Nifty weekly prediction - 3rd October - 7th October

Scenario One : Nifty breaks down below 4900
3rd October - If Nifty breaks down below 4900 it has to happen on Monday and it could get support at 4820-4860 levels.
4th & 5th of October - It could be another day of fall and Nifty would retest the previous low zone of 4720-4750
6th - Trading holiday
7th - This would be a crucial date as we should see whether nifty retest the low of 4720 and bounce back or crack to 4600 levels.
Any bounce back from 4800 levels would face a resistance zone of 4950-70 levels

Scenario Two: Nifty forms a bottom at 4900 and move upwards
3rd October: it would try to cross 4970 and 5030 would remain as a hurdle
4 & 5 th - If it could breach 5030 levels Nifty could move towards 5110 levels.
7th would be a range bound session , a decision making day for nifty whether to cross upside levels.

It is a market that favors options writers because of two reasons.
As the volatility levels are at a very higher range they wont leave the extra premium that is available and as the range is clearly mentioned as 4900 - 5050 they could successfully write out of the money options.In a nut shell the shorter range range remains at 4900 - 5030 and a larger range remains at 4600 - 5100. The 500 point range would tell you the expected volatility in the market. Any bounce back of 100 points during 4700-4800 range would postpone the chance of 4600 levels to another week. The best thing to do is once the shorter range is broken react to those conditions and it could most probably give a an 80-100 points move

Disclaimer: The Calls made herein are for informational purpose and cannot be considered as recommendations to any person to buy or sell any securities. The above calls are based on the theory of technical analysis. The author does not accept any responsibility for the use of this column. Readers of this column those who buy or sell securities based on the information in this column are solely responsible for their actions

Nifty update for 3-October -2011

As of now Nifty is holding 4900 levels and there by establishing it as a major support zone. Apart from the short positions we could see that people were trying to square off their buying positions they have initiated at 4900 levels. If you see some of the large cap stocks like SBI and AXIS bank it is evident that they are coming to test their major lows once more which is very common in forming a base in a bear market . If nifty breaks 4900 there is a possibility of going back to 4700 - 4750 levels. The major reason could be , if we analyze the buying positions lot of buying has been initiated at 4900 levels, so the selling pressure would also be there below 4900 levels. Nifty held our range on the upside at 5030 levels .

(Followed by weekly prediction for next week)

Nifty update for 30th September 2011

Nifty held our support level of 4900 and gave a good rally that too on an expiry. As i mentioned in the previous post though 5000 call writers tried to resist, Nifty could surpass them. It would tell as something about the amount of short positions people had and short covering triggered that upmove. Today's move was with good volume and it could be very much possible that people just started buying the next month futures.It is still a range bound market and today also it held the lower part of our range of 5030-5060 and it would be interesting to watch out that range would be taken out on the upside.If it takes out that level nifty could rally a bit more and lets wait for our dates of 3-4 of October whether it could form a top.5030 levels would be important as it would be closer to an important Fibonacci number.If you observe these two days there is a kind of positive up move in terms of accumulation in Nifty futures. It would be just be a warning signal for the bears and watch out 4900 as an important level.

Dollar index crossing 79 levels would be a major threat for Nifty to go up.The Dollar index chart shows a cooling off period before the next up move .

Nifty update for 29th September 2011

Nifty held our upper range of 5000 -5030 ...and it could not touch 5000 levels in the opening. Today's session was considered to be a profit booking session.
Advance /decline ratio was in favor of bears and it indicates people are exiting their positions in every rally and lot of shorts have been created in the system again.Though dollar came all the way down stocks were not ready to react in favor of that. It indicates yesterdays rally was fully supported by retailers and the turnover reveals that. Whenever it comes down Nifty is getting supported by a good number of buyers and shorts are getting covered soon. 4900 is a key level to watch out for and lets see some more pain below 4900 . October 3-4 are crucial dates as the market could top out. As tomorrow is the expiry day and closing suggests there wont much of an upside and in the opening though it may go up it would be met with huge amount of writing in 5000 Call.

Nifty Update for 28th September

Nifty had a decent rally from 4840 levels and ended close to days high 27th September confirmed the bottom of at 4750 (read previous posts). It confirmed the bottom of 4750 and was trading with good volume.Institutional buyers sold around 3000cr and huge amount of cash would be left over with them.All the shorts got covered around 4930 levels and all the activity above 4930 could be seen as buying activity from retail investors. As we could see the total equity market turnover was lesser compared to previous days and the rally was due primarily due to short covering. The interesting point is whether Nifty would be able to cross 5030 - 5060 (upside cap that i mentioned in my previous posts)levels with good volumes. Next important dates would be 3 rd and 4th of October where the market makes its top. It would be interesting to watch whether Nifty would be able to cross 5030-5060 levels or people who have already covered their short positions would come up with fresh shorts. The closing shows all is well for Nifty traders who are bullish and the rally could extend upto 5030 levels.

Another positive factor for Nifty would be Dollar kind of reached close to its high
and is cooling off at 49.50 levels.India VIX has come down by about 10% and bulls really had an upper hand in today's move

Nifty update for 27th September 2011

Nifty came down closer to our short term target to 4750 and gave a bounce back till 4870+It was a smart rally from the days low and it was expected from a major low like 4700-4750 zone. 27-28 September would be crucial days as it form a bottom and rally further to 4970 - 5000 zone. If Nifty goes down and take out the low of 4720 i dont expect Nifty to bounce back further to 5000 levels. Below 4700 (closing basis) it would be a severe cut to 4300-4400 levels. It is better to be bearish only below 4700 and not before that. It was always worth playing that bounce from 4750 for a 100 points and we could catch it as we covered our shorts close to 4750 (read previous post). Anyway the upside cap seems to be at 5000 -5050 levels till the end of this month (maximum range on the upside)

Scenario One: If Nifty forms a bottom here at 4820

26th and 27 th ..It would be a range bound session with a maximum bounce back up to
4950 levels and attempt 5000-5050 maximum on the upside till 28 th of September.
So the maximum Range on the upside is capped at 5000 - 5050 levels with selling expected to resume from those levels.

Scenario Two : Nifty breaks Friday's low of 4820.

It would first retest 4750-4700 levels on 26-27 of September and if it bounce backs from those levels 4800-4850 seem to be a major resistance.A free fall is expected below 4800 levels and Nifty should rest at 4600 before any bounce .
Conclusion:In a downward trend like this it is better to know the upside cap and be with the majority population. So as per the time cycle analysis Nifty's range for the week would be 5000-5050 on the upside. It is advisable to square off all the short positions close to 4750 levels and resume shorts only below 4700

Nifty weekly levels - 26 th September - 30th September

As per the longer to medium term trend Nifty has not come out of the bearish trend and the trend reversal would happen only if Nifty could cross 5200 levels on the upside.On the shorter term Nifty should test 4700 - 4750 levels on the downside and nee to confirm whether it could hold these major bottom levels.For the next week we can simulate two situations.

1. If Nifty forms at bottom at Friday's low of 4820 and bounce back .

Nifty Update for 26th September 2011

Nifty could not hold 4900 levels and closed below that crucial support level.It tried to bounce back above 4900 but as i mentioned in yesterday's post every small bounce was met with huge amount of selling. It was very much visible that cash segment witnessed huge amount of liquidation at higher levels. Biggies like TATA motors and L&T slipped and we could infer that people just want to get out of the market and they are saving some amount of cash for bottom fishing. From the FII data it is evident they are looking at much lower levels to enter and 1300 cr selling in equity segment reveals that. As per time cycle 27-28 th would be the time for an interim bounce or bottom formation.If Nifty could successfully retest 4700 levels and come back it would be a good thing for the market , but the current scenario looks much dangerous.India VIX has risen to new highs and it reveals uncertainty prevails at higher levels and short build up on every rise.
Dollar is not in a mood to rest at 49 levels and all these factors turn out to be negative for the market.

Nifty update for 23 rd September

It was a crucial day and as i mentioned yesterday 21st September was an important day to watch out for as per time cycle. The next important date is 27-28 September for an interim bottom formation.I did mention the levels of 5040-5000 levels and
as i mentioned in the first post(20th September 2011)4900 is the key level to watch.Today's fall seem to be a major one and 4900 doesn't seem to hold if it comes below 4900 it could first retest the recent low of 4700. There is no need to create any long positions in Nifty and every rally would be considered as a sell signal.
Dollar has crossed 49.50 levels and India VIX has risen by 22%. It indicates lot of short positions prevailing in the market and FII's are pulling out their money. Stocks would give some time to bottom out and lets wait and watch Nifty on the downside and all the bounce backs would be a sell signal

Nifty update for 22nd September 2011

Nifty gave a range bound session and added one more resistance at 5170 levels. The volumes were not bad and it indicates buying on dips scenario in the market. Two banking stocks that we mentioned yesterday ,SBI and ICICI bank gave a decent up move and traders could profit from this move. One major worry for Nifty would be dollar trading above 48. Implied volatility has increased and it shows short positions building up at higher levels .Once Nifty crosses 5180-5200 levels these shorts would get covered lot of long positions would be added and the move would be a much sharper one.

As per time study September 21 was an important date to decide a crucial level for the market.On the downside if Nifty comes down it should touch 5040 - 5000 levels on 22 or 23 of September. As i mentioned in the previous post no need to create any long positions in Nifty at these levels . Let it cross 5200 levels and stay long for a 100 points move. If nifty is not able to cross 5180 levels this week it would most probably touch 5000 levels on 27th or 28th of this month.

Nifty update for 21 - September 2011

As stated in the previous post 20th September is the day for bottom formation.Nifty futures formed a bottom at 5030 levels and gave a sharp up move. Now we are waiting for a top around 5200 - 5250 range and every dip was a buying opportunity till now.(Stated in yesterdays post)there are multiple resistance points at 5200-5220 levels. It is better to book some profits in Nifty around 5200 and go long only above 5220 levels (closing basis). No need to book profits in banking stocks as banking gives you the first indication of a bull market structure. Banking stocks like SBI, ICICI had a smart run by forming double bottoms and looks good on the charts.Investors should accumulate some mid cap banking stocks like Canara bank , Union bank of India in smaller quantities as they look cheaper at current levels.

I would stick to expiry at 5200 till Nifty gives a closing above 5220-30 levels.Next important dates to watch out for are 27 and 28 th of September.

Disclaimer:The opinions made herein are for informational purpose and are not recommendations to any person to buy or sell any securities. The opinions are based on the theory of technical analysis. The author does not accept any liability for the use of this column. Readers of this column those who buy or sell securities based on the information in this column are solely responsible for their actions.

Nifty update - 20th September 2011

Nifty formed an interim bottom at 4720 and rose to 5170 levels. It seems to be a range bound market in the following week. As long as Nifty futures holds 4900 one can buy on dips. As per time cycle Nifty should form a bottom around 20-23 rd of September and form a top during 27-29 th of September and Nifty could rally maximum up to 5200-5250 by the end of September.On the downside if Nifty breaches 4900 before 29-30th of September there is a higher probability of Nifty testing the bottom of 4700 and could touch 4650-4600 levels. In a nutshell as per time cycle and price and volume data it suggests that if nifty could not hold 4900 it could slip further and a recovery to 5200 seems to take some more time.Nifty could probably expire maximum at 5200 or below in September series.Watch out for the daily forecast of Nifty everyday

Disclaimer:The opinions made herein are for informational purpose and are not recommendations to any person to buy or sell any securities. The opinions are based on the theory of technical analysis. The author does not accept any liability for the use of this column. Readers of this column those who buy or sell securities based on the information in this column are solely responsible for their actions.