Nifty levels for June'11

Dear All,

2011 has seen lot of volatility in Indian Stock Markets, though developed markets like US and UK are in multi year Bull phase. From the day one our markets started falling from the peak made in November' 2010 during diwali, raising a question whether we will be in a bull phase or bear phase during 2011. Analysts are divided over the technical levels of supports and resistances, as the market started moving in its own way, since it has its own dynamics, and some pundits put it 'its own mind'.

Instead of drawing the levels for entire year or more, I wish to look at the pattern that is developed over past 5 months in 2011, and try to forecast the range and levels for June'11.

On monthly closing our markets have the following low( 5333.25 on Feb'28th 2011) and high( 5833.25 on Mar31st 2011) as far as Nifty is considered, which is taken as basis, since the volumes traded on NSE are larger, and maximum Derivatives are traded on NSE, which give indication of futuristic view of option writers.

Month    Closing on Nifty on the last trading day of the month

January     5505.90

February   5333.25

March       5833.75

April         5749.50

May          5560.15

From the above data, I am of the opinion that Nifty should move in the range of 500 points, i.e., 5333 to 5833 during the entire year. Well, once the high or low are broken decisively on monthly closing with volumes and participation, then our markets will witness prolonged bull phase or bear phase.

June Derivatives settlement, and last day of the month fall on 30th, which has lot of significance, as 2 quarter closing, for MFs to show better NAV, advance tax numbers indicating the first quarter performance from 16th june' 2011, Second half performance of economy, corporates will be influencing the markets. However, I see that markets sticking to the above 500 points range during June'11, as per the options build up at the beginning of the month. 200 DMA and confluence of other EMAs in the region of 5600 to 5640 will be a supply zone, which only if over come then there could be further upside. However, I foresee maximum 5750 not breaching during the month or by the settlement date.

Traders will have number of opportunities to make money using derivatives strategy on Nifty, which is more predictable than individual stocks performance / movement. I will be suggesting strategies in due course of time, through the blog, as academic interest, to fine tune, my knowledge of markets, forecasting skills.

Wishing all readers, happy trading.

bkvrkraao.