Outlook for Friday - Nifty breaks 5000

"It is one  of the historic day for our indices, since Nifty crossed and closed above 5000 for the first time ever, simultaneously Sensex closed a 17150, with one of the largest trading volumes on a settlement day. September has been very rewarding for investors, as markets world wide moved very strong and fast after Fed decision to cut rates by 50 basis points on 18th; With settlement being over smoothly, rollovers also healthy, now the expectations on the Q2 performance will be priced in from now on, and markets will reward the performing companies and punish the ones which fail on guidance and also unable to meet expectations. Thus, lot of churning of portfolios to take place, pricing in further rate cuts, econonomic performance, political risk/situation etc., which will provide ample volatility in the days to come. Nifty futures closed at 8 points premium to the spot, presents bullish outlook for the day. Today is the last trading day for the week, month and quarter and how the indices close will present the indication for future trend, in our view it would be "up" only.

 

US markets closed postiive, and Asian markets are trading negative to flat in opening trade, our indices might face resistance today at higher levels, as next week is a truncated one, and profit booking can be expected, bringing 2 to 3% fall indices today or on monday, which should provide good buying opportunity, for long term investors. FIIs have been net buyers in our markets for the past 10 days on margin against DIIs who are net sellers, keeping the upward momentum of the indices so far. The larger traded volumes per day, while indices make new highs daily is welcome feature, the market breadth is generally negative as retail investors are booking profits around 17000 (Sensex) and 5000 (Nifty) is a discomforting feature.

 

No doubt that we are in a long term bull markets, however, even running corrections whenever happen will be sharp, swift and sudden, so entering markets with leveraged funds, should be avoided from here on.

 

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 4940- 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be 17000-16876-16500-16135-15950-15870-15600-15485

Outlook for Thursday - Sensex Breaches 17K

"Our indices amidst high volatility recorded new highs, on high momentum, inspite of flat to negative performance of asian peers yesterday and in the process Sensex created History by breaching 17000 intra day. Nifty found resistance at 4980 on several attempts and rollover caused last minute sell off, which made indices to close flat to marginally positive. Nifty futures are at hefty premium for Sept (18 points) and October series too have 8 points premium suggests that the rollover is smooth so far and shall be completed with positive bias.

 

US markets closed firm overnight and asian markets to follow suit, should augur well for our markets to open gap up and trade firm in the first session. Post sun outage trading, markets shall be volatile and Nifty shall have its turn to kiss 5000 in the process. The momentum being on its side crossing 5000 and closing above it on a settlement day may also need not be a surprise too, if it happens. One can look at technology sector on weakness in the market, as they will be coming out with the results in October. Further rally in the markets should be with the participation of Tech sector and other rate sensitives, as expectation of rate cut by RBI is too being factored in by market players, during the credit policy to be announced in October, or even before it, to help and sustain economic growth momentum.

 

Strategy for the Day: Buy 4900 calls on weakness and 5000 puts on rallies in September series and book quick profits, as it is the last day of the settlement.

 

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 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be 16715-16500-16135-15950-15870-15600-15485

Outlook for Wednesday - Settlement jitters

"Our markets are in the strong bull grip and inspite of running correction, continue to make new highs ever since bullish breakout happend on clearing previous highs. Since this is settlement week for september series, volatility increased, as anticipated, the volumes per day are now averaging 1,00,000 crores is an indication of greater participation. The outstanding positions have crossed 1,00,000 crores, is being viewed as a concern, by many analysts. Here one has to remember that number of scrips included in derivatives has increased on one hand and at the same the prices of the stocks having derivatives contracts also gone multifold. Nifty futures have closed at 5 points premium to the spot indicates bullish outlook to continue for some more time.

 

Nifty having run up quite fast and furious is facing resistance around 4950, as we are in settlement week, however, 4880 support is held in volatile trade on tuesday. Thus, Nifty might trade in a range of 4800 to 5000 for some time, consolidate and take a cue from the results which start pouring in from 2nd week of October'2007 onwards. RBI has liberalised the Foreign Exchange outflows norms with immediate effect, yesterday, after market hours. Now, an individual can remit upt 2,00,000 $ every year (an increase of 100% over previous limit); corporates can repay ECB upto $500 million without RBI reference. Mutual Funds can invest upto $5 billion overseas. All these measures will ease the pressure on rupee which is appreciating very fast, breached 40 mark and threating to appreciate further, as overseas flows are on high since the US fed cut its rates on 18.09.2007.

 

Strategy for today and tomorrow: Buy 4800 calls on weakness and 5000 puts on rallies to capture intraday volatility and book profits quickly.

 

Since we 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 4760-4678-4648-4564-4530-4480 and for Sensex shall be 16500-16135-15950-15870-15600-15485

Out look for Monday and Week - Volatility to continue

"All markets world wide have posted substantial gains during last week, on the back of US FED cut of 50 basis points interest rates in FOMC meeting on 18th, our indices, have posted new highs daily from there on after a clear bullish breakout, and closed at all time high close for the week and day on friday. Nifty futures closed at substantial premium due to spot at 15 points in current series and October series have just 5 point discount, shows that lot of short squeeze took place, along with addition of net long positios in next series. Roll overs have begun, and one of the largest outstanding positions roll over to October series, will provide huge volatility this week. The daily turnover on our bourses for the previous 3 trading sessions averages above Rs.90,000 crores, point to greater participation, and adventurous shorts during the day being reversed in the last hour, since the strength in the markets force the day traders to cover.

 

The indices are posting new highs for the past 3 days,  inflation was lowest, and rupee is strong, all point to continuation of interest in our markets by FIIs. The current bull run in 2007 on and off happening, is due to participation of select index heavy weights..viz., Reliance group, Engineering & Construction sector, Banking & Cement sectors. While these stocks are posting new all time highs, Technology sector, is posting new 52 week lows, due appreciation of rupee, and on concerns of possible US recession. FMCG and Automobile sectors which are rate sensitive are also under performers till now. All Technical analysts proved wrong by calling that August lows will be tested sooner than latter after touching previous highs. Further rallies in the markets in our markets might induce the fence sitters, and retail to jump into the fray, due to impatience, and over exuberance can be expected in the days to come. This being the settlement week, volatility shall be high. One need to be suitably  hedged on the market to protect portfolio, due to any reversal of the trend, as markets always react suddenly and sharply in long term bull run.

 

Strategy for the Week: One can go long on 4700 calls on weekness and 4900 puts on rallies in current series, and book profits quickly without waiting till the expiry on 27.09.2007.

 

Since we 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 4678-4648-4564-4530-4480 and for Sensex shall be 16135-15950-15870-15600-15485