"Markets were volatile world over, with lot of confusion and pessimism doing rounds, on the sub prime concerns facing US economy and its spreading to other economies such as Europe etc., Our indices have closed negative for the 3rd straight week in succession, and some buying support emerged around 100DSMA on Nifty lead to recovery on the last day of the trading finally closed around 50DSMA . As observed by us, certainly index funds have seen to it that June closings are protected on closing basis for the day and week. So far in this correction, a pattern is emerging that July closings on indices ( Nifty4528.85 & Sensex 15550.99) have become supply zone on rallies where as June closings on indices(Nifty 4318.30 & 14640.86) are inviting buying or support from long term funds & investors.
Today our markets shall open positive and might trade positive in small range since it is a truncated week, 15th being holiday on account of Independence day, and volatility should come down during this week, so that some consolidation - base formation takes place, from where from next week on, clear direction will emerge. Nifty futures discount stands at 34 points as at the end of the trading on friday, clearly indicates that lot of shorts exists in the system, the fight between bulls and bears to continue for few more weeks until indices clear 4620 (Nifty) & 15777 (Sensex) which may not happen by August Settlement. Excepting Chinese index almost all indices in the world are forming similar pattern and currently 20DSMA is offering stiff resistance, as the sentiment is battered very badly in the last 2 weeks.
We feel that buying 4200 calls on weekness in the markets and 4500 puts on rallies in current series certainly is offering good returns for intra day / week trading. August Settlement might be negative over July settlement is the assumption.
The day's range for Nifty shall be 4320(Support) and 4475 (Resistance); Sensex shall be 14725 (Support) and 15313 (Resistance)
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