Crude at 122$ and Inflation at 12.63% all make our markets to crash yesterday steeply!

Our markets have opened week and selling intensified in the later half on long unwinding a head of inflation data, as it was feared to be higher than previous week figure of 12.44%. All technical supports were breached and once indices broke July closing levels, stoplosses must have triggered further fall on indices. Finally, Nifty breached 4300 crucial level and closed below it. In finality both indices broke and closed below 50DSMA levels currently placed at Nifty(4285.22) & Sensex(14292.66). The inflation data came at 12.63%, after market hours, where as crude broke the upper band of 117$ yesterday on New York Mercantile Exchange and reached 122$ lead to weakness in US markets too. The job less claims data shown some improvement, which helped US indices to recover from lows at the end of the session. VIX closed at 36.55, however the day's high reached 73.22 the highest so far after introduction of this index. It points to huge volatility, as roll overs too will pick up from today. Rate sensitives were beaten blue yesterday on the fears that inflation might touch 13% inviting RBI action. The reaction was overdone, as bulls were on back foot to lend support before an event. Nifty futures have closed with a premium of just 3 points on adjustment basis. Actually, they went into 9 points discount if last traded price is to be considered.

Asian markets are trading mixed and Singapore Nifty Futures are currently quoting at a discount of 20 points, which might induce further weakness initially for our markets. Now it is to be watched whether August lows made on 01.08.2008 Nifty(4235.70) & Sensex(14036.57) would offer support for our markets today, on any weakness. However, gains may be made today, on some short covering, a close above previous week's closing Nifty(4430.70) & Sensex(14724.18) today appears to be distant possibility. But markets do have their own mind, thus, if positive closing happens over previous week, then bulls will gain command next week. Today's trading pattern and closing shall offer clues for the next week settlement and the intermediate trend too.

Range for the Day: Nifty might trade in the range of 4240 to 4440 today.

Strategy for the Day: Buy Nifty futures at the opening in case of weak opening, keeping a stop loss of 25 points from the purchase price for intra day trading.