Nifty update for 19-Dec-2012

Nifty held 5850 levels once more and it is expected to trade till 6150 levels with a reversal below the mentioned support zone. Volatility index gave a negative closing with an increase in the premium and it is indicating that long positions have been accumulated in todays trade and 5850 levels can be treated as a decent support zone in the short term. Metal stocks like JSW steel and TATA steel gave a fresh break out and it could help nifty to break out on the upside and we can still remain bullish till the end of December. Turnover data was good and is in favor over bullish counters , especially in metal counters. Among the banking stocks SBI broke from the consolidation phase and it is forming an inverted H&S with a target around 2750-2800 levels on the upside. Thus lets wait for nifty to break out from 5950-70 range to have a decent upside move before heading lower in January.

Nifty update for 17-Dec-2012

Nifty held 5850 and gave a quick bounce to 5900+ levels and some major large cap names also showed an upmove due to short covering. In the coming weeks nifty is yet to prove whether it can still hold 5850 levels or some more downside is left. If we look at the chart structure of major stocks there are no signs of major correction but clearly a sense of range bound market is evident. Some promising names from the stocks front would be SBI and HCL tech and the banking biggie is close to giving a break out. 2350-60 remains a stiff resistance zone for SBI and it could fly-200-250 points on the upside with a fresh break out. HCL tech is another stock which is holding the support zone for quite a few days and unlike SBI the stock is not a break out trade and i would be a buyer above the previous high.Another interesting stock is TATA steel which is also ready for a break out after a long consolidation.Above 400-405 it can give 10% return within a short span of time. Volatility data is showing some buying happening at lower levels and traders are very much optimistic in December series. Dec 20-21 would be crucial trend deciding days and it could give a major move on these days and till then the index can be range bound , thus it would be wise for an index trader to be active on these days. 6000 levels would still remain as a psychological level to cross and options writers would try their best to hold these levels. 

Nifty update for 13-Dec-2012

Nifty is facing stiff resistance in 5950-6000 region and it might head lower till 5800 in the near term before moving to higher targets. Bank nifty is giving a leading signal by reaching the trend line resistance and PSU banking space might see some correction in the days to come. The premium is still on the higher side showing the over optimistic attitude from the traders and these kind of situations should be handled with hedged positions. 5800 put Dec is trading at Rs.20 and that is one of the cheapest options available. As we have two more weeks to go for the expiry it can be a decent bet for this minor correction.Turnover data is still strong and we could not see any short build up till now and the medium term picture still look good with a bullish bias.Metal sector is yet to give a decent performance and that is the sector one should bet on if there is an extension of this rally. Thus i would be waiting for a dip below 5900 levels in nifty futures to be a buyer in this dip. It is not wise to build long positions in nifty and 5900 + levels and it is good to have a protective put with the long positions.

Nifty update for 10-Dec-2012

Nifty futures held 5970 zone and it is expected to see some profit booking in the coming days. We could see a negative close for volatility index and the premium still remained 35-40 points, thus it could be read only as a profit booking session. Usually when nifty is close to a resistance zone as per the derivatives data and the premium is close to 35 points one needs to be cautious.If we see the chart of bank nifty it has already reached the trend line resistance before nifty.Thus it can lead to a correction in the near term as we first track the respective index before going stock specific. At 5950-6000 it can act as a psychological level than a technical level and it is wise to take some cash from the market and wait for a good opportunity to get in. If we check the past data December has always been good for equity markets and we could see allocation of money from precious metals to stocks , that is seen as a good sign for the markets going forward. It is wise to book some long positions in banking stocks an we could wait for a better levels in banking space to re enter. The status is still 'buy on dips' and 5750 -5800 could act as a decent support zone. I would be a buyer in 6000 call feb options if there is any dip and that would be a much cheaper one than going for futures.Two stocks i would remain bullish would be TATA motors and Allahabad bank and one could use any dip to create long positions in these stocks. Among the metal stocks JSW steel is on the verge of a break out above the previous high of 780 zone and TATA steel would be a decent bet close to 380-385 levels. The strategy would be to wait for a correction to create fresh positions and the target of 6150 is still intact as the structure still looks strong

Nifty update for 07-Nov-2012

Nifty got decent support at lower levels and bounced back close to 6000 levels and is expected to trade till 6150 in the short term. As per the technical charts the target is 6150 but derivatives data is showing lot of options build up is happening in 6000 call options. Thus the market can take a pause close to 6000-6050 levels and short term traders can book their long positions close to these levels. Turnover data is still strong and institutional traders are all set to trap retail investors at the higher end of the channel. Thus concentrate on a few high beta stocks and keep the volumes in your control. Traders usually have the habit of getting excited when the market is  showing a strong momentum and once would have seen everybody has started talking about talking about a bull market when it reached 5900. One sector i'm hopeful for further rally is the metal sector which has a lot of potential on the upside especially the ones like Jindal steel, TATA steel and Hindalco. One should try to get into these stocks when nifty gives a small correction and banks would not be the choice. As i had already mentioned many times in the blog a bull market starts with the huge momentum in auto sector, banks would out perform in the accumulation phase and metals would outperform in the last leg of bull market. The current bull market would be much bigger as still have interest rate cut in the coming year but one should be able to identify the right sector to be in at each leg of the market.

Nifty update for 06-Dec-2012

Nifty is continuing its uptrend and any dip close to 5850 should be used as a buying opportunity and the target of 6150 is still.Volatility data shows some uptick in ahead of the FDI drama but the turnover data is still good and we could see good buying interest from institutional buyers.Among the stocks TATA motors and Gujarat fluoro are looking interesting and i am expecting a combined return of 18-20% from these two. 290 call of TATA motors is looking attractive at Rs. 4 and can double in the month of December and the cost is affordable. Gujarat fluoro is about give a break out from a descending triangle on the upside. Keeping a stop of 330 i am expecting the stock to touch 380-385 levels in the near term. Allahabad bank is another interesting stock which has some upside potential.I would be a buyer in this counter anywhere between 150-155 with a stop below 145 for a near term target of 175-180 

Nifty update for 05-Dec-2012

Nifty held the support zone and it is expected to trade till 6150 in the medium term with a support close to 5800-5820 level.The current FDI drama can have an impact in the medium term but as long as the fund flows continue fundamentals would take a back seat. One important development happening in the global markets is Dollar index is again going to test the previous support zone of 78.5 which has proven to be really strong till now and U S markets would be testing the previous highs again. Thus the hypothesis could be dollar index testing the support zone and bouncing back. Though a bigger head shoulder pattern is developing in the Dollar index it has to break below the mentioned support zone.Thus the bigger picture for next year would be clear only depending upon the move in dollar index too. Among the stocks SIEMENS, Dishman pharma, MOIL and DCB are expected to move up in the month of December and Maruti is giving signs of topping out at least in the short term.Volatility data is showing some long accumulation at lower levels and midcap space is performing really well ahead of any other sector.Turnover data was good too and it is giving the signals of retail participation too at these levels which is good sign and i expect the market to make a temporary top close to the first week of January 2013. 

Nifty weekly update for 3-7 Dec 2012

Nifty held the support zone and it is expected to trade till 6150 with a reversal below 5730-5750 zone and is expected to top out close to the first week of January 2013. If we have a look at the hourly chart cash flow is getting extended and it can result in a profit booking session in the coming week. The turnover data was strongly in favor of the bulls and should be considered as good till gives a lower turnover data.The premium in nifty futures got reduced by a few points and indicates some short build up at higher levels but the positive momentum is expected to continue and any dip close to the support zone should be treated as a buying opportunity. We could see an uptick in metal stocks like TATA steel, Jindals and Sail and would be giving the signals of a bull market and the patterns are suggesting that these stocks would give a much bigger upmove than banking names in the near term.Any profit booking session in the index would be a good opportunity to get into stocks like Hindalco , IRB infra and  TATA steel as the out performance is yet to come from these stocks. Dollar/INR has broken the upward slopping channel and started making lower lows and is expected to trade till 53.70 levels in the short term. If we see the cyclical charts any major upmove/downward move would last for 6 months from January to June and there would be temporary  move on the opposite side.Thus i am optimistic only till 6150 and expecting nifty to completed the top formation close to first week of Jan (4-5th of Jan). Some of the cement stocks like ACC and from the automobile space Maruti are expected to under perform the market in the near term(below the previous low). Stocks like Vijaya bank, Fianancial tech, Orbit corp, DLF are expected to outperform nifty in the short term.

Nifty update for 30-Nov-2012

Nifty held the support zone of 5660 and made a quick move (a bit surprising though) to 5800+ levels.I might have missed a 50-60 points upmove above 5760-70 levels and should accept that it was an opportunity loss. The move in the final hours were quite convincing as all the major stocks could participate in the rally except some metal stocks. Institutional traders are pumping in money and the turnover data is showing that. Thus there is no need to create any short positions in the market and the major development that has happened is bank nifty leading nifty from the front. As mentioned Dollar/Inr got well resisted at 56 zone and that would act as a stiff resistance in the near term. Volatility was on the rise as this could be read as building of positions for next season and not short positions. Huge build can be see in 6000 strike and that could be the ceiling for nifty as of now as per the options data. Technical targets are close to 5940 - 50 levels and any dip close to 5730 levels would attract lot of buying interest. Among the stocks i think it is time increase the beta of the portfolio for Santa rally in December. HDIL and Canra bank would be top picks as both of them have similar chart pattern and i am expecting a return of 7-8% return from both these stocks.

Nifty update for 29-Nov-2012

Nifty broke 5660 on the upside and moved towards 5730 zone and we got a good intra day trading opportunity above the reversal point.The advance/decline ratio was good and the turnover data too was good but the large cap stocks were lacking the momentum. We are at 61.8% retracement level of the fall from 5820 levels and 5730-5750 are another crucial points from where it can go back to 5660 levels. Thus the previous resistance zone of 5650-60 zone would act as the support in the near term as lot of buyers came in after that. If we analyse the time cycle of 2010 and 2012 there are couple of similar happenings. It formed a top around 7-8 of Nov 2010, came down and started moving up from 26th of November and started falling after December. In 2012 too nifty is following the same time cycle and we could see 20-21 Dec and 4-5 Jan as crucial days.Among the stocks Hindalco is about to break out from a bullish flag formation and it would be trade on the long side above the previous high with a stop below 3-4 points.

Nifty update for 27-Nov-2012

Nifty held the resistance zone and one should consider the reversal only above 5660 zone and till the trend is negative and there are no signs of further strength as it was really evident from the way USD/INR was performing. As mentioned in the previous post 5600 call again made a high just above 60 and it is giving enough time for options writers to sell the call at 60 levels and thus 5660 remains a crucial resistance as per the technical charts and derivatives data. The major reason for the dull movement is the lagging metal index and we could see stocks like TATA steel, Jindal and JSW are almost dead, once the momentum starts picking up in these stocks nifty could inch up to 6000 levels and i expect that to happen around 20th of December or 4-5 th of Jan 2013. Traders are so optimistic that they are not allowing the market to go in a complete sell mode and that is acting as a cushion for all long positions. If nifty is able to cross 5660 that can probably be a whipsaw as it is ahead of the expiry season. Thus we could definitely have trading opportunities in banking names and wipro.Bank of India and Biocon are the best ones on the long side (above the previous highs) if we are able to cross the resistance level.One important development that has happened in the inter market co relation would be Dollar/INR hitting new highs and moving close to the tough resistance zone of 56 from where it actually started falling. Thus a lot of selling can emerge close to 56 zone and that can be helpful for nifty to stay in a range for some more time. There is no doubt that dollar index and nifty are in an uptrend and there is no way that both of them can resume the uptrend at the same time , one has to slow down and that is the way it works.

Nifty update for 26-Nov-2012

Nifty continues to hold the 5600 levels and it is expected to face stiff resistance close to 5650-5660 zone. It had been quite a good week for options writers as they could get around 70-80 points if we combine 5600 call and put.On the upside there was lot of call writing has happened in 5600 call close to 65-70 rate and this would be a crucial level to watch for. In a nutshell even if nifty crosses the upside hurdle it could most probably a whipsaw if the rates of this call is failing to surpass the previous highs and the simple interpretation would be the smarter traders are writing the options at higher levels. In any upmove it is better to avoid nifty and concentrate on stocks if you are a nifty futures trader. The weakness in nifty is still evident and i expect nifty to form a five wave decline to 5300 by December and we could see the weakness in largecap names. Poor turnover data is arresting some the downward momentum and helping the market to be range bound ahead of November expiry and options traders would not be much happy to be a buyer in options in the expiry week. 5650-5660 levels are crucial as we have the near term resistance placed over there and the convergence of some important moving averages.

Among the stocks there could be a trading opportunity in 3 namely Wipro,Motherson Sumi and Auropharma. Wipro is all set to break above the highs to 400 levels and it needs some support from the nifty too which is not gettting as of now and December 400 call would be the cheapest investment for this. Motherson Sumi is at a new high and technically new highs have to be bought. Auropharma is in a sell mode and it is a short sell below the previous low

Nifty update for 23-November-2012

Nifty had a range bound session extending the bounce back to 5650 levels. The upper levels in nifty seems to be capped at these levels and we could see some sell off happening at higher levels and it is clearly indicating that if anyone wants to be a seller in this market it has to be from the top and break down trades can be a trap. Turnover data was poor and short covering in stock futures triggered the upmove. One stock that is clearly giving an upside momentum would be WIPRO and it is showing the signs of a bullish break out from a downward slopping channel to 400 levels soon. Let it break out from the previous high and December 400 call would be available at Rs.3-4 and i would like to go long here in this counter. On the sell side ICICI bank is getting resisted at some major moving averages and it is expected to trade lower in the coming days.Volatility data is showing a marginal increase in the premium with a negative closing for the volatility index indicating some long positions were created at lower levels but due to the tight range traders are playing safe by booking at higher levels.

Nifty update for 22-Nov-2012

Nifty gave a quick bounce after hitting the lower levels close to 5570. It is expected to give a range bound session between 5600-5650 before heading to 5300 levels. Before falling it broke from 5650 levels and lot of options built up could be seen at these levels. Though it gave a bounce we could see some major stocks like JSW steel, SBI and BHEL closed in the negative zone. In the hourly chart nifty broke the falling trend line for a bounce and it might extend upto to 5650 levels but there is no change in opinion as the advance/decline ratio is not convincing and we could not see any major accumulation pattern in stocks.If the bounce is here to extend i would like to go long in stocks like IDFC and Kotak bank above the previous as short term trades.From the telecom space R - Com too looks good in the chart. On the sell side there would be much bigger downside for stocks like JSW steel and SBI.We could not see any substantial increase in the premium and if there is long accumulation happening in nifty it would reflect in the premium and open interest. Volatility data is showing people are getting out of long trades at higher levels. Cyclically it is forming the same pattern that we have seen in 2010 ie; it formed a top between Nov 5-10 and in 2012 it formed the same pattern and i expect the same pattern to continue with 20-21 December and 4-5 th of Jan as major trend deciding days.

Nifty update for 21-Nov-2012

Nifty slipped down due to selling pressure at higher levels and in the medium term (end of December) it is expected to trade till 5300 and it seems to be a sell on rise market till now. Though it the index is maintaining a tight range one could see that major large cap names are moving down the trading channel and it would present a worrisome picture for all the traders. Though it can be considered as a normal bull market correction till the market settles down there is no logic in catching a falling knife. I expect the range bound to negative bias to continue till 20-21 of December 2012 and the market would start climbing up after that. Thus let nifty complete the price or time correction first and then be a buyer in midcap and large cap names.In the metal sector too we could see some major correction in stocks like JSW steel and TATA steel and Jsw will have a much lower target close to 670 as the distribution is happening after a long time. Volatility data is showing that long positions are not able to sustain beyond 5600 and they are getting squared off at higher levels. Turnover data is showing that institutions have not started selling in midcap stocks and only the largecap names are sliding and the implication could one more round of selling can emerge at bounce back.

Nifty update for 20-Nov-2012

Nifty had a flat session but it is expected to trade till 5520-30 levels in the short term with a reversal above 5660 levels. The medium term view has also turned negative with a target of 5300 where it matches with the 50% retracement level. The index is making lower tops in the daily chart and most of the major large cap banking stocks are forming rounding tops which is a major threat for nifty in the near term. Axis bank is one of the large cap names where we could see a major break down in the daily charts. The stock has been forming a top close to 1230-40 levels for quite some time and broke out of the topping out pattern. The view is bearish with an immediate target f 1160 in the near term and i would see this only as a normal bull market correction.It would be difficult for nifty to catch upto 5800 levels in 2012 because when ever there is a bounce back it is not giving positive impact on stocks. Nifty had a much needed bounce bounce back and it increased the premium t 20 points and that would again trigger a selling trigger. If nifty spends some time here at starts trading above 5650 levels the view can be changed.

Nifty update for 19-Nov-2012

Nifty broke the immediate support zone and now it would be a sell on rise market for a target of 5520-5530 on the downside. There is no point in selling the further break downs as the premium has also come to nil and only sellers are dominating the market. In the stocks front there would be lot of stocks which are on the verge of a break down like SBI, Ranbaxy and Bank of Baroda which would come to a complete sell below the previous low zone. Volatility index is showing that lot of short positions were built up in 5630-50 range and that would be an immediate resistance zone or the stop loss for the short positions. Turnover data is showing that institutional traders are still betting on some stocks and thus dont get trapped by going short below the breakdown and instead do it from the top close to 5630-5650. S&P has reached an immediate support zone of 61.8% retracement zone and gave a bounce back from there. Thus i would not expect much downside in nifty futures but stocks are expected to slide more especially the PSU banking space. The lower end of the range could be 5520-5530 levels where we have a well built trend line support holding the higher top higher bottom formation.

Nifty update for 16-Nov-2012

Nifty broke down to 5620 levels where some short covering happened and there is no evidence to see that the recovery was due to addition of long positions. We could not see any significant increase in the premium and thus it can be assumed that some amount of short covering is happening at lower levels but the volatility data is showing that the downside pressure is increasing. We had a false rally towards 5800 levels two weeks ago and whenever we have a false rally the resulting move would be very severe on the opposite direction and that is what we are seeing now. The turnover data was good and the advance/declining ratio was in favor of declining counters.Nifty is yet to decide whether it has to break below the previous low or not but the false upside moves happening in stocks would be giving a signal that some more downside is left in the market especially in infrastructure stocks. If nifty is making a pause here two stocks to bet would be HUL and Bata India (above the previous high's). Both these stocks are consolidating at lower levels for quite  few days and these stocks are seeing good accumulation pattern in daily charts.S&P has almost reached the closest support zone of 1350 and i expect the market the consolidate in 1340-1350 before any downward move.

Nifty update for 15-November-2012

Nifty broke below 5700 and is expected to trade till 5600-5620 in the short term with a reversal above 5740 levels.As mentioned in the previous post 5700-5710 was a crucial support zone as far as nifty futures was concerned and it was decisively broken on the Diwali day. The rate sensitives like banks and infra would be under pressure and  i dont see any logic in holding these stocks when the market is heading down. S&P would be moving towards the 61.8% retracement zone of 1350 levels and it could offer a possibility of bounce back close to that level. Though the break down in nifty would be slow because of the good amount of optimism but i am expecting a stock like SBI to face pressure in the near term and is expected to trade till 2050 in the November series. If we look at the options data we could see that because of the number of holidays and nifty held 5750 levels for quite a few days there was enough time for options writers to sell 5800 call options. Thus it would be difficult for nifty to regain 5800 zone in the current series.One sector that is offering some hope on the long side would be tea companies like Jayshree tea , and Goodricke group where we could see huge delivery as compared to the total trading volume and traders seem to be accumulating these stocks on every dip. Volatility data is showing that long positions got squared off below the psychological support zone of 5700 and i would not be a buyer till nifty makes a pause and it is wise not to catch a falling knife.

Nifty weekly update for 12-16 November 2012

Nifty failed to surpass the high of the tight range and once 5700 is taken out it might be getting ready for a 100 points fall. Nifty is getting decent support at 20 DMA but large cap stocks have started declining from the support zones.Stocks like SBI and ADAG stocks are on the verge of a decline and we need to watch the previous low zone of nifty as it was acting as the support zone till now.Nifty could get some buying interest at lower levels and that was evident from the increase in premium after hitting the low. As of now no distribution pattern is seen in nifty futures and traders are accumulating long positions despite the weakness in the global markets. If nifty is holding the low and moves REC would be one among the few bets on the long side as it is consolidating close to important moving averages and likely to move to 235 in the short term. The volume is still low and would be lower in the coming days too because of the Deepawali and it could arrest any major moves this week and stocks would perform in its own way. SBI is still a stock to worry and a level below previous days low could take the stock again back to 2050 in Novemeber series and 2150 would be an important support zone for the stock as it is close to the 50 day EMA. Cyclically 5-10 of November are important dates and it is the cyclical anniversary of the high of 6335 made in 2010 and the dates could normally act as pressure dates for the Indian equity market as these are considered to be trend deciding days.  

Nifty update for 09-Nov-2012

Nifty held the lower bands once again and that proves that the buying happening at lower levels is done by stronger hands. Tomorrow would be an important day as we have results of two large cap ie; SBI and TATA steel. Volatility data is showing that long positions are getting booked at higher levels and thus we could see some reduction in the premium. As long as the support zone holds  we can expect the positive momentum to stay. Except L&T all other large cap stocks are still staying in the positive zone. Though we have the result of tata steel tomorrow the stock is seeing a good accumulation pattern in the technical charts. Turnover data was not so bad and institutions were net buyers in the equity market and dollar index is close to the mentioned upside target of 81.5 and these things would be in favor of bulls. One major threat that is facing Indian equity market would be the under performance of U S market and the market is a strong sell mode with some bounce backs.Thus the strategy should be to lessen the volume and duration of long trades should be short. The only one worrisome stock would be L&T and it can test 1600 levels once it breaks the previous low zone and i feel market will maintain the tight range with some outperforming stocks

Nifty update for 08-November-2012

Nifty held the support zone and broke out of 5800 zone after a long time. It is expected to trade till 5840-50 with a reversal below 5700. Though there was a shocker from the U S market the structure of Indian equity market has not changed. S&P is at a major support zone of 1390 and break below that could lead to a major fall in the U S market and it could under perform the Indian market in the medium term.As i said in the previous post the premium was so heavy so that it could compel any nifty trader to cut off the long positions above 5800 mark level. The charts of stocks are still interesting and many stocks are giving break out on the upside like Infosys and PFC but wait for the dust to settle down and create positions above the previous high if there is no panic selling in the market. Volatility data is showing addition of long positions and it was very evident as it was not a gap up opening.Turnover data is showing an uptick in the volume and fii's have again started pumping in the money. This shows that lot of buying positions have been created by traders and it would not be practical to say that Indian market will come down once the U S market fall.Thus any fall in the market could be used as a buying opportunity and the stop should be tight around 5700 and as long as S&P is holding 1390 levels i dont see any panic selling happening in the market.

Nifty update for 07-November-2012

Nifty held the support zone and broke out from the tight range after a long consolidation and it is expected to trade till 5840-50 levels with a reversal below 5700. Volatility was at the peak and it is expected to come down in the coming days as it is happening just ahead of the event. Thus it would not be a time to create any fresh buying positions in index options as the premiums will come down drastically even if nifty gives a big move either side. As it is a new high in nifty within a month come out of defensive's and it is time to bet on some rate sensitive one's like SBI. The stock is ripe for an upmove ahead of quarterly result and that quick trade should be done before the announcement as the implied volatility in the particular stock options is expected to rise ahead of the big day. Turnover data has not picked up till now and it is expected to increase in the days to come. Thus the strategy would be to start booking long positions in nifty any level above 5800 (if it does so) and move to banking stocks like SBI and DLF. As said in the previous posts both base metals and US markets are giving sharp up moves and this can have a positive impact on nifty. I would like to book the long positions in nifty above 5800+ just because of the heavy premium available in index and that would be a good sign for an index trader. Thus as a trader one should be fast enough in churning the portfolio with the changing market conditions.  

Nifty update for 06-Nov-2012

Nifty held 5700 once again and it is expected to trade till 5840-50 in the short term. It was good that nifty got some buying interest at 5700+ levels and the volatility index took its own time to adjust to the upmove. If we see the uptick in volatility index and currency market it is evident that the moves were overdone and dollar/inr is moving towards the 61.8% retracement zone close to 55.Thus that could be a positive factor for nifty on the way ahead. Apart from PSU banking space and some real estate stocks all other sectors are looking for an accumulation pattern. Turnover data is very low and if the volume is less it could arrest the downside pressure too and it is clearly telling that nifty would take some time to reach the upside levels but one has to be stock specific moving ahead.In the commodities market base metals are showing good positive momentum and that would be encouraging for the metal stocks especially the dead ones like Jindal steel and Tata steel.The current market structure looks like a buy on dips market or buy near out of the money calls above 5750 mark. The U S market is waiting for a bounce back from the support zone and selling could get arrested in close to 1395-1400 levels.

Nifty weekly update for 05-09 Nov 2012

Nifty closed at the upper end of the channel and a break out above the upper end would be the right to initiate some buying positions in nifty. Though the downside targets were unfinished and nifty got support at 38.2% retracement and that is a good sign for the index is concerned. If we have a look into the turnover data its still low and one has to be stock specific if you are long. Volatility data is showing addition of long positions at 5700 levels but the move on the upside wont be quick even if breaks on the upside. The volatility index is again at historic lows and it would be threat for nifty's upmove and the premium is at the peak of 35-40 points which shows extreme demand conditions in the market. Some stocks like Sesa goa and Hexaware are on the verge of a break out and these are the stocks to consider if one has to be a buyer in this market. If we look at the attached chart of nifty we could see that nifty is getting supported at one of the most important angles and any downward move could get enough buying interest. The upper end of the channel lies close to 5950-6000 and that has to be the target as long as 5700 holds on the downside.That upmove should complete a 5 wave pattern in nifty and that could be considered as a long pause for the current rally.

Nifty update for 02-November-2012

Nifty once again held 5600 and the short covering rally can be expected to continue in the coming trading session too.Though the downside targets are still unfinished nifty is likely to be stuck in the range for some more time and then inch up after 5th of November. If we look at the turnover data and bank nifty we could see the market is lacking cash based buying and most of the banking stocks are still waiting for good buying interest. Volatility data is showing some buying happening at lower levels but the premium in nifty is once again at the peak of 30-35 points and i would not be a buyer in nifty but many stocks are giving excellent trading opportunities. There are a few stocks which were in the buyers radar like TCS and Bharti which are expected to move up in the coming days. Bharti is expected to break out from the consolidation range of 280-282 and buying could emerge only above the zone and traders should watch out for good trading opportunities in this stock. TCS is also expected to break above 1315-1325 range which would attract more buying interest in the stock. Thus it could be worth putting some money in these stocks than nifty as there are unfinished targets on the downside and these stocks are not very much positively correlated with nifty.

Nifty update for 01-November-2012

Nifty gave a much needed short covering rally before heading lower to 5560 zone. Bank nifty has broken down on monday and it is heading towards the immediate support zone of 10900-11000. There is no point in initiating long positions in a short covering rally and if the market has to rally it will spend days in the lower end of the channel and banks should give some meaningful recovery for nifty to move up. Volatility and turnover data is showing marginal short covering happening in stocks but FII's are still playing with their arbitrage positions in nifty options.There is no harm in booking short positions in PSU banks as they have started correcting much before nifty broke down and the rewards were decent enough. On the long side Wipro also gave a smart recovery and the stock is moving up with lot of buying interest at lower levels. Thus wait for an accumulation pattern in all the major large cap names before initiating any long positions. The range can be 5600 - 5660

Nifty update for 31-Oct-2012

Nifty broke all the support zones and is heading towards 5530-5560 which can be the immediate target in the short term. Majority of the large cap names are heading downwards but as these stocks gave signs of break down much earlier it is better to book partial profit anywhere below 5600.It is wise to watch whether nifty futures is getting support below 5600 zone and then try going long in nifty as there is no point in catching a falling knife now. Anything that falls will give us some time for accumulation and let people start accumulating stocks and dont jump to initiate long positions.Volatility data is showing new short positions in stock futures than in nifty. As expected the rate sensitives lead the fall and it is better to avoid PSU banking space from the buying list. Turnover data is showing that the participation was low but the institutional traders have emerged as sellers in the equity market. Lets watch for 5-10 of November for an interim bottom to be formed and till then i would not be a buyer as long as some support zone emerges.The trading range can be 5580 - 5660.

Nifty update for 30-Oct-2012

Nifty held 5700 zone once again and is expected to trade till 5530-5560 with a reversal above 5740.Lot many stocks are getting added to the sell list in the coming days too. As the range is so tight traders should be able to churn their portfolio's at a faster rate.Two stocks which got added to the sell list are BHEL and TATA motors while Wipro is only one major stock which looks promising for some upside momentum. As expected Wipro and LIC housing gave a decent move on the upside but PSU banking space is expected to slide further.RBI policy would have an impact in the further moves in Nifty but the chart structure of many large cap names are weakening with larger distribution patterns.If we consider only nifty it seems to be good that the index is getting support at lower levels but stocks need some more time for accumulation.Turnover data says all these days were low volume days and it is good to see that stocks are falling with low volume and we would be close to the bottom between 5-10 of November.Volatility data is showing a very volatile session ahead of the RBI policy meet and it can continue in the coming days too. The range for nifty can be 5670-5740

Nifty weekly update for 29 Oct - 2 Nov 2012

Nifty held 5700 once again but expected to trade till 5530-5560 zone with a reversal above 5740 levels. The correction would be slow and painful and i would expect the corrective phase to continue till 5-10 of November and resume the uptrend after that. There are chances for an immediate bounce as the world markets are close to the support zones. As the market is in a tight range it is always advisable to take a trade close to the upper and lower end of the trading range thus buying puts close to 5730-40 levels would give us a decent trading opportunity. Though the market is in a corrective its relative outperformance with the world markets are really encouraging and a dip towards 5530-60 levels should be taken only as a retracement from the top and that is quite normal in every market. The medium term target of 6150 is still valid as the market is still maintaining a higher top higher bottom scenario and the reversal should happen only below 5450-5500 levels. I have taken a negative view in the short term mainly because of the way stocks are performing in a market like this.In a range bound which is ready to go up would never show a distribution pattern like this. If we look at stocks like SBI, Reliance capital, BATA India and Reliance Infra the distribution pattern is very evident and this is affecting the private banking space which is a relative out performer.Reliance Infra is a new addition to list of stocks which are breaking the support zones and the stock is expected to touch 470-465 soon if nifty is stuck in a range.Volatility data is showing some short covering happened during the last hours of the trade and it could help for an immediate rebound but the distribution pattern is still active is most of the major large cap names.The short term range can be 5670 - 5740.

Nifty update for 26-Oct-2012

It was a choppy day and nifty held 5700 zone but only options writers could benefit from these kind of range bound sessions. If we have a look into the stock specific data stocks like BATA India, SBI and Reliance Capital are heading down by breaking important support zones. Bank nifty is still holding some important levels due to banks like Axis bank , ICICI bank and YES bank. As said in the previous post I would be holding my short positions in BATA and SBI as the view is negative in the medium term. World market charts are out of the basic bull market pattern of higher top and higher bottom formation and it would be a worrisome picture for Indian equity market.Thus put options can be bought in PSU banking space and metals as these are the weaker names in the market and wait for a deeper cut to get into mid cap names like Wipro and LIC housing. The strategy should be to book longs in stronger names like L&T , ICICI bank and Axis bank as there is no point in creating short positions in these stocks and try creating short positions in the mentioned names if they are breaking down. Volatility and turnover data are showing addition of new short positions in nifty with some cash based selling too. I would like to maintain a bullish stand in dollar index for a target of 81.5 and it is wait and watch game for nifty whether it is holding 5630-40 zone.

Nifty update for 25-Oct-2012

Nifty held the upper resistance level of 5730-40 levels and gave a negative closing just before the holiday. If we look at the chart of S&P a major technical support zone has been broken around 1425(the lower end of the range mentioned yesterday).It would be headed lower till 1395-1400 zone from where a bounce could be expected but the long term charts are losing the upward momentum and could be worrisome for traders all around the world.Dollar index is also heading towards 81.5 zone where equity traders would face a tough time ahead. Thus if we look at these kind of correlations the world market let it be FTSE or S&P it is dangerous for Indian equity market.We have a near term support zone close to 5630-40 and a decisive break below these zones would confirm the weakness and if it happens banking stocks are expected to correct first especially PSU names like SBI and Bank of India.Another stock which is trading below the long term upward channel is BATA India. The stock was making higher highs consistently for the past two years and the long term trend is expected to turn bearish below the previous low.If we look at another possible scenario of nifty breaking 5730-40 on the upside stocks like Reliance Infra , LIC housing, Wipro are expected to move higher. The 100 point range should be watched carefully and it is wise to take trading decisions based on major large cap stocks in specific sectors.As of now the rollovers are not showing major long additions in all the major sectors.

Time cycle analysis

If we look at the current rally from June we could see that close to 25-26th October the rally can get matured as it would complete 144  days from the bottom. 144 should be considered as an important number if we see the current cycle.An important date would come between 5-11 of November and the emergence of a major trend can happen between these days. Usually the day after expiry is crucial and a major trend deciding move can happen these days too.In a nutshell we have two important dates after the expiry and till 5500 on the downside the bullish trend is intact as there is a higher top higher bottom scenario

Nifty update for 23-Oct-2012

Nifty held the support zone of 5640 levels and is expected to trade till 5750 in the short term.For a nifty trader anything less than 50 points move should not be considered as valid and it is still well within the range. Some large cap names gave a short covering rally but i would like to use this as an opportunity to exit the long positions. As said in  the previous posts there would not be any hurry to build short positions and get into stocks like LIC housing and WIPRO with a 10 points stop from the buying levels. 235-240 and 340 levels would be decent support zones respectively and i dont expect a major downward move from these levels.If we look at the chart of S&P it is also well within the range of 1425-1455 where we could see lot of consolidation happening and dollar index would still be a major threat for nifty for any up move.Dollar/INR would be forming a symmetrical triangle pattern which could usually form a range bound market within 52.5 -54 for a month or so. Though the the range is a little bit large it would provide much room for option writers to sell out of the money options in the currency market.As of now the range for nifty is well defined and it is getting decent support at 5640 levels and getting resisted at 5740 levels sustainable performance by large cap stocks could lead to some more upside. Though the stocks are performing i dont see any reason for stocks to perform at the end of the current expiry season.Turnover data is still at a very low level and we could see that instead of delivery based buying short covering is triggering quick up moves which are not reliable. Volatility index is showing that it is at one of the lowest levels in the history and any major up move could reduce it further which can be a threat for the up move.In a nutshell just accept the fact the range bound market is still active and one has to patiently wait for a major break out on the upside for any buying positions.

Nifty weekly update for 22-26 Oct 2012

Nifty spent the week in a tight range of 5640-5740 and is expected to trade within the range till the current expiry.If we look at the chart of major global markets we could see that all these major ones are close to the support zones. Dollar index is close to an important support of 78.5-79 which i think would not be broken in the near term. As long as these support zones are held a bounce to 81.5-82 zone is quite possible and traders in the equity market should be aware about this development as it can have an adverse effect in the Indian equity market. Now come to the charts of major large cap stocks like l&t and SBI (i am referring these charts as they were the out performers in the previous season). Both these stocks are kind of making a rounding top and is considered as bearish in the shorter term.These can just move to their medium term moving averages and usually in a bull market that is the way how large cap names perform.In a nut shell we have strong support zone close to 5600-5640 where lot of huge put options build up can be seen and on the upside the resistance levels are clearly marked close to 5740 zone. If we are in a structural bull market it is wise to buy the dips than buying a break out trade. As of now a break below the support zone can just be a bear trap as lot of traders might find it as the beginning of a new downtrend but it is better to wait as a buyer than a short seller especially in nifty.The stock specific data is telling us to go long on some of the stronger names like LIC housing (close to 235-240) and WIPRO (close to 335-340).We could see these stocks are stronger names in their own respective sectors but have corrected more than other stocks. As these are close to their intermediate support zones any dip close to these levels are buying opportunities and avoid large cap  names like SBI and l&t.In a nutshell wait for a buying opportunity in nifty as it is not giving much evidence of holding the support zones but i would be a buyer in the mentioned stocks close at those support levels.As a trader it is always wise to keep the volume in control so it gives a much room for flexibility in churning the portfolio thus don't jump into lot of buying positions and let the market give us a clear direction.

Time cycle analysis

Nifty is close to the strong support zone of 5600 -5640 and i dont see it breaking before this expiry as options build up is happening in that way.Close to 25-26th of October cyclical charts are not showing any levels below 5600 and it is wise to sell at the money calls if you are buyer in nifty futures.On the upside too it is not showing any levels more than 5740 in the coming week.Thus the large cap names can correct than nifty thus dont jump in as a buyer.Volatility and turnover data showing that the short build up has already happened at higher levels and the cost of carry is really low so that we cannot assume further short build up at lower levels.

13-October-2012

I was not able to update the blog from monday as i was down with high fever and still in a recovery stage.I would be updating the blog from coming monday.
Cheers,
Vinu

Nifty weekly update for 08-12 Oct 2012

Nifty is done with the intermediate target of 5850 and is expected to correct till 5630-5650 in the short term with a reversal above 5850-70 which is a crucial point to watch out for. It should be considered as a consolidation/ correction within the ongoing bull market and look for buying opportunities in this type of a market. I would still be betting on TATA steel which was an under performer in the current rally and the stock has a good potential to go up in the long run.If we have a look at the premium in nifty futures we could see a phenomenal rise and a premium of something like 35-40 could be seen as a topping out pattern in nifty. It reveals that there are only buyers in the market and to keep the balance of trade there should be some correction in the near term.The medium term target has been raised to 6150 with some consolidation and structurally the market looks good as lot of sectors are yet to participate in the upmove. Banking stocks are kind of overdone with the rally and i would expect the PSU banks to correct before any upmove. Stocks like Canara bank and Bank of India would be first among the list.Among other stocks Sesa goa is looking vulnerable below 171-170 zone and it is expected to correct till 160 with a reversal above 180.

As per the time cycle we have a 95-100 period cycle in Nifty which it is following since 2010 and October is cyclically not a great month for equity markets and we could see an interim low during this month before a substantial upmove. It is not a bearish view but a much needed consolidation before any valid upmove.

(See the attached chart for more details)

Nifty update for 05-Oct-2012

Nifty moved closer to the immediate target zone of 5850 but as said in the previous posts i am not chasing any banking stocks as of now for a trading opportunity.As a trader i might have missed some opportunity in catching some 2-3% move in banking biggies but there is no need to chase this market.It would consolidate , there would be profit booking sessions and get in when the opportunity arises.I have been upbeat on the banking space and the mentioned names in the list were SBI, Canara Bank, Bank of India and YES bank (12,13 -Sep blog). Readers should understand that i am saying to book profit from a traders perspective. As an investor one should stay long in banking space with a one year horizon.From a trading perspective Mphasis gave a negative return and i have to accept that i was wrong in analysing that stock. With a consolidation close to 5630 - 50 levels the index is expected to touch 6150 by the year end and any dip could be used to buy quality stocks like TATA steel and mid cap IT stocks. Volatility data is showing some profit booking happening close to 5840 and these might be warning signals for a consolidation phase. If we look at the sector wise performance the rally was fueled mainly by banks and no other sector has contributed like banking space and thus it would be a positive factor for a good positive move.In the next phase when ever there is an upmove in base metals in the commodity space we could see a decent rally in metal stocks like TATA steel , Sterlite and JSW steel.Thus no need to chase the market and utilize every opportunity in the consolidation phase to be on the long side. 

Nifty update for 04-October-2012

Nifty held the support zone and inching towards the immediate target zone of 5850 but as said in the earlier posts it is time for unwinding some long positions in the banking sector. As a trader one should be good at reshuffling the portfolio according to the situation. Midcap IT space looks attractive with Mphasis as the top pick in the sector.CNX IT and Pharma are two spaces where we could see renewed buying interest and incase of any profit booking traders would jump into these sectors to make some quick money. Volatility index was showing addition of some long positions during the end of the session but if we have a look into the turnover data we could not see much buying interest at higher levels. As an investor instead of buying at a higher price it is better to hold on to the previous long positions especially in the midcap IT space. Dollar/INR is moving to the support zone of 52 range and a short term bounce is possible at any point of time and it looks quite cheap after a fall from 57 range. Thus as a trader it is time to be a little cautious on buying positions especially in those stocks which are positively correlated with nifty. The broader range could be 5710-5850.

Stocks to watch

Mphasis and Escorts - Both these stocks have given a break out after a long consolidation of 2-3 months and i guess buyers have got enough time to accumulate these stocks. As an investor i would be getting in for a 10 % return at current levels and keep a stop of 395 and 62 respectively.

Nifty update for 03-October-2012

Nifty is trying its best to create a new high over 5750 but even if it creates the chances of sustaining at upper levels would be very less as the cash in flow levels have exceeded the upper levels.As per technical charts when there is a negative divergence one should square off the long positions and wait for a better entry point. When the momentum is so strong traders usually wait for a dip to create long positions and no need to get into trap by creating short positions. As i was mentioning in the previous posts traders should book their long positions in banking sector and look for opportunities in metal sector at lower levels. In the commodities market one should have a careful look into the reversal for copper as it could be a catalyst for metal stocks in Indian equity market. Dollar/INR has breached a decent trend line support and it is not maintaining higher tops and higher bottoms scenario and any bounce back to 54 levels could attract lot of selling pressure. The broader range for the month could be 5630-5850.

Nifty weekly update 01-05 Oct 2012

Nifty made a new 52 high close to 5760 which is close to an important square which could act as a hurdle in the near term. If we analyse the charts as per pure quantitative methods we have targets like 5776 and 5850 levels and we are close to those two targets and thus i would not be creating any new buying positions especially in the stocks that have rallied in the previous month and that would be the banking space. As the momentum is so strong and the momentum indicators are still in a buy mode we could assume any downfall as a normal profit booking or consolidation period. Any sudden upmove if remains within a consolidation range could be treated as valid and an upmove without any breathing space would be treated as a bubble to suck the wealth of public. If we analyse the current upmove except tata steel all the major largecap stocks have given a decent performance and on any correction tata steel would be my first pick as i would assume the stock is spending more time in the accumulation phase. A stock which is forming a good base pattern should be the  darling of traders and should be picked when it is ripe.

Time cycle analysis 

Before nifty making the current upmove it made a low on 5th of September 2012 and we are now on we have completed the month of September and the time and price are close to squaring off or the first cycle of upmove is getting matured. Even if there is an upmove close to 5800-5850 levels time would be just matching or overshooting the price and any upmove can be considered as points to exit. As the chart says there would be multiple support zone close to 5630-5650 levels and test of these levels could only be treated as a 'throw back' and most probably it could happen within a week's time on or before 09th of October or it would mark the high of the month and thus first week of the month would remain crucial for traders to decide the trend. If we have a downward move we could see the upmove again as it would be range bound session then price has to shoot up to 5850 levels to match the time in the second cycle. In a nutshell the broader range for the month can be 5520-5850. 

Nifty update for 28-Sep-2012

Nifty held the support zone of 5630 and is expected to trade higher till 5800-5850 in the month of October with a reversal below 5520-30 zone. Apart from being an expiry day large cap stocks like SBI and l&t are still supporting the upward momentum and that would be a positive factor in the coming days. If we closely observe the large cap names some of them like ICICI bank and Axis bank are facing major resistance at higher levels and it would bring in the possibility of nifty topping out soon close to 5800 levels. Thus any upward move would just finish the target and as a trader one should be shifting the focus from large cap stocks to midcap names espcially in IT and Pharma. Volatility index was showing 5650 -5630 levels acting as a strong support zone and long positions are getting added on every dip as lot of people are left out as there were huge gap up openings.Turnover data is still positive but it seems to be moving to the extreme zone and the previous yearly high of 5630 should be closely watched and as a trader it is wise to close all the long trades below this zone. When we look at the longer term picture the 5450 - 5400 zone would be a strong support zone where nifty could get some buying support when ever there is a downward move and we should see these corrections as much needed consolidation sessions and the market is taking its breathing time before the new up move. The trading range can be 5630-5740.

Nifty update for 27-Sep-2012

Nifty held the support zone and tried for a rebound in the second. Apart from the current consolidation phase nothing has really changed in the long term view. The consolidation seems to be a little more longer than expected but i don't expect the downward momentum to accelerate. As long as the left out feeling is there in the market it can be a buy on dips market close to the support one of 5520-30 levels. Volatility index is not showing much of short accumulation but the scenario is very clear ahead of expiry as it is creating a narrow range. It would be good to take out some profits in banking biggies like SBI and ICICI bank as both of these are high beta names and gave a decent rally on the upside.As mentioned in the previous post pharma space is the one to have a re look as most of them are getting ready for a bounce back. If we watch the currency space though there would be some bounce backs the medium term target would be around 52.50 levels and is expected to achieve in the month of October. The only concern in nifty would be the amount of trading activity happening at higher levels. Usually when lot of trading activity is happening at the top after a rally it could be read as a negative sign as a distribution pattern can be formed but none of the stocks are showing these kind of patterns and that could remain as a positive factor for nifty . Thus in a nutshell the index is taking its own time to consolidate and lets give that time for any further upmove.The trading range can 5630 - 5700.

Nifty update for 26-Sep-2012

Nifty spent one more day well within the mentioned range and it is not expected to make major moves till expiry.Though nifty is spending the days in a narrow range individual stocks are giving us lot of trading opportunities.Pharma sector would take a pause in the downward move and it is all set to make a major bounce back let it be Biocon, Ranbaxy or Auro pharma. As i mentioned in the previous posts it is better to lighten the beta of the portfolio and profit taking sessions in banking biggies like SBI and Axis bank were much visible and needed after a huge rally. Volatility data is not showing any additional short build up other than the previous day and there is ample evidence to believe that lot of short positions are lying close to 5730 zone. Turnover data is showing good amount of liquidity from the foreign institutional traders and as long as the volume supports the trading activity it would be in favor of bulls but as a cautious approach there is no harm in booking some profit at current levels. Though world markets are still not giving any major move the domestic market does not seem to care much about that but one should be looking into relatively under performed  sectors like pharma and IT. 

Stock to watch

Orchid Chemicals - The stock is expected to complete the consolidation phase of 2 months and it is expected to give a move to 135 zone once it crosses the hurdle of 116-118. I would like to keep a stop of 110 for the current trade and it is expected to move to the target zone within a week or two.

Nifty update for 25-Sep-2012

Nifty held the resistance zone of 5730 levels which is close to 78.6% retracement of the entire fall. It is expected to trade till 5850 in the month of October with a decent support close to 5520 levels. The short term corrections would be much needed for a structural bull market and as long as nifty maintains a higher top higher bottom scenario things are clearly in favor of bulls. Bank nifty is leading from the front and it would be an interesting situation for nifty to build up the confidence level. Fund managers are really churning their portfolio between banks and pharma stocks and the scenario is visible if we have a look into the stocks. Volatility data is showing some short build up close to the resistance zone and nifty might take some more time before any valuable upmove. As i said in the previous posts one should be booking profits in high beta counters and reduce the portfolio beta at higher levels and it is time to rethink about stocks in the IT  sector too. Turn over data was in favor of bulls and the foreign institutional traders are really utilizing the opportunity to create long positions in equity market.If there is a consolidation phase it would be logical to assume that the rally is not over yet. At 5800-5850 the cash inflow would get stretched and that would be the ideal time where i would re look into the positive momentum in nifty. The trading range can be 5630-5740. 

Nifty weekly update 24-28 Sep 2012

Nifty had a dream run which happens once or twice a year and we might be in the middle of a long term rally. We could see an increase in the turnover data and lot of retail participation could be seen in the equity market which would be a good sign for the markets in the coming days. Though the volatility is on the rise i would like to interpret it as those option traders who are busy making long straddle positions. Nifty is expected to trade till 5850 with a decent support close to 5520 zone. Any dip close to the support zone can create fresh buying interest in the market. It would be a little bit difficult to choose those stocks which have not rallied till now and there would be only a few in that category.It is time for traders to lower the beta of the portfolio and go for low beta stocks like Crompton greaves and BGR energy. Nifty is making higher tops and higher bottom in the daily chart and weekly chart and the momentum indicators are also in the positive territory which is a good sign for the market. There would be lot of debates that could be seen arguing whether it is the beginning of a new bull market or not and for the time being it is better to avoid this kind of noise and concentrate on the trading portfolio's. If we see the cyclical moves too lot of changes are happening in the market structure where new cycles are being developed which i have marked in the chart.

Stock to watch

Crompton Greaves - The stock seems to have completed a bear market and i would like to take long position in the stock by keeping a stop below 110 for a target of 135-140 with a time frame of 15-20 days.

Nifty update for 18-Sep-2012

Nifty had a gap up opening and it is expected to trade till 5850 with a support close to 5450 in the medium term. As a short term target we could consider the previous high of nifty and traders should take out some profits at higher levels.The turnover was really good and an up move in price with increased trading activity and it shows that any dip in the market would be bought into. Volatility data is showing some short build up at higher levels and it would be a good signal as of now because it cannot be 12-13 when nifty s trading at 5600 levels. Though it shows some consolidation could happen in many of the stocks but as a trader one should not try to go short in the market. I would read this rise in India VIX as a trading strategy by institutional traders to hedge the positions by writing out of the money calls. Pharma sector will have a consolidation phase and the upmove in banking is expected to continue after a consolidation phase and it is not a good time to create fresh long positions.

Nifty weekly update 17-21 Sep 2012

Nifty held the support zone of 5450 and rose to a new high in the recent period. It is expected to trade till 5850 with a reversal close to 5330. In the short term the recent gap of 5450 would act as a support zone. As mentioned in the previous posts PSU banks were one under performing sector and the bank nifty gave a new high in the recent time with the help of banking biggies like ICICI bank and SBI. We could see some huge short covering happening in metal stocks but should consider that as an exit signal. Volatility data is showing traders are going short close to 5500 but a positive news flow could again cover all these short positions. A good turnover data is showing some buying happening large cap stocks especially the banking names. Going ahead the important level to watch out would be 5450-5460 as the gap up happened from there. Dollar/ INR has also broken a crucial support zone which would be a positive factor for nifty. In the stocks front banks like Bank of India and YES bank are expected to out perform the index and pharma stocks like Ranbaxy would have a difficult time ahead.

Nifty update for 14 - Sep - 2012

Nifty had a range bound session and as said in the previous posts it is expected to trade higher till 5530-50 levels with a reversal close to 5320-30 zone. Though i wont be a buyer in the break out trade in nifty PSU banks are expected to out perform the index in the coming days. The bank nifty is still lagging nifty and that would not be a good indication for nifty but most of the banks are making decent base ahead of the monetary policy and i expect it to have a positive effect on bank nifty. With the positive news flow S&P has done with the upside target of 1450 and i would be cautious on any up move beyond this. Volatility data suggests some short build up at higher levels close to 5450 and any positive news flow would force the short sellers to cover their positions. Turnover data is showing the injection of liquidity continues and as long as the fund flow is there go with the flow. SBI is consolidating at 1850-1900 levels for quite a few days and it is building the base around those levels for a 90-100 points move. 1900-1910 seems to be an immediate resistance zone and a move beyond this could take the stock to 2000 levels. If you are reader of this blog for quite sometime you could see the bullish stand taken is quite justified for quite a few days and lighten the longs when we are close to the target and that is way one could prove how smart he/she is as a trader. The trading range can be 5430 - 5530.

Nifty update for 13-Sep-2012

Nifty is done with the mentioned short term target of 5450 and is expected to trade till 5530-50 levels once it crosses the previous high. Though we have some higher targets in the chart i would not be a buyer on a break out. The move can be good as lot of banking majors have still not performed. We could see many major indices like midcap and bank nifty are lagging and nifty alone is moving up.I expect the PSU banking majors to move up in the coming days and a real good performance from bank nifty is needed for this up move. Stocks like Bank of India and YES bank are making bullish patterns and these would be good bets in the short term.If we consider nifty the index is facing a trend line resistance close to 5530-5550 where i expect it to consolidate or correct. Thus the trend is up with a reversal close to 5330-20 for a target of 5530-5550. Volatility data is showing addition of long positions at lower levels and 5380 -5400 would act as a decent support zone in the short term. Turnover data is showing the liquidity is pumped in by institutional traders and the market will get support till the flow is there.

Nifty update for 12-Sep-2012

Nifty held the support zone of 5330 and is expected to move towards the first target zone of 5420-5450 in the short term. The turnover data is not very much in favor of any big movement but when the system is ruled by liquidity we just need to follow the momentum until the trend is reversed. Volatility and open interest data is showing some long build up at lower levels and it could possibly break the 5450 mark too in the September series. The momentum is gaining strength as the PSU banks are also joining the up move.The segment was a real under performer till now and it is surprising to see SBI at 1850 levels when nifty is trading at 5400. The mid cap PSU banking space like BOB and Canara bank are expected to outperform the index in the near term. We were mentioning about a possible break out of  SIEMENS in the previous week post and that has happened yesterday with good volume and open interest. Thus if we look at the whole structure in the short term nifty is moving with higher top higher bottom formation which is a good signal and the advance/decline ratio is also in favor of the bulls. 5330 -5320 would be a key support zone or the stop for all the long positions.

Nifty update for 11-Sep-2012

Nifty is still spending its time in a tight range and it would be one of the most boring market conditions in the past few years. The poor turnover data is showing the lack of interest by retail traders and and institutional traders are ruling the market with their heavy participation. It is expected to take support close to 5320-5330 zone and head towards 5420-5450 zone in the current series. The upside could be capped due to lack of participation. As said in the previous posts S&P would face a stiff resistance close to 1450 and nifty would not be able to do any magic if world markets start falling.Volatility data is showing building up of short positions at the upper end and 5300-5400 could hold for this week too. Though the index is providing trading opportunities only for option writers PSU banks are at attractive levels to get in. Stocks like Canara bank and Bank of baroda are on the verge of a break out. I would be a buyer in these two stocks above the previous highs as it is a break out trade. The trading range can be 5300-5410.

Nifty update for 10-14 Sep 2012

Nifty held the support zone of 5320-5330 and reached the first major resistance level of 5380. It is expected to trade til 5420-5450 in the short term with a reversal around 5330. There is hardly any evidence to see that nifty is going to make a new 52 week high. As told in the previous posts the medium term trend is still up as long as the short term trend line is holding close to 5250-5230 as we have a higher bottom , higher top formation.Bank nifty and ICICI bank are also following the same pattern and if it is a new uptrend bank nifty has to lead fro the front and lead nifty.If we see the US market charts S&P might be extending the final up move to 1450 as there is a valid trend line resistance coming into and nifty is also in its final leg of up move in the short term. As the liquidity flow is good enough it can spend the remaining series with 5200 as the base but there is every chance that we are in the 5th or final wave on the upside. Dollar is still making a  decent base around 55 zone and 57 can be looked into at some of time this year. Overall we have a trend deciding date coming around 20-21 of September where i expect the up move would get arrested temporarily. If one is already long in nifty it can be hold but other wise it is not a market to buy the break outs but only buy the dips close to 5300 zone.

Nifty update for 07-Sep-2012

Nifty held the support zone of 5250 and is expected to trade till 5360-5380 in the short term.We could see a positive momentum in the stocks and bank nifty too held the crucial trend line support.On a bounce back the beaten down banking names will have a sharp recovery and some buying could happen in real estate names too. Among the banking names we could see SBI not joining the downfall in the previous week and that could be a stock to bet on as new buyers would be there rather than mere short covering. Volatility data is showing still some shorts are left close to 5300 zone and a good rally would cover all these positions in favor of bulls. Another stock that can rise in the near term would be L&T as the stock is near the support zone. The overall turnover data was poor but is expected to rise once the confidence is back in the system. If we see the US market charts we could see S&P holding to the mentioned support zone of 1395-1400 zone and that would be good sign for the bulls. The strategy would be to go long with the near out of the money calls in names like L&T,ICICI  bank and SBI as it is worth taking a small risk at this juncture. The trading range can be 5250-5380.

Stock to watch.

LIC housing - The stock is close to the strong support zone of 230-235 zone and it is expected to trade till 255-260 zone in the near term. I would like to go long in the counter with a stop below 230.

Nifty update for 06-Sep-2012

Nifty held the important support zone of 5250 from where the index touches an important trend line support and a bounce is possible. The cash flow indicators are in the oversold territory from where lot of buying can happen.Thus the strategy would be even if there is a trend line break down in nifty look for a buying opportunity at lower levels and go short on stocks if they are breaking the support zones. Stocks like financial technologies and BATA india are looking weak and i would be a short seller below the previous low zone. Volatility data is showing that though there is some short build up buyers too are adding to their positions. The fight could be interesting and there would be lot of put writers active in 5200 zone. Bank nifty and nifty are at a crucial juncture of a decent trend line support but the banking stocks are looking like really dangerous on the long side though some dead cat bounce could be there. Dollar/INR has broken out of the range and 57 zone would be possible with the pattern target. The trading range can be 5200-5300.

Nifty update for 05-Sep-2012

Nifty held the mentioned support zone of 5250 and it is expected to spend some more time in a narrow range of 5250-5330. The short term bias can be positive as it is holding the previous low zone and large cap stocks like l&t and SBI are leading from the front. Volatility data is showing some long build up in the range of 5260-80 zone and this level should be the stop for any long positions. A break above 5330 could lead to higher levels in nifty. In the stocks front Reliance and SBI are looking good on the long side as they are getting good buying support. Turnover data was still poor and it shows the current rally can be due to short covering and buying has happened only in few counters.If nifty is ready to move up real estate sector stocks like DLF and HDIL are expected to move up but would like to remain bearish on banking except SBI. We could see an interim base close to 5250 and bears will gain strength only once that level is broken on the downside. Though we could talk about the price action could get weaken by breaking the low there would be multiple support zones lying close to 5200 zone. Options data is telling us lot of options writers are still active in 5200 puts.The long build up in nifty futures is visible by analysing the open interest and volatility data but the reading says institutions would take some more time to make fresh long positions in stocks. The trading range can be 5250-5330 with a break out above the upper band.

Nifty update for 04-September-2012

Nifty tried to make a high above 5320 but failed and gave a close at the lower end of the day's range. On the upside till 5330 remains as a hurdle the trend is down and is expected to trade till  5200-5220. Turnover data was poor and the advance/decline ratio was not entirely in favor of selling counters. Thus the trades are showing unwinding of short positions in stocks and profit booking in nifty too. It would be be wise to buy puts only below 5250 levels as we have the previous low placed close to that zone. On the upside above 5330 large cap counters like l&t and SBI could take nifty to 5400 levels once again. It is better to wait for 5330 levels to be taken out to take any call on the long side. Volatility index is showing profit booking in short positions as of now and new shorts can emerge only below 5250 levels and till then nifty is expected to stay in the range.

Nifty update for 03-07 September 2012

Nifty futures held the previous low zone and we could see the selling momentum weakening in many stocks. We have a short term support lies at the trend line close to 5200-5220 and that zone is expected to hold in the near term. If we come to the modern technical analysis many indicators and oscillators are hiding the basic price and volume action and they are not clearly showing whether we are in the correct position or in a trap. The classic Dow theory says the major index and the corresponding indices should complement each other with a positive correlation and if it is not doing so the move is doubtful. If we follow the same principle we could not see a positive correlation between Bank nifty and nifty at this point of time nifty's recent high was not followed nor lead by bank nifty. Any up move should get arrested on the upside as still some downside targets are left. On the upside nifty started falling from 5360-80 zone and that could be acting as a stiff resistance zone. If we have a look into the US market charts we could see S&P holding the mentioned support zone of 1395-1400 and should be closely watched for any reversal for the downside. The trading range can be 5250-5360.

Stock to watch.

Siemens - The stock is forming a consolidation pattern with a rounding bottom and seems to be a triangle break out on the upside in the weekly chart. A price break out should be confirmed above 685-690 zone with decent volume and we have to wait for that thing to happen. The volume is expected to increase once the price break out happens as it happened in Biocon. The stock is expected to see levels of 720 once it breaks above the previous high with a reversal below 665-670.

Nifty update for 31-August - 2012

Nifty made a new low just below the mentioned range but made a quick comeback to 5300 levels. It was a much needed bounce and it is expected to trade till 5220 levels with a resistance close to 5360-5380 zone.If we look at the charts of nifty and bank nifty we could see a triangular pattern formation in both the charts and the same pattern was seen in SBI before a month ago.Thus i would like to read these as distribution patterns as SBI has already given a leading indication on the downside.We could see a chance of pull back close to 5200 levels as we have a crucial short term support close to those levels. A break below that could lead as to 4950 zone where the long term support lies. The medium term view will change to negative when a if a break below 5200 happens or bank nifty breaking out of current support zone.At this juncture bank nifty could be a leading indicator and would tell us whether nifty is going to break 5200 or not. If we analyse the charts of these two indices we could see nifty making a new high in the previous two months but bank nifty did not make one and this is showing a clear under performance. 

If there is a pull back from 5200 levels there could be some buying happening in stocks which are holding the major moving averages like Biocon and Siemens but there are unfinished targets for banking majors like Axis bank and ICICI bank on the downside. As a trader one should be watchful for levels of 1400 in S&P as it is a crucial support zone ahead of the FED  meeting.