Nifty update for 30th December 2011

Nifty gave up all the gains it had accumulated over the week due to shortcovering and resumed its downword journey to retest the 52week low of 4530. As said in the previous post Reliance, ICICI bank, Axis bank cracked its major support zones and continuing its downward journey in search of new lows. Though nifty held its important support zone of 4640 it is expected to touch 4530 within a weeks time. The chart pattern says that one shouldnt be a buyer on dips and 4810 should be considered as reversal on the upside, till then lets keep 4530-4730 as the range

Nifty update for 29th December 2011

Nifty gave a decent opening bell for buyers to square off their positions above 4750 and made lower lows during the session. As i said in the previous posts Nifty can't make a decisive move on the upside because of the lack of volume ,thus it just gave a negative bias to the market but did not do much damage.Though index traders had a normal range bound session but some of the biggies have broken down and poor advance/decline ratio is an evidence for that.Some of the major stocks like Reliance, SBI, Axis bank ICICI bank have already given a topping out pattern and Nifty has a major challenge of holding high in spite of these weaker names.One major pharma stock Dr.Reddy's had a good rally though out the past 3-4 months but is on the verge of a trend line break out on the downside. These are some major worries for the bulls and will have a serious effect on nifty traders once the volume traders are back in the system.As of now Nifty is holding our major support zone of 4640 but making lower tops in intra day charts which is a very weak signal.Once the trading volume is back to normal we could see a break out most probably on the downside.Thus i would not be a buyer on the next dip .We can see a reversal on the upside only above 4810-4840 zone and till then it is a wait for new lows.Volatility data shows that short positions got accumulated on every rise and 4810-4840 could be seen a reversal point on the upside.

Nifty update for 28th December 2011

Nifty has just breached 4800 levels but could not reach closer to our resistance point of 4840 levels. The chart pattern looks like a topping out formation and some of the biggies had a profit booking session.As said in the previous posts the first dip from here can't be judged as a short selling idea but can be treated as a profit booking session. We have an important level at 4640 to act as a cushion and that would be a crucial level for all long positions in the market. Even if Nifty is able to cross 4800 levels we have another hurdle waiting close to 4840 levels , thus we have a cluster of resistance points at these levels.If i'm a buyer i won't be comfortable on highs like 4800 levels and would be uncomfortable to initiate a fresh buying position on highs.If there is a dip to 4640 levels and if it is holding that level one can initiate buying positions. As a trader i would be squaring off my long positions anywhere between 4750-4800 levels.Turnover data is telling you that today's dip was due to profit booking at higher levels and short positions are yet to get activated as volatility was on the negative side.As said in the previous posts a delta neutral position would have given you handsome money in options.Thus be careful of profit taking in the coming sessions too but any up move should only be considered for intra trade as these up moves are not supported by volumes and we have some more lower lows left in Nifty.Thus we can consider 4640 - 4810 as the new range.

Nifty update for 27th December 2011

We could see a decent up move today supported by some large caps.As we have Christmas holiday season in U S and European markets it would be a big relief for Indian markets.Beaten down names are continuing their up move and we are close to an important resistance point of 4840 levels.Volatility cooled off and it is telling you that not many short positions are left in the system. Even if there is a negative move it should be read as profit booking session and not as short positions.These moves cannot be considered as valid as these are not supported by volume.By seeing the poor turnover data we could only trade these stocks from an intra day perspective.If a trader could initiate delta neutral positions in options that would be the best for Index traders.Thus lets buy a dip and let Nifty confirm a top and then go short in the market.As long as the short term trend is on the upside there is no need to go short in the market. In a topping out situation it would first take a dip and that dip would be bought by traders and then it should confirm a top.Thus as long as that situation happens lets trade the stocks from an intra day perspective because now we are in the middle of a short term uptrend and it does not make sense to buy and hold Nifty for a day or two.I don't expect nifty to make an extra ordinary move this week because of the lack of volume in the market.It could most probably be in a range bound session and lets see how Nifty would behave close to 4840-50 levels.

Nifty weekly update 26-30th December 2011

Nifty had a range bound session on Friday and the turnover data too was not very encouraging. It is a Christmas holiday week for the FII's and thus we can't expect an action packed week for Nifty. In the coming week too turnover would be low and Nifty could most probably see a range bound session. If we observe the price action it is evident that Nifty held our major turning point of 4640 and that could be a decent stop loss cushion for all long positions. On the upside Nifty held one of our major resistance point of 4770 on Friday. Another resistance point where lot of short positions got initiated would be around 4840 levels and these are levels that could act as upside cap.If you are an experienced trader start selling options by keeping a delta neutral position as a possibility of range bound market would be more.Thus by making your position a delta neutral one a trader could get the extra premium in his favor.Volatility data was in favor of bears as short positions are getting initiated on tops with a decrease in cost of carry.As per time cycle we have a major date coming around 5th of January for a major turn around. As of now we can keep 4640-4840 as the range for the week.

Nifty update for 23rd December 2011

As said in the previous post it took a dip and we were buyers on the first dip. From there Nifty took us to 4750 which could be a decent level for a Nifty buyer to square off his/her buying positions.Now we have a stop loss at the bottom ie; today's low of 4640.On the upside we could see 4770 and 4860 as major stopping points. If i need to be a buyer buying options on an intra day basis should do good instead of futures. 4840-4860 could form a hurdle as a Fibonacci level and price resistances converge there.If i get a dip i would not mind to buy if volume data is in favor of buy on dips.Turn over data shows that only shorts are getting covered and value buying is happening only in a few stocks.Volatility was on the rise in the first half of the trade thus indicating short build up but eventually those shorts also got covered . In a nutshell Nifty is running up only by covering the shorts and it would not be enough for nifty to carry the momentum on the upside.It needs more buyers to for a decent rally and short covering rally would lose momentum in the days to come.It is a wait call for short sellers as it has not confirmed a top twice so it is difficult to take a call on the short side as of now.Thus let it make a top , take a dip and will have a secondary rally to confirm the top and short sellers would get activated there.As of now 4800 could be seen as upper cap or squaring off your intra day buying positions and at the same time i would like to buy only on dips than highs.

Nifty update for 22nd December 2011

We had a good short covering rally and 21st December gave a Christmas gift for the bulls by giving around 150+ points.We had some resistance points around 4640 levels but Nifty could cross those levels with good volume. Luckily Reliance held its 52 week low zone and helped nifty for a decent rally. As of now we can't short this market as it might have some more steam left on the upside. Fibonacci levels are placed close to 4770 and 4840 levels.Thus these are some area's to watch out for on the upside.I would be a buyer on the first dip as it gives a cushion with a decent stop loss. Turnover data shows that it was a clear short covering rally and long accumulation did not happen at lower levels.History says when every one is on the bear or bull side's markets would react in just the opposite way. That is exactly what happened today and treat it as a normal bear market rally. Decrease in volatility and increase in cost of carry with a high OI would indicate long accumulation at lower levels and short covering rally.As said in the previous post we had every chance of breaking 4640 if it hits that level because of the time element involved in it.December 21st has again proved its importance by giving a massive rally.Thus for short sellers let the nifty move any way and make its top , then think about going short in the market.Lets keep 4630-4780 as the new range.

Nifty update for 21st December 2011

Nifty tried its best for a pullback but could not sustain at higher levels .As said in the previous post it was a clear sell on rise market and Nifty futures held our lower range of 4530.Futures volume charts are showing positive divergence for a pull back but biggies like l&t,SBI,Reliance are making new lows everyday . Thus these stocks should stop falling for a meaningful pullback rally.We had a selling in the last hour but it was not with enough volume but large cap stocks were really disappointing.After 4530 the next stop for Nifty would be close to 4480 levels. Thus lets keep the new range as 4480-4640.I think 4640 is a crucial level as buyers got stopped out around that level and Nifty took a 'U' turn from that level. Thus on the next rise towards 4640 Nifty could possibly break the upside range for a good pull back rally.We had our previous 52 week low around 4630-40 zone and lot of short positions are accumulated over there. Thus the area is of significant importance for any move.Volatility was still on the rise indicating short positions are not yet covered fully.One major worry for bulls is the way heavy weights are registering new lows.It indicates Nifty needs good consolidation period to build a base for the broken down structures.If world markets closes on a positive note Indian markets could do well but 4640-50 levels would be important levels to watch out for and 21st December would be an important date for Nifty.

Nifty update for 20th December 2011

Nifty held our lower range of 4530 on the downside and started moving up but could not sustain on the upside. The accumulation of short positions are much above 4700 levels thus Nifty should hold 4530 levels for any upside bounce.The pull back back was due to some short covering at lower levels and it is expected to be a sell on rise on the coming day too.Nifty has to be in a consolidation phase for any up move and many biggies registered new 52 week lows.As per the wave counts we are in an 'ABC' pattern and the wave count can result a fall upto 4300-4350 levels where an important Fibonacci number can be seen on the weekly charts.Banks led the downfall but Reliance held its level through out the day. On every rise there would be sellers and it would be better to trade in options on any pull back rally. If bank nifty could find some relief close to 7600-7500 it would help the pull back rally. As our range is not broken lets keep 4530-4770 as the range.Volatility was still on a rise and it indicates short accumulation on any up move. Thus it is better to play the trend than the counter trend.It would be difficult to create short positions on a downside break out.As a trader i would buy Put options on a decent rise if the market is forming any topping out levels.As per time cycle 21st and 24th would have a major impact on Nifty. 24th being a Saturday lets assume by end of this week Nifty could form an interim bottom.

Relevance of Economic cycles in Indian markets...Should a chartist care about Economic cycles?

Nifty would be in the last leg of a bear market and majority of Indians don't believe it would end soon.How do we know a market is bottoming out?We are at the peak of an interest rate hike cycle and inflation is supposed to come down in the first half of 2012. Crude oil and Dollar are two major components which decides the inflation cycle. As we are seeing in the commodity market crude oil was testing life time high's till last week and cooled off just 2-3 days ago. Thus it should first top out and start its downward journey for some relief. Dollar Index is continuously making higher bottoms and it would be a major danger for those companies which are involved in trading in overseas markets and it would be a major challenge for the growth of the economy as well.Thus the result season would not be that good for the market at least in the coming quarter. As Dollar was making life time highs it would have a major negative impact for most of the balance sheets. One could see bond yields coming down when the market is about to bottom out and it is a sign of people buying equities. There would be a little more downside left in commodities especially in Gold.Gold could most probably test 26500 levels in the near future.Thus peak of rate hike cycle and bond yields coming down would be the first signs of a recovery process. Another major worry would be European markets as we have not seen anything worse in Europe and we are yet to see major correction in European markets. Thus in a nut shell it would be difficult to get out of all the economic issues that soon but as a long term investor one should start buying any dips close to 4500 levels in Nifty.We have attractive valuation level of 13-14 P/E when the markets coming down from these levels and one could get the stocks at the lowest levels on any panic selling day.Thus make use of the available opportunities in this current downtrend.(followed by nifty weekly analysis 19-23 December 2011)

Nifty Weekly Analysis - 19-23 December 2011

Finally Nifty retested 4640 and broke below that!!It is expected to slide lower as investors have started squaring off long positions.As said in the previous post Dollar Index crossed an important level of 80 on the upside and it would be a hindrance for any up move in Nifty. If we have a look at the volatility data we can see short positions got accumulated only at the top and lot of long positions got out of the market especially long term investors. It was a crash in every respect as along with Nifty , bank nifty and many biggies registered new 52 week lows. As i mentioned in the previous post Nifty got locked in 4830-60 zone as lot of short positions are still active at that level and it topped out exactly in the same range.It is a good time to do some shopping in the equity segment as the valuations are really attractive.Though we were sitting on cash till now time has come to start investing with a time horizon of 2-3 years.For a trader Nifty could still give lower lows and eventually it could form a low any where between 4500-4300.Thus it could be altogether a different approach in trading and investing at this point of time.As per time cycle there is every chance of a good pull back rally on or before 24th December or 21st of December. Technically charts are telling that it is a crash and we could not find a bottom soon ,but market can do anything and that too to any extreme.Thus i'm not saying that Nifty would show some strength in the near future but one should be careful when every body is bearish in the market as markets usually rally at these times.Look for volatility peaking out and Nifty trading at huge discount as these are some of signs of bottoming out.As a trading level lets keep 4500-4530 as a fair level of the current trend with a reversal above 4860. As of now weekly range would be 4530-4770.I'm uploading the same Nifty chart from 2001-2011 where i was talking about 4500 level.

Nifty update for 16th December 2011

A smart pull back from our 52 low zone of 4640 !!Does this mark the end of a bear market?I doubt so.In the near term , yes it was a smart pull back of 100+ points from the days low and Reliance led the rally.At the same time dollar index surpassed an important level of 80 after an accumulation of 3 months thus it should be considered as a serious break out on the upside.We have a big event for tomorrow and ie; RBI's credit policy. Thus let Nifty first fill our previous daily range of 4640-4860.We have lot of short positions accumulated at 4830-4860 zone and that needs to get cleared first.As December had always been a positive month for Nifty due to pulling out of cash by FII's they might do the same this time too, and Nifty has to unfold that. We have 3 important time cycles dates in December and first week of January. December 21 is a seasonal date,December 24th is a moon date, first week of January is always famous for major tops and bottoms.Thus Nifty should form an interim bottom before 24th Of December (as i said in my previous posts 21st Dec too is an important day for a turn around), let it be today's or below that. Thus the picture would get a clarity if we combine it with these important dates. Today's rally was primarily due to some profit booking happened in currency futures. As said in the previous post a sharp pull back rally followed after that sharp cut.As we could see from the turn over data retailers have pumped in some money but FII's are still pulling out the money.4640-4860 could still be a good range for Nifty.

Nifty update for 15th December 2011

Nifty tried for a bounce back and it could achieve till 4850 levels. A 100 points bounce from the lows of 4730 should be considered as a decent pull back.As said in the previous post it would be a sell on rise market and Nifty behaved in a similar way.Turnover data shows that some short positions got created at 4830-4850 levels and on the way up this would be a major hurdle to break.On the downside below 4730 we could see nifty testing its 52 week low.As the index is in a severe downtrend the pull backs would also be sharp , thus one should be cautious in attempting shorts in the last leg of the crash. Thus as of now lets keep testing 4640 is quite a possibility and Nifty would find it hard to hold that level. Volatility was on the rise even on the pull back rally and it clearly shows that short positions got created at the top. Though some positive divergence is visible in Nifty's volume charts 4730 could be the deciding point for Nifty.Advance/Decline ratio was clearly in favor of declines and most of the biggies closed near the days low.Lets keep 4640-4860 as the new range.

Nifty update for 14th December 2011

Nifty took support at 4730 levels and bounced back to 4800 + levels. As said in yesterday's post it was not a volume selling day and a bounce was quite natural.It held our range of 4700 and seems to be getting filled.Turnover data shows that investors are not picking stocks at lower levels and the major cause of the rally was only short covering.Volatility has decreased substantially and Dollar/ Re cooled off in the second half of the trade. It was an intra day bounce and maximum could be extended to 4900 levels.As a trader i would be on the short side again if nifty breaks 4730 (today's low)or at the top around 4900 levels(if it forms a topping out pattern).In a major down trend like this i would not like to play the counter trend move on the upside and would like to sell on every rise.If it breaks today's low it does not seem to hold 4640 on the down side as it is a down ward channel.If it is a consolidation pattern at these levels it would benefit the bulls but it does not seem to happen in the near future. Let 4700-4900 remain as the broader range.

Nifty update for 13th December 2011

It broke our support zone of 4840 and moving towards 4640 zone. We cannot rule out a pull back to 4900 levels at any time. Thus we were playing the downtrend right from 5130 till now.If Nifty is continuously breaking the lows just trade with options for new lows.The structure looks dangerously weak and any bounce would be met with selling. The way stocks are breaking down makes a trader more bearish in the market. Reliance did come below 750 and ICICI bank made a new low.Thus the structure is really broken down and dollar has touched 53 mark!lets wait till 4640 and the way it is breaking it does not seem to hold 4640 this time.Unless and until there is a consolidation phase traders should avoid buying futures.As an investor i would be adding some stocks in my portfolio below 4640.Options could give you handsome money at these levels.India VIX is telling that lot of short positions are getting covered in between and bounce back may be due at 4640-4700+ zone.Turnover data shows that it was not volume selling and the selling was not happened because of short positions but because of long exit by investors.Thus trade the downside cautiously atleast for a short term. 4700 - 4900 would be the new range for options writers.
(One could enlarge the chart for deciding the support and resistance levels)

Nifty weekly update 12-16 December 2011

Though we can't call this quite a downtrend in the short term as a medium term outlook Nifty is still in a bear marker. It can be a sideways moving market for an interim base formation or it could be cracking the 52 week low of 4640. As long as 4840 holds on the down side we could expect a bounce close to 5000-5020 levels where lot of short positions are hiding.If this is a consolidation or bottom formation process one could see major high beta names rallying with good volume.If it breaks 4840 as a trader i expect the downside is still open till 4500 levels , but as an investor i would wait till 4640 to be taken out to square off my long positions.One major worry would be FII's taking out money for the first time on friday.Thus it would be a sell on rise market unless and until a base formation or consolidation process is happening. If we have a look into the daily charts if 4840 holds we still have a higher bottom formation and that would be a good sign for the bulls.As it is a downward slopping channel 5200 would still remain as a hurdle to confirm a bullish reversal. Dollar index is also making a higher bottom and forming a high above 80 levels would be a real worry for Nifty.Turnover data shows that when ever there is a bounce retail investors are getting rid of their long positions and leaving the market.As of now 4840-5020 should be considered as a broader range. If Nifty breaks 4840 retesting of 4640 is very much possible and that too with in a week. As per time cycle 20th,21st of December could be crucial dates for a turn around.

Nifty update for 12 December 2011

It was another red day for Nifty with a huge gap down but managed to hold our immediate support level of 4840. The turn over data shows that it was a low volume day but instead of creating long positions lot of short positions got covered near 4840-50 zone as a big is due today. As of now lets keep 4840 as a crucial level for Nifty to make or break and below that one can see 4700 levels once again.In the recent history Nifty never had a triple bottom. Thus if it retests the low of 4640 it does not seem to hold this time. I expect it to retest 4700 with some bounce backs. Some new short positions got created at the higher end of the channel around 4940 levels. As long as 4840 holds we could expect a bounce till 4950-5000 levels but the overall trend is biased towards downside. As the volatility was on the rise it is a clear sell on rise market. In a down ward trending market it is better to know the upside cap where the shorts could come in and our upside cap is around 5000 levels.Thus let the world market unfold the trend after the event and we can have a further look for a major trend.(followed by weekly update on Sunday)

Nifty update for 09 December 2011

It was red all over and Nifty was about to kiss our lower range of 4930 but had a rebound from there. If the European summit brings more worry it would be a severe cut towards 4840 levels from where the gap up happened. As of now the interesting play would be around 4930 levels. It has to be decisively broken on the downside for more downside targets. Stocks had a severe cut especially banking and metals and biggies led the fall.The turnover data shows there was lot of long unwinding and huge short positions got created. As far as Europe is concerned it would be an important day as the summit is happening.Nifty would still be in a trading range but the deeper cut in stock futures would be more painful for the retail players.So as of now lets see whether 4930 holds on a closing basis and if it breaks that range on the lower side , lets see 4840-5020 as the new range. The major distribution zone for nifty was around 5010-5030 levels and this would be the major level to watch out on any bounce.

Nifty update for 08 - December -2011

As said in the previous post (07 Dec) Nifty would be testing a Fibonacci number at 5000-5110 and crossed that level but failed to close above that level. As we could see the cost of carry was extremely biased towards the buying side and that would be the first sign of a topping out pattern.It was trading with a premium of 30+ points and it eventually got reduced with an increase in volatility . Thus it is a clear indication of short build up on highs. Nifty has almost completed 3 phases of a rally .It was a sharp up move , had a profit booking session and a secondary rally to confirm the top. So as it has successfully tested the Fibonacci levels it could head for a smaller correction as long as 5130-5150 holds on the upside.There would be a slight possibility that there would be buyers on a dip.Our weekly range still remains as 5150-4930.The turnover data shows that profit is taken out at highs and it indicates squaring off long positions above 5120. Dollar is again moving towards 52 zone and closed at day's high.On a medium term view one could keep 5020 and 4930 as major support levels and even if Nifty holds these levels it would be a higher bottom higher top formation which would be good opportunity to utilize the dips for buying.Major worry for an up move would be ICICI bank is at a major support level of 770 and if it is not holding those levels it could correct further.

What does Gann say about Nifty

Scenario 1:These angles would tell you where are the important support and resistance points. These lines look like simple trend lines but they are some angles which tell you the final resting places for Nifty. If we have a look at this chart it tells you that in the weekly chart Nifty is still holding that trend line and below that it would take Nifty to 4200-4300 levels. As of now these extreme levels are irrelevant as we are no where close to that. In the current scenario Gann angles say there is a well tested angle (which i have marked in red color) and currently it is placed around 5200 levels in the weekly chart. If it surpasses that level the next level appearing in the weekly chart would be 5600 on the upside.As it is the weekly chart 5200-5250 levels will be marked at the same angle resistance line and this angle could play as a resistance point for the current up move.Blow 4630 levels the angles are not offering any support levels and a fall could be extended towards 4200-4300 levels.
Scenario 2: If nifty is getting close to 5200 and the angle is in a upward slopping line it could offer decent support close to 4900-4850 levels as you see in the chart.Thus Nifty could form a higher bottom , higher top formation which is actually a bullish pattern for the short term.

Nifty update for 07th December 2011

It was a range bound session and Nifty is in a double top kind of formation near the Fibonacci level of 5100-5110. As long as Nifty does not move above these Fibonacci levels the double top formation is confirmed. We were in the second phase of the rally , ie; profit booking session but Nifty was bouncing back from the lows with lot of stock specific action especially Axis bank and SBI.Any profit booking session would be continued by a secondary rally to confirm the top. So if one has to go short he should get the top and otherwise it would be buy on dips market as i was saying through my previous posts(in the coming sessions too).Dollar Index was not ready to cross 80 + levels and that really helped nifty to get good buying interest. At these levels of 5050-5100 one should have a look at the premium with which Nifty is trading. As of now nifty is close to the maximum premium levels of 30+ where it is extremely biased towards the upside. Thus any decrease in the premium with an increase in volatility is a sign of short build up.Some short positions were created in nifty as volatility was on a rise.Poor turnover data shows that it was a profit booking session and all the up moves were with out much volume.The immediate support lies at 4930 levels and if nifty crosses 5020 levels on the downside with the same upside cap today's high is confirmed . Thus as of now 4930-5150 would be the range.

Nifty weekly Analysis 05-09 Dec 2011

It was a great week for the bulls as nifty was in a short term bullish setup (still is) and almost reached all the Fibonacci numbers. The final Fibonacci number is placed at 5100-5110 and it has almost reached those levels. If one really trades a bounce i would have squared of my buying positions above 5030 levels and would square of my positions close to 5100 levels.As i said in the previous posts all the dips were met with huge buying interest.One should use any profit booking session to buy again for secondary rally . As i was telling in my previous posts in a rally there would three phases a sharp upmove , profit booking session and a secondary rally to form the top. Thus as of now we have seen only the extension of the primary rally and major profit booking session and secondary rallies are yet to follow. Thus in the shorter term 5200 will remain as the major hurdle to cross and by crossing this nifty would be able to regain the temporary bullish setup. One could see nifty forming double bottom at 4930 levels and rallied. Thus 4930-5150 would be the weekly range as of now.(Read about world markets and Nifty from 2001-11 in previous posts)
Time Cycle levels.
If the up move continues Nifty is expected to hit 5170-80 levels on the 9th of December and on the downside there is a possibility of getting back to 4950 on the 13th of December. In a nutshell if nifty fails to reach 5170-80 levels on the 9th it is expected to touch 4950 by 13th of December.(Consider +,- 1 day for this forecast). In the longer term watch out for 20,21 December and first week of January close to 5th of January for a a major change in the trend)

A combined analysis of Dow , FTSE and DAX from 2001-11

Here i'm trying to project how world markets are looking at the moment.

1. Dow Jones - It is making lower tops but making higher bottoms at the same time.It has retraced successfully from the top of 12900 levels and on its way upto test 12600 where the current trend line is placed. As one can see the lower part of the trend line is placed at around 11100 levels and only below that Dow's down ward move is confirmed.
The trend is still range bound with a negative bias and has to come below 11100 levels to confirm the downtrend.

2. DAX - The German index is also moving at par with the Dow and there would be a trend line resistance placed around 6600 levels.Unlike Dow it has broken higher bottom formation and broken major support levels.DAX has also retraced 61.8% and bounced back from there.

3. FTSE - This is one of the major markets where the bear market is still active as it has retraced 100% from its previous top. For the time being it can be considered as a double bottom formation but is expected to correct soon.The upside cap would be around 5900 levels.

Conclusion: These charts show you if we compare these 3 charts with Nifty our index is the only one which has retraced more than 100% and consistently making lower tops and lower bottoms.Thus if we compare it with the world markets we cant rule out a possibility of Nifty crossing 5330 and marching towards 5600 but by that time the world markets would be forming multiple tops and that would definitely act as a hindrance. If the world markets take out the trend line supports it would be altogether a different game. (Instead of Dow , S & P 500 would give us a better result but unfortunately i could not upload enough data into the software)

Nifty - An analysis from 2001 - 2011 (Strictly for an Investor )

Let's have a look at the weekly charts of Nifty from 2001-till date. This analysis would be based on simple trend line analysis and the more data we have the more would be the accuracy.If we have a look into Nifty chart we can see that it was consistently making higher tops and higher bottoms from 2001 till the time of recession. As an investor though he cannot catch the bottom with the simple trend line he could ride a trend. Let's come to the present scenario. Nifty is consistently making lower tops and lower bottoms and that should be considered as a bear market.As per the weekly chart the trend reversal could happen if Nifty consistently gives closing above 5200 in the short term and above 5330 in the longer term.If we have a careful analysis of this weekly chart we can see that above these levels Nifty could ride to 5600 levels.If Nifty is giving a consolidation a these levels as this is a downward slopping channel we could be in a bullish trend above 5200 levels provided it should not give a lower top after that.In my previous posts i was talking about 4500 levels because that year trend line got broken below 4720 , it could be a trap but the market has to prove that by crossing the above mentioned resistance levels to confirm the upside break outs and till then it is still very much in a bear market.(Please click on the chart to have a larger view)
(Followed by Nifty weekly update and a comparative analysis with the global markets (will be updated before Sunday evening)

Nifty update for 2nd December 2011

Though we expected a bounce till 4940 a opening at 5000 levels was a little bit surprising but retraced to 4940 levels during the final hours.Though it retraced to 4940 it just had a bounce from there and the whole rally was relevant and much needed one.There is no change in opinion for the downside as the trend reversal has to happen only above 5200 levels and that too with proper consolidation.We have seen bear market rallies at many stages right from 6300 till the recent one.These rallies must be used as a buy on dips for a shorter period of time because whenever it comes down , will be met with good buying interest as people did not get an opportunity to participate in it.If we list all the major tops 6200 levels we had huge gap up openings ,repeated at the tops of 5900, 5700,5200 etc. I would consider this as a bear market rally. If we have a look into the stock data as i said in my yesterday's post Reliance moved up because of buying and not of short covering. Banks went up because of short covering , touched resistance points and came back with ICICI as an exception.Implied volatility has come down substantially with an increase in open interest and cost of carry and thus it indicates huge short covering and buying on dips. On the downside 4750 would be a major support zone from a medium term perspective and buy any major dip for the secondary rally as all the major rallies would get topped out with a secondary rally.As it is already done with the major Fibonacci number at 4940 next important level would be 5020-5030 levels where next major hurdle is placed at, but buy only the dips and no need to buy at the break out of highs as it would be dangerous.Selling on rallies was very evident in major stocks like l&t and Axis bank.Turnover data tells that lot of profit booking is happening at higher levels. I would wait for a topping out pattern to go short and its better to wait for a secondary rally to create that top.

Nifty update for 1st December 2011

As mentioned in yesterday's post Nifty took a pause at 4860-80 levels and it is still a major hurdle to cross.One good thing for bulls would be Reliance is consolidating quite well at 760-770 levels and trading with better accumulation on the lower range.If volume could push it to 800 levels Nifty could surpass the hurdle and move towards 4900+ zone , otherwise it looks quite difficult. Nifty took support at 4750 levels and had a dip if we compare with yesterdays levels. Dollar index is just taking a pause for the second day at 79 levels and that is really helping Nifty to stay range bound though with a negative bias.Bank Nifty and major banking stocks are looking dangerous on the long side as when ever these stocks go up they just form a cluster of resistance and come back. I would expect today's low as a major turning point for nifty and if it is taken out we could see 4630 levels once more. Anyway we are bound to test 4630 once more, let be after testing 4900+ levels or once 4750 levels are taken out.This is a classic bear market rally as i mentioned in my weekly update , it forms a bottom goes up with a sharp move , give side ways movement and again test the previous low. If it consolidates at these levels with out taking out the recent lows then there could be a trend reversal on the upside , so as of now the trend would be still down with some sharp whipsaws.As i mentioned in yesterdays post though it was a range bound market with a negative bias call options should have been bought on dips, but if it makes a dip tomorrow and take out 4750 it is not a dip and it would be a clear sell signal!!! The premium is getting reduced whenever it is getting near 4860-80 levels and it indicates lot of short positions accumulating at those levels. Thus even if it crosses the upside barrier it would be this short covering rally to push Nifty to 4900+ levels and not fresh buying,so be careful on highs.

Nifty update for 30th November 2011

All major indices rallied more than 2% and that was one of the best short covering rallies in the recent history , but our Indian markets could not repeat the up move.As said one should not hold any futures positions as it would be range bound market with a negative bias.Dollar index is at a crucial level close to 80 and as long as it does not cross 80 levels Nifty could be saved. It does not look weak at all ,may be before crossing 80 on the upside it might be getting ready with some more long positions.Call options should be bought only on dips and 4690-80 levels could offer some support. Volume in nifty futures is telling that lot of profit booking is happening at higher levels. Today's move could not have initiated many shorts but i would call it as a profit booking session and VIX data is one evidence for that.If Nifty could get supported at the lower end of 4700 levels it can still stretch up for a top. Though Nifty did not initiate many short positions weakness in major heavy weights were evident. As i said in my last weekly post pharma sector was the most out performing sector.Long positions should be taken only on intra day basis if it is forming some support region at 4700 levels.4860-4880 is still a major hurdle and on the upside it could be stretched maximum upto 4940 levels.We formed a low of 4690 just before that big rally and that would be the good support region for the market.For bulls it is a major worry that long positions are not getting created in heavy weights and just short covering rallies are happening.

Nifty update for 29th November 2011

It was quite a good bounce back and worth playing ..It hit our first level of 4860 and broke that level.The rally could extend to 4900+ levels (as said in the previous post), but as we are playing the bounce any level close to 4900 or 4900+ levels could be good enough to square off the long positions and wait for a topping out pattern. Huge short covering is very much visible and the poor turnover data shows that the upmove is contributed by short covering. As the world markets are also covering short positions let's wait for a topping out pattern for the next move and the rally could extend upto 4900+ levels.As a trader who have played the bounce back should square off all the long positions close to 4900-4900+ levels as above that there would be some major hurdles to cross.As a trader i would be booking my Nifty futures position today it self and play the rest of the upside move with options.

Nifty update for 28th Nov - 2nd Dec 2011

As i told Nifty gave some good bounce backs during 21st -26th November and is expected to continue to bounce back till 4860 - 4930 as long as the 52 week low of 4630 holds as the bottom. The downward channel actually ends at around 4500 levels and it shows that there would be some more downside left for the market. Fibonacci number says , if we join the levels of 5330 and 4630 importance resistance levels would come at 4930-40 and 5000 levels. Price levels have formed a resistance at 4860 where lot of short positions are still there. Rollover data shows that short positions are still very much active at 4860-4900 levels.Thus play any bounce till these upper bands and be cautious on the long side. I would be a seller from the upside at 4860 - 4900 if it is showing a topping out formation. Pharma stocks are still giving lot of momentum on the upside and equity players could actually play those stocks on the long side as a defensive sector.It is better to avoid metal stocks as it is making new lows every day. One major worry for Nifty would be Reliance not participating in the rally. As of now for the week let 4630-4860 would be the range and on the range break out it would be extended to 4500 - 4940 on the downside and upside respectively.
Time cycle is telling you that Nifty should spend some more time in the downward channel or in the consolidation phase to balance with the time factor.Next important date for a crucial movement would be around 20th of December 2011.

Nifty update for 25th November 2011

Nifty gave two positive closings this week and both of them were during the time period mentioned ie; 21-26th November.The pullback was relevant and a much needed one before heading lower.The rollover data shows that bottom is not yet formed and we need to wait for some more time.As of now nifty could be maximum extended to 4850-60 where you could see fresh supply zone.Volatility data shows that plenty of short positions got squared off at lower levels and many got trapped at the lower end.Thus Nifty would go back to those lower levels but instead of going short on break downs go short from the top where immediate resistance points are placed.A usual feature of a major bottom would be , the futures contracts would be trading at a huge discount and VIX would be at its peak.Thus it would still be a sell on rise market.As said in yesterday's post the bounce backs could be sharp with 80-100 points move and these are worth playing with options.
Time cycle data shows you that price factor is overbalancing with time, thus the market should spend some more time in the downward channel to make a proper balance with time.One could see one more deeper cut and it would be a good consolidation period so that one could start buying more in the cash segment.As of now 4630-4860 would be the range for option writers.

Nifty update for 24th November 2011

Finally it broke 4720 levels and registered a new low around 4630 where an important Fibonacci number is placed. The low was touched with huge volumes and nifty is expected to head lower with some sharp bounce backs of 80-100 points. The next logical target for Nifty would be 4300-4400 but i would advice investors to start adding stocks in small quantities where you could find some cheaply valued stocks. As Nifty has breached its 2 years support levels it should be considered with more caution.IT sector has not participated in the downtrend as of now and there would be good correction coming in IT too.There would be bounce backs for nifty to come down further as the downward channel tells you nifty would be at 4400-4500 levels and Fibonacci is telling you 4300 levels if you see the weekly charts from 2000 till now.The picture is clear now for an investor , he should be a buyer at any levels from 4300-4500.For an investor there is no point in waiting for a bottom to be formed. The bottom formation process would take at least a month or two, it forms a bottom , would give you a sharp up move and it tests it again to confirm the bottom etc. For traders these are important turning points as these are major trend defining moves.Dollar index is still in an upmove and it is not showing the strength to move up. Any upside 4840-4860 would be the upside cap.

Nifty update for 23 rd November 2011

It was a decent bounce back of to 4860 levels where some major resistance levels are placed.Many stocks saw short covering rallies especially heavy weights like TATA steel and Infosys.Bear market rallies would be there in any major markets after a sharp downward move. Nifty would be getting prepared for another move to retest 4720 and the moves show, it is not so far. The bear market rallies could extend maximum upto 4900-4950 levels before the next round selling resumes. The momentum shows that if nifty retests 4700-4720 levels again it doesnt seem to hold those levels.Turnover data shows there are sellers at every rise thus long positions should be played only for intraday and one should not carry a long positions.Lots of shorts are getting covered at 4780-4820 levels but new shorts are getting created at higher levels and volatility data reveals that fact. Dollar index and dollar vs rupee are making new highs every day and there is no logic for FII's to come back to India when the dollar is trading at at a higher rate. The range for the market would be 4720-4860

Nifty update for 22nd November

It failed to give a major bounce today also..on every small rise Nifty was under huge selling pressure and it is a wait and watch game now. First is to test the low of 4720 but one should not be short in the market to fix that as the target.One should be squaring off the shorts at any level below 4800 and wait whether 4720-4700 would be taken out.Either one can sell on any rally or below 4720 levels for a new low.As i said in my previous posts once nifty comes down below 5000 banks would break 52 week lows and that is what you are seeing every day. As an investor one should start building up a portfolio below 4700 by buying in small quantities.For a nifty trader he should watch for nifty's 52 week low as a major point to decide the trend. All the technical indicators are deeply oversold thus play a bounce based on the movement of dollar and European markets. Dollar is at a dangerous level of 52+ and even if it comes down there would be a secondary rally for dollar to top out. Thus evidences suggest that Nifty should cross 4720 on the down side to be in proportion with Nifty.Anyway this week a bounce back is due and play carefully on both the sides , let it be short or long but one should be a seller on every rally.

Nifty weekly update 21-25 November 2011

Though Nifty is giving some hints of a bounce back the structure looks really weak.One important fact is nifty tried for a bounce back when all the biggies in the banking sector registered new 52 week lows. This indicates the weakness of the structure and the only cause for a bounce is nifty is deeply oversold and the stocks need to rise for a fresh selling. Thus the logical target on the downside is retesting 52 week low of 4720 and heading lower to 4400-4500 levels as it is a downward channel.The bullish set up could be possible if it is able to cross 5330-50 levels on a longer time frame.As per our time cycle 21-26 is due for a bounce it might lead to a bounce to 5000-5050 and completes the final tops before heading lower.The turnover data shows heavy selling on any rise and two stronger stocks Dr.Reddy's and Kotak bank have also started declining and this will add to the current weakness. Fridays traded ended with some premium and some addition of good open interest indicates some kind of short covering is happening with less volatility.It is a clear sell on rise in the coming days too!!

Nifty update for 18 th November 2011

It was a crash all over and it took out our support zone of 4970 - 5000 and gave some good points on intra day.As of now it would extend downward move till 4700. Nifty did not even show the courage to cross 5100 and thus the weakness is evident. Stocks like l& t and PNB which are registering 52 week lows every day worsen the situation. The way it crashed the psychological support level of 5000 tells you how weak the system is. I expect any relevant bounce back during 21-26 as i said in my previous posts. Volumes in nifty futures would tell you that there are not many buyers left in the market. Reduction in cost of carry with implied volatility surging indicates a much deeper cut and be cautious to play any play long positions for a bounce. If it comes below 4900 square off all the short positions close to 4750-4800 and a bounce is expected close to 4700 levels.

Nifty update for 17th November 2011

It did the much awaited bounce back , not a valid one for Nifty but banking stocks had a bounce before breaking their 52 week lows. A bounce could extend up to 5150 - 5170 and it would be clearly a sell on rally market. As i mentioned in my earlier posts there are multiple support zones at 4970 - 5000 zone and it would be interesting to see whether it would hold this zone. Play the bounce only with options and it is not worth playing with stock futures,on the downside there would be a sell signal below these support zones. I expect if nifty takes out the support zone banks would take out their 52 week lows.For any up move their needs to be a consolidation period and it does not seem to be happening . As i was mentioning in my previous weekly reports it would be a painful journey unless and until it takes out 5330-5350 (on a medium term view).
Tine cycle tells you that any relevant bounce would take between 21-26 and that would clearly tell you that Nifty would be topping out.

Nifty update for 16th November 2011

Nifty came close to the 5030-5040 and stocks were trading close to their 52 week lows. Though the turnover is low in equity market many banking and some other large cap stocks are close to their 52 week low like L & t and maruti. These stocks don't seem to be good at least for a bounce if they break 52 week lows. Nifty started its up move from 5010-5030 range and this becomes a crucial range in the coming days.There would be multiple support levels at 4950-5000 range thus any break from here could lead to a bounce and thus instead of playing with futures it is better to trade with puts on any downside. If banks are not breaking 52 week low from here there is nothing much to sell in those stocks. Stocks like JSW steel remained strong through out the day but broke crucial support levels at the end of the day. Panic selling is evident in all the large cap stocks and remember the most beaten down sectors are banks and infra, thus the bounce backs would be more severe in these stocks. Upside rallies would be met with selling anywhere close to 5150-5170. If it spends some time or consolidate at these levels it would be a decent pull back. As of now below 5040 - 5050 levels another cut is possible to 4970-5000 , but try to get some cheaper but stronger stocks to play the bounce back. On the upside 5130-5170 would be a hurdle to pass, as that is the area where lot of new shorts got created. Dollar and dollar index are both moving against nifty and that still remains as a major threat for any up move. Dollar index is already done with its base formation and on the way up.

Nifty update for 15th November 2011

It closed at the lower part of the range ie; at 5150. Banking did the damage today too and lets wait and watch whether banking stocks would hold their 52 week lows especially ICICI bank and SBI.Below 5150-5140 a 100 points cut could be seen with some bounce backs.The bullish set up for investors are still on but for trading purpose Nifty is not suitable for a long.The turnover data shows that we are due for a bounce so play carefully on short positions. As i said in my earlier posts a valid pull back can be expected only from Nov 21-26 but don't get stuck in the small bounce backs.Volumes were low compared to other trading days and dollar is still a worry for bulls.As a reasonable target though 5030-40 would be the levels, it is advisable to square off the shorts close to 5100 levels. On the upside 5220-5230 would remain as a major hurdle.

Nifty weekly update 14th -18th November 2011

Nifty held the immediate support levels of 5150-5170 but as it broke 5200 levels, as of now we could confirm the top of November 8.As i said two major stocks Reliance and Axis bank were trading at crucial support levels , Reliance bounced back sharply from those levels but Axis bank got hammered below those levels. A small bounce looks quite possible but on the upside 5270-5300 would be the range to watch out for. On the downside below the important Fibonacci number of 5150 the next number would be 5030-54040 levels. Nifty would be met with some selling pressure at 5270-5310 levels as fresh shorts could come in.Any rally should be used for selling and volatility data shows short positions are still there in the system.On Friday we could see Nifty trying to recover from day's low but at higher levels fresh short positions got created. If we have a look into the turnover data we could see both Thursday and Friday had huge volumes and it is evident that people are selling heavily especially banking stocks. On a bounce back banks could get the benefit as they are the most beaten down sector and fresh short positions would get created on the upside.
Option traders could keep 5140-5310 as the range and make use of the extra premium that is available due to highly volatile situation.

Nifty update for 11th November 2011

It seems like a crack ever where especially in large cap stocks.Hope at least a few people read my previous posts and acted accordingly. I had mentioned 3 important dates in my previous posts. November 8th (Cyclical anniversary of one year bear market), November 21st and 26th. The picture becomes more clear now, below 5200 it confirms the top of November 8th and any bounce back up to 5330 - 5350 would pull you back to 5200-5150 levels. As the world market shows it is almost clear that nifty would take out 5200 levels. (All the major dates are mentioned just after October 5th post under the heading "Important dates for a nifty trader").If Nifty breaks 5150-5170 levels that easily it would be going back to where it started ie;5030 levels . Eventually it would be justifying the trend line resistance of 5400+ levels and it would be a slow and painful journey back to 4700 levels. On the upside it is evident that till 5270 (lower part of our previous range)it was a profit booking session and below 5270 shorts got created. Thus on the upside 5270-5310 would be the place of major shorts and this area has to get covered for any valid up move.If it cracks below 5200 i expect a major bounce back only on November 21st - 26th. Minor bounce backs could happen but would be met with selling. There is no need to buy any dip below 5170-5200 as it would be illogical to buy a weak market, especially banks. The weakest of all would be banks and as long as there is a reason to go short one should be utilizing these opportunities.Stocks like Axis bank and Reliance are at major support levels and the structure could get worse any thing below these levels.For buyers let the dust settle down and take your time for a wise decision.

Nifty update for 09 Nov 2011

Nifty spent one more session with no gains and it gives you some signals about a big move coming in. Turnover data shows that retailers are no more interested in these range bound market buy small stocks are seeing lot of buying interest. As i said in my previous post SBI gave a second break out above 1990 and gave a decent rally. I would still be a seller on any rally and waiting to place my short positions as and when required. Implied volatility is still rising but at a marginal rate, it reveals some fresh shorts are in the system.People would still carry their long positions till 5200 is taken out on the downside.The out look o the market is slightly positive and 5400 + levels would act as stiff resistance levels.Though one does not have to short the market at current levels one should be exiting large cap stocks on rallies and include some small cap stocks as more upside is left with small caps than large caps.SBI is result awaiting stock now and it would direct the market movement at least in the shorter term.Institutional investors have not left Indian market as the turnover data shows they are still buyers in a range bound market. As of now consider 5200 as the base and trade the stocks and take out daily profits. Option writers would be getting good premium in the month of December by keeping a range of 5270 - 5410 as the range.

Nifty weekly update 8th November 2011 - 11th November 2011

Nifty is in a range bound and directionless mode and futures traders should exit by taking out daily profits. As i said in the previous post RIL, SBI and JSW steel gave a break out but SBI and Reliance could not sustain till the end but JSW steel gave its best. It doesn't look that weak on the charts but i would advice traders to take out some profit in large cap stocks like
SBI and L & T. SBI and l & t can do something good above 1990 and 1460 respectively. Even if one book profits at these levels too one can enter above the break out levels as these levels are so close. There is some profit booking happening in large cap stocks and that is very evident from the turnover data.Short covering and buying in smaller stocks help nifty to bounce back from lower levels. I would be selling my stocks on every rally and start placing shorts at 5400 + levels.People are still buying any dip in nifty and it would continue as long as 5200 holds. As a trader the short term bullish setup would not be there once 5180-5200 levels are taken out. An investor in smaller stocks don't have to worry about the volatility in the market and it is usual after reaching a top .As of now nifty is holding the Fibonacci number 5330 and can move to 5420 levels, but that rally should not be bought buy investors. For traders it would be good to buy near out of the money calls than futures as it is close to a top. As of now 5200 - 5420 would remain as the weekly range. Nifty is in a longer time cycle this time and i expect the major consolidation or downward move to start only by Nov 21 - 26 - 2011

Nifty update for 4th November 2011

It broke 5250 levels and got support near 5220 levels.The volume data shows that it was due to short covering and buying emerged is some stocks like RIL and SBI. One important thing that happened in today's trade would be the break out that happened in SBI, RIL and JSW steel on the upside. If these stocks could lead nifty on the front some more upside would be left in Nifty before fresh short positions coming up. If we look at the chart of Nifty futures it is evident that short positions started accumulating from 5320-5330 zones and a move above these levels would cover all the short positions at that level. On the upside i would like to take a long position only up to 5420 levels. As i said yesterday instead of playing nifty futures it would be better to go for near out of the money calls as volatility is in your favor and take out your profits daily.
It could most probably attempt for one more top and in a larger time frame it seems to be topping out around 5420-5470 levels . It is advisable to reduce your equity long positions at these levels.

Nifty update for 03 November 2011

Nifty held the lower range of 5250 and bounce back to 5330 levels as people bought on dips. Though long build up could not be seen as compared to other range bound sessions retail investors are not ready to square off their long positions. As per the futures data we could see lot of profit booking is happening at higher levels and shorts are getting accumulated for the past few days and we could see an up move in market volatility.It is just holding on to 5250 levels and getting good support in this zone. IT stocks are cause some major worry at least in the short term as all of them have rallied so much and closed at day's low.All IT stocks are at major support zones and if they breach these levels we could see some correction for a short term. On a longer term view if the market is going to go up this sector would lead the rally.Indian markets looks like they don't care care about the global downturn and that gives a good amount of confidence to investors but it is not so good to test the support zone many times. As the volumes are getting lower there is no rush for buying nifty at 5250 levels this time.I prefer to buy an out of the money call near the support zones than adding futures.As long as the range of 5250-5470 it remains good for equity buyers. If it breaks on the downside i expect a minor correction to 5180-5200 levels.We are near to getting into one year cycle of bear market on Nov 5-8 2011 November it would have a significant impact on the trend of Nifty

Nifty update for 2nd November 2011

Nifty held our range of 5250-5470 ..but it seems to be all set to break 5250 on the lower side ...
Though it came back sharply it is hard to believe that all the short positions got covered.India VIX is on a rise , dollar again climbing 49.5 levels and the volumes in nifty futures were not convincing for a buy.It is obvious that after a good rally people would join as buyers on dip and that happened today too.Positive factors would be turnover data and it shows people are not squaring off their long positions and adding more on dips. Nifty's cost of carry has reached its peak and would be worrisome at least for the shorter term. 5250 levels should be watched carefully and below that nifty can go back to where it started ie; 5200 levels.As long as the range of 5250-5470 holds all is well for Nifty on the long side!!

Nifty update for 1st November 2011

Nifty ended on a slightly negative note after a range bound session. I would still like to maintain a range of 5250-5470 and it would be a buy on dips market. On the higher range i would be a buyer above 5410 levels and on the lower side close to 5250 levels. Volatility was on a rise through out the day and it shows some fresh short positions appeared on highs. It seems to be the short positions created by retail investors as it did not have any impact US dollar vs rupee trading. Stocks have seen plenty of long build up and it suggests buying on dips will continue til 5470 is achieved.Though profit booking is evident in Nifty futures i expect the market to gain some volume and push it on the upside after taking a dip below 5300 levels. Many could possibly join as fresh buyers as they did not get an opportunity to participate in the recent rally. India VIX shows that if it comes down it would be with increase in volatility and option writers should make use of the extra premium available in nifty options. Let the range be 5250-5470 and lets wait for the reactions from the market. I expect nifty to be in a range bound - longer side till the last week of November as some important time cycles are due by that time.

Nifty weekly update - 31st October - 4 November 2011

Finally it broke all the resistance levels and rallied to 5350 + levels . The up move was good , supported by all the major sectors and the turnover data proves that. It is hard to believe that market would find a top soon and it seems to be riding the rally to 5500 + levels. Anyway for the time being as a trader 5470 is the next levels i'm looking at. It is interesting to see whether nifty would take another period of consolidation to move to that level.There would be buyers on every dip in the market till 5250 levels. On the upside i think 5470-5500 level would be a decent level to think for and there is only a little chance for nifty to move above that with out a consolidation period.Ending of rate hike cycle would be good for rate sensitive sectors and some important time pivots are coming around November 21,26. Beyond 5500 nifty looks too much stretched without a consolidation phase . As of now we should respect the consolidation period nifty had for the past two months and there would be several up moves to prove that the consolidation period was good enough for a fresh up move. Even if nifty makes a corrective move to 5200-5100 levels it would give as a higher bottom formation if we join it with the lows of 4700 thus it proves to be a bullish setup at least for the shorter term. We had 5330-5350 levels above 5180 and now extend it to 5470 levels as a reasonable target. Turnover data shows that apart from fresh buying lot of profit booking could be seen in many stocks and lets be a buyer at dips than on the upside. Any corrective move or consolidation phase will make nifty in favor of bulls because they did not get much opportunity to buy as it was a huge gap up opening. New range for nifty would be 5250 - 5470 for the coming week.Let nifty consolidate and takes its own time for a fresh move on the up or downside,but in equity market start buying on dips

Nifty update for 28th October

It was a good expiry in favor of bulls and it crossed an important resistance level at 5180. Though it did not give a closing above 5200 levels it seems like all set for further upmove till 5330 levels. PSU banking space still remains a worry and nifty could sustain the uptrend and above 5200 levels on Nifty it could be extended to 5330 levels. It is difficult for this up move to sustain without banking sector above certain levels. Apart from banking all the stocks were very supportive in today's upmove. Equity market turn over shows that buying emerged at all dips and many mid cap stocks including YES bank (one of the best banks in India with an incredible business model) supported the rally. India VIX has come down by 11% and option buyers have an upper hand than writers as option premiums have become cheaper. As we are close to the cycle anniversary of a bear market on the first week of November it is very important to move ahead of 5200 to prove that the long term bear market is close to bottoming out at least in the short term. A closing above 5200 can drive Nifty to 5330 and if it happens the new range would be 5080 - 5350 . Happy Diwali!!!

Nifty update for 25th October 2011

Atleast for an hour nifty was so tempted to touch 5160+levels but it could not and finally banking sector did the damage. Options data show you volatility has cooled off and it shows that traders are still holding on to their previous shorts and not many fresh positions are there in the system. Lot of shares showed good buying interest especially banking stocks in the initial part of trading. Still 5180 is considered to be a fearful level to worry and the longer the consolidation takes place the more biased would be on the long side. The upmove above these levels would trigger a short covering rally and fresh buying as Nifty and bank nifty are moving in the same direction. Indices are waiting for european events and credit policy and if it encourages the market it could see more upside . On the downside let 5030 be the range. Till this range of 5030-5180 breaks only option writers would be able to benefit. As the turnover data shows people are least interested in the market as they could not take a position on the long side as they are met with huge amount of selling from 5160 levels.

Nifty update for 24th October

Nifty tried to cross 5150 levels once again but it failed and ended at 5060 levels. It looks like a directionless market and equity market turnover reveals you that though there were lot of short positions got added on Thursday and Friday retailers who were the major participants in the rally from 4700 - 5150 are not ready to exit their buying positions and it is very evident that it is from an investment point of view. Volumes in nifty futures were good and supported by increase in open interest and increase in volatility along with decrease in cost of carry. The current data shows that this negative bias is not because of profit booking and on every rise fresh shorts are coming up. It held 5030-5040 once more and it would be interesting to watch how long would it hold this range and it shows the range bound market is preparing for something big and it is getting prepared for that. As the old saying in the street tells you 'never short a dull market' and let it break the range of 5030 and if it does that i expect a smaller correction to 4950-4900. There would be some positive surprise in the market as the U S markets held high but there should be some local buy triggers and good cash market volume for nifty to go beyond 5180-5200 levels.One major hope on the upside would be dollar index breaking to lows and it would be a positive sign for the market.

Nifty update for 21st October 2011

It was again a buy on dips market but it was not like the same when you got support at 5000 levels !!!When nifty covered its short positions dollar made a high close to 48.90 and India VIX rose by 6%I would not be a buyer at the next dip towards 5030 levels and i would be a seller below those levels. Banking stocks are rallying just before their earnings report and i seriously doubt whether Nifty has the strength to cross 5180 levels. As a buyer i wont be a buyer at the dips for the third time, else i would wait for 5180-5200 to be taken out on the upside and be on the long side.Time cycle wise it formed a crucial level at 5030 and as long as it holds it is well and good and below that i expect a deeper cut towards 4900 levels. Institutional participants remained as net sellers and lets wait for the upside hurdle to be taken out for a change in the trend on the upside. It was almost sure that some of the shorts got covered and after noon rally was due to good movement in the banking shares. VIX data shows still there are shorts in the system and it would possibly get covered only above 5180 levels and 5030-5000 levels are important levels to watch out for on the downside.

Nifty update for 20th October 2011

It was a smart rally from yesterday's lows. It held 5120 levels for sometime and finally the shorts of those levels were also got covered and gave an intraday buy till 5150. Still 5180-5200 remains a hurdle and if nifty gives a closing above these levels then only it could be a trend changing move on the upside at least in the medium term. All the major large cap stocks participated in the rally , India VIX came down by 7%, volumes in nifty futures were good enough and all these things are good signs for traders who are bullish. As i said in my earlier posts i would be still be a buyer on dips and on the upside only above 5180 - 5200 levels. Till today's closing all is well for Nifty on the upside and the only hurdle left is the price resistance at 5180-5200 levels. Option traders could concentrate more on buying options now as the volatility has come down drastically and option prices would be cheaper.Institutional data in the cash market is still surprising as both FII's and DII's are remaining as net sellers. We are getting closer to the end of one bear market cycle on the first week of November and that would be one important week to watch out for the shorter term 2Oth October would be an important day as a trend deciding day (after 12th of October 20th Oct would decide an important change in the short term trend)

Nifty update for 19th October 2011

As we saw Nifty had a sharp fall but held our range of 5000 on the downside.It was a huge gap down opening and nifty would face pressure on the upside till 5120 ..and as of now it would act as a cap on the upside range.During the final trading hours lots of shorts got covered and some large caps saw buying interest. If it is a huge rally like this from 4700- 5160 it is common that those who could not participate in the previous rally would join the market on any dip as a buyer. On the downside key levels to watch are 4950-70 range as that is the range from we saw buying interest in the market and we need to see if people are ready to add more positions on the long side at 4970 or leave the market at these levels.Trading volume were much lower and we need to wait for calling it as a market to go for single side trading positions.It seems to be a direction less market because of lack of buy or sell triggers and option writers still have the edge till a range break out happens.Option traders could maintain a broader range of 5000-5125 ...Only factor that confirms a trend on the downside is rising of dollar against rupee and the volumes in nifty tell you the story that shorts got covered around 5020 levels and short positions can get created at two points , below 5000 and at 5120 levels.Even if we can see some kind of short covering one cannot expect that range of 5120 to be taken out that easily and go for a trade on the long side . In a nut shell lets wait the range break out now at 5000 - 5120 levels.