October Settlement of Nifty was exactly at 4750 which was not anticipated by any one, in my understanding, since every analyst was expecting a strong rebound from 4930 level which extended support on more than one occasion, after there was a break out on upside from the 4500 to 4740 range. Markets were on a roll till Diwali (17.10.2009) and closed around 5140 level and every one was complacent, as observed by me in my earlier postings, and giving further upsides to 5300, 5500 etc., The mute point I always re-iterate is markets are 'dynamic' and will discount future, or react to news and expectations, and generally trend reversal happens where there is large consensus among various category of players. I was also hoping that market will not break 5000 level on 'block theory' and will post further gains after brief correction to 5000 levels. Any way November Series commence from today, with lot of pessimism around and futures have closed with 24 points premium will help bears to continue shorting, as they made huge profits after Diwali.
RBI's hawkish stance to raise SLR by 100 basis points and increasing the provisioning against Standard Assets to be complied by September 2010, have sent zitters in banking stocks and real estate sector. Weakness in global markets also contributed for further fall, as USD strengthening became favourable to FIIs to press for sales, amongst emerging markets, including India, because the valuations of some sectors and stocks reached astronomical levels. The scanty support from DIIs have not helped the markets to hold important support levels, and already analysts and experts are suggesting deeper correction to levels of 4400 or 4200 in this run itself.
However, in my view, Settlement of October series is behind us, November series today will open on positive note, as markets have held the break out level of 4730 in the recent may hem which ran for 9 straight sessions without any break. US markets have posted huge gains overnight, on positive GDP data and reversed the trend, which should help a relief rally in emerging markets and back home, where Nifty to move to at least 4920 level in the coming days. Further today being the last day of October month, some fund buying in index heavy weights like, RIL, ONGC,DLF, SBI, M&M etc., should give a closing between 4850 to 4900.
Nifty Range for the Day: 4700 - 4750 - 4850 - 4900.
Strategy for the Day: Buy November Futures around 4800 levels with a stop loss at 4750 for a target of 4920.
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