (September) and try to make some money, as volatility sets in from now on.