Nifty is back above 5050 level and whether further upside is possible from here on ???

The weakness during last week till thursday, and gap down opening on friday tempted lots of traders to go short as many analysts were hoping that the 80% retracement was the final leg of the rally, and the announcement from Finance Minister that P- Notes will not be discouraged helped to improve sentiment amongst FIIs. The talk that Government is considering merger of PSUs to reduce the number of banks operating also encouraged a rally in PSU Bank Stocks, and the announcement of Disinvestment of PSUs has already pushed the listed PSU stocks. When the bulls forced the rally beyond the predicted resistance levels like 5000, 5020 and then 5040, intra day traders and short term traders have no other way except to exit the positions at what ever price in the last 15 minutes of trading, as they will not have the capacity to carry forward the positions on a week end.

This observation is based on the huge premium of 24 points with which November Futures traded at the end of the day. Now that the indices have closed firmly above 5050 and 17000, whether there will be further short squeeze coupled with fresh buying which can push markets further during this week is the mute question. This week being the Settlement week, and the outstanding open interest positions at record high, above 1 lakh crores, huge volatility can be expected during this week. Roll over of positions to December also will provide two way movement in Nifty. Investors may stay away from markets for this week, and can take a view on the markets next week, after knowing whether fresh rally has begun, or sideways movement with downward bias shall continue for some more weeks/months emerges with clarity.

I will update the posting next saturday, after the settlement and november montly closing is known. The range for the week could be 4800 to 5200.

Strategy for the Day: Buy 5100 Puts on rallies and 4900 Calls on weakness of November Series for quick returns with adequate stoploss owing to one's risk perception.