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!!