"September month was a historic one for our indices, which have posted substantial gains month on month basis, and people who stuck to basics of sticking to value investing in uncertain times, are substantially rewarded, when the sentiment changed to positive, with markets friendly Fed cut of 50 basis points on 18th. Our indices have posted gains since then, uninterupted till the month end, recording new highs, after breaching old highs, every day, surprising most of the analysts. How the markets perfrom? from now on is the key question in every person minds since we are already at all time highs!
October month has the following key events to influence the markets mood, sentiment and trend; UPA-Left party co-ordination committee meets on 5th, on Indo-Nuke deal pursuation issue; Infosys Technologies comes out with its performance for Q2, Dividend and outlook for the next quarter or may be for full year on 11th; Infosys Management's outlook on the technology sector going forward, in the light of rupee appreciation, probable US Slowdown and how it will or may affect the company and sector in general will be heard, analysed with great detail by all global investors too, as the sector is clear under performer on our bourses, by a great margin, inspite of the overaall indices making substantial gains. FOMC meet on 30th and RBI's Credit policy are the next major events which would influence the performance of rate sensitive sectors like, banking, finance, automobiles and fmcg;
Strategy for the Month: One can construct a bull spread by buying 5000 call and selling 5200 calls in current series, to ride the upward movement, with minimum investment of Rs.45,000/- Break even level shall be 5100 as of 29.09.2007 closing prices. Investment will give 10% return on capital employed if the market settles at 5200 or more; maximum loss could be Rs.5000/- which is the net premium paid in case nifty trades and closes below 5000 during the month.
Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:
Short term support for Nifty shall be 5000-4940- 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be17160-17000-16876-16500-16135-15950-15870-15600-15485
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