Our indices have opened with huge gap up, as predicted and went on to post record gains in minutes, due to all round enthusiasm, euphoria and exhuberance, from all players, as if the "stocks will not be available from next moment onwards". Post sunoutage trading due to weakness in Hangseng indices, and US futures indicating negative trend, profit booking set in which brought running correction, and at one time it was threatening that the indices might close negative for the day. However, inflow of dollars from possibly new FIIs, the indices received support at 5 DSMA and the short covering in the last hour of trading, helped indices to post substantial gains at the end of the trading. Before Fed meet on 18th Sept '07 many analysts were doubting whether 5000 on nifty and 17000 on Sensex would be reached by December end; now we find that these levels are not only surpassed with great ease, and are offering support in case of dips on profit booking. Nifty futures closed at 5 points discount to spot on adjustment basis at the end of the session.
US markets opened weak and traded in negative territory overnight and closed negatively. Asian markets have opened negative and this might induce our markets to open negatively too, However, Volatility shall be very high, so one can start selling 25% of the portfolio on every rise of 100 points on Nifty from now on, increase cash levels, as the rally has completed 11 sessions, unabated, setting up of correction is overdue either from today or tomorrow is inevitable. So adding fresh long positions at these highlevels should be avoided. Trading in this high volatile markets, can hurt badly, as the stoplosses gets triggered, much quickly to the disadvantage of players.
"Power Grid Corporation Of India" will be listed on the exchanges today, which is offered at Rs.52/- might open and trade with substantial premium, as the power sector is very hot and leading the bull run for the past one week. Opening might be above Rs.100/- and investors who got allotment can hold the stock, inspite of huge returns it is offering on listing, as all other stocks in the sector, have run up too much too fast already.
Strategy for the Day: One can construct Bear spread on Nifty by going long on 5250 put and selling 5050 put in current series, when nifty touches 5250 and trades above it, and hold till the end of series for good returns. It requires a margin of Rs.45000/- approximately.
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 5050-4940- 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be17260-17000-16876-16500-16135-15950-15870-15600-15485
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