"With smooth settlement of October derivatives series and roll over on 25.10.2007, SEBI's PN guidelines being in line with the draft guidelines issued on 16.10.2007, there was a sigh of relief on friday among market players, resulting in net addition of long positions in November series. Sensex touched new high ( 19276.45) on new found enthusiasm, and closed at an all time high at 19252.35, Nifty too closed at 5702.30, as the inflation data was reported to be flat at 3.07 week on week basis. FIIs were seen covering short positions heavily on 25th and 26th and their net postions are marginally down week on week basis. Domestic Institutions and retail investors were buying which have resulted in speactacular gains of over 9% on Nifty and Sensex week on week basis. Nifty futures closed at a premium of 10 points indicating bullish sentiment. It is to be seen whether Nifty too will clear the previous high of 5736.80 today or this week, in which case markets will have a rally to post 5927 on Nifty and 20538 on Sensex respectively by or before Diwali.
US markets closed positively on friday, on expectations of fed cutting either discount rate or interest rate in ensuing FOMC meeting on 31st October'2007. RBI comes out with credit policy on 30th October, 2007, where the stance on CRR, interest rates, and stance on inflation etc., will be revealed. Generally it is being believed that in view of capital flows stabilising, unlike previous month, hike in CRR is not expected. Markets shall continue to be volatile during this week too, till the events pass smoothly, and a mild rally can be expected upto Diwali (9th November 2007), as the Q2 results are generally in line with expectations and surprised on upside in number of cases.
Strategy for the Day: One can buy a straddle of 5700 on Nifty for quick returns in day trading.
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