Nifty update for 01- Feb- 2012

Nifty broke the immediate resistance of 5170 and gave about 50 points above that level.Thus 5100 would be the new support for traders who are long as the short positions got covered above 5190.Nifty futures made a new high above 5220 and it is to be considered as a valid break out on the upside.Bank Nifty also made a new high and it is confirming the upmove.Short covering in Bank nifty and a spectacular rally by ICICI bank helped nifty to reach new highs.On the upside the crucial levels would be around 5290-5300 and lot of new buyers got added above 5170 levels. As lot of buy on dips happened yesterday and short covering above 5170 would make it a strong move on the upside.Bank nifty above 10000 would give us a new range on the upside buying in smaller banks like IDBI (above 103)would be a good idea on the long side.On the metals front Jindal steel (above 550) and Bhushan steel looks strong.Institutional buyers are continuing their journey on the long side and investors are advised to stay with their current buying positions.Turnover and volatility data shows lot of short covering happened above 5170 and buyers got added above the mentioned level.Investors could use this time to concentrate on smaller stocks like IDBI bank and SAIL as longer term bets.The new range would be 5100 - 5290.

Nifty update for 31-01 2012

Nifty took out the previous swing low of 5170 and thus confirmed the top of 5220. As of now it should be taken only as a corrective pattern in a normal bull market set up.We have two important levels on the downside , they are 5060 and 5130 . It broke 5130 and is expected to correct till 5050-5060 in the shorter term. As it is a profit booking move in the stocks we could expect a secondary rally after this profit booking session.As i said in the previous post the only sector that we should not expect a downward journey would be IT.When nifty dropped 100+ points on the downside IT stocks held its higher levels , Infosys, tcs, Hcl tech gave some decent trades on the upside.Bank Nifty would face a major threat on the upside around 9900-10000 and as expected bank nifty led the downward move.As it was the leading index it should first complete the corrective phase and start its upward journey for any significant upmove in Nifty. Though Nifty has retraced from its highs it should be considered as a profit booking session before a larger consolidation phase.We have 5060 levels on the downside as a crucial level and 5170 would act as a major resistance levels.As a trader i would be booking some profits in my puts close to 5060 levels. The secondary rally should start after a good consolidation period , thus Nifty would be in a better shape for any upmove. Turnover and volatility data show that though there are lot of short positions got accumulated at the top there are some buyers too on every dip. Thus the scenario as of now seems to be a trap for bulls as they have started buying every dip from 5200 levels.The new range for Nifty futures would be 5060-5170.

Is it difficult to make profit in stock market ..if yes why so ? How to choose momentum stocks?

I would like to thank all the readers of this blog. As a Nifty trader my major focus was only on Nifty and today i would like to discuss some thing about trading in equity market.These are just some basic rules and guide line i follow when i trade, it can be true or false
1. As a trader the first thing one should notice is never trade on hope and stock market is not a place to experiment the trades. It is all about making money and that's it !!!.
As W D Gann says "When you have nothing but hope to hold on to, get out of the market".
2. Before getting into stocks have a look into the specific index where you can have a broader outlook regarding a sector. For example if Bank nifty is expected to perform better first have a look at the levels of bank nifty and then move into specific stocks in Bank nifty.Thus before selecting the stock one should have a clear cut view about the particular index.
3. Select high beta stocks for the purpose of trading.For example in the cement sector we have many stocks like ACC, Ultratech , Ambuja cements, JK lakshmi etc, but you know a greater movement could happen in Ambuja than in J k Lakshmi. One can choose the movement mainly on the basis of volume.Select those stocks from a sector which are trading with good volume and those stocks would give you a greater momentum.
4. Which stocks to buy or sell - Always sell those stocks which are trading with high volume and if you want to do bottom fishing catch those stocks which are trading with lower volumes but a major one in the sector. For example on a buy trigger i would first buy SBI instead of Axis bank and on a sell trigger i would first sell Axis bank just because Axis bank trades with a better volume.The logic behind this would be if you are trying to buy near the bottom it should not give you much loss, if the volume is more the stocks can give a wild movement.
5. Always see the time a stock spent at the top or bottom. The more time it spends on the downside the more sharp would be the move. One could have a look into the chart of Idea for a distribution pattern which happened in a huge selling 2-3 months ago. For a buying or accumulation pattern one can look into Bhushan steel.Thus only trade in those stocks which is showing a good accumulation/distribution pattern.
6.Never short a market that is rallying on the upside or never buy a market which is giving short covering rallies. In an upside rally buy the dips and on a short covering rally sell the highs. Never buck the trend !!!
7. Always buy those stocks which are the major one's in a specific sector and don't buy only because the price of the stock is less. It is good to remember that if the price of the stock is less there should be a valid reason for that and if every one is moving away from that stock why should you buy it??
(Followed by weekly analysis of Nifty 30th Jan - 3rd Feb 2012)

Nifty weekly update 30 Jan - 3 Feb 2012

We had a dream run in Nifty in the first month of 2012 and Nifty is close to the upper end of the channel.As it was a very sharp rally every dip would be a buying opportunity and i would like to buy the dips.If we look at the institutional data FII's were buying heavily since the first week of January and is still continuing that. As of now if you got a buying level close to the bottom he/ she would be in a profit and the market tells you that when every body is in profit it is not good to trade on the long side.Thus if you are into stock specific trading i would like to book profits but investors can stay with their buying positions as this could be first leg of an upmove.We have some crucial resistance points on the upside around 5220 levels in Nifty futures and it would be a break out trade for a nifty trader and the next level on the upside would be 5290. The top of 5220 would be confirmed only if Nifty takes out the previous swing low of 5170.Thus in a nutshell as a trader this would be a crucial time to understand the difference between short selling and profit booking session, don't over trade the market and wait for next entry point from the downside.The market has retraced more than 100% from the 52 week low of 4530 levels and crossed all the major resistance levels. Watch out for levels of 5130 and 5060 on the downside.
Another important index to be considered is Bank Nifty. The banking index is getting locked at 9900-10000 zone and it has to confirm an upmove for any major move in Nifty. As Bank nifty led Nifty from the front it should first confirm a top for any downward move in Nifty. Thus we have to watch these two indices closely to get a clear picture.If we consider the stock specific moves as i said in the previous post IT is the only sector which has not rallied in the previous upmove and there is still some more upside left in IT stocks.I did mention about the spectacular performance of metal index in the previous posts and SAIL and TATA steel confirmed the move. Thus if Nifty continues to move upside i would like to stick to IT stocks and book profits in all the other sectors.As per time cycle below 5170 would confirm the top of 5220 but the reversal would be fast as it is a secondary rally and the week after 5th of February would see some major moves. Lets keep 5130-5290 as the weekly range

Nifty update for 27th Jan 2012

We had a normal expiry day with no special surprise expect a spectacular performance by the metal index.As i was repeatedly mentioning about Banking index leading Nifty , the profit booking session should also start with Bank nifty.Nifty is definitely in a short term bull market but bank nifty could possibly get locked at 9900-10000 zone as we have some crucial resistance zones over there.If it could surpass this zone Bank nifty could lead to further upmove.Thus we could connect these two indices and read it together as the move is directly proportionate.In a rally like this it is better to wait outside for a profit booking session and be a buyer on dips. The crucial levels on the downside would be 5060 and 4980 levels.We have a rally pending only in the IT stocks. Thus if Nifty stretches to 5200-5220 zone metals and IT stocks are expected to show some strength.If we talk about the levels on the upside we have targets lying close to 5200-5220 but i would not like to be a buyer without a consolidation stage as it appears to be an extended rally than a normal one.Thus we can keep a range of 5060-5220.

Nifty update for 25th Jan 2012

We had a good rally after breaking the resistance level of 5060 and crossed our next level of 5130 where the recent high was placed.As per time cycle the price is not in balance with the time in the current cycle and we need a healthy consolidation before the next move.We crossed 5060 which was an important level on the upside where the whole set up could change into a bullish scenario.Thus one could keep 4970-80 levels as the cushion for all long positions.Though the call is on the long side we need a good consolidation period for further rally as it could add more buyers at lower levels.As said in the previous posts a healthy correction is always good for a bullish market to stay intact.We are close to another important level of 5200-5220 levels but Nifty normally rallies close to 700 points and we are close to that mark.If we see the charts we have some slow movers with us they are from the IT and Pharma space.Even if there is a dip in the market it would be met with buying for a secondary rally and 4970-80 would be some important levels to watch out on the downside.We had a good turnover data as compared to previous days thus it is fair to assume the upmove was a clearly due to buying and not due to short covering. Thus it is still a buy on dips market and buying puts should be initiated only at the break out of 4980-70 levels or at the top close to 5200 levels (if it is making a topping out pattern).If Nifty is moving higher with out any consolidation it would just be a bubble like we had in 2010. Thus 5060-5220 can be the new range.

Nifty update for 24th Jan 2012

It was a quiet session for Nifty but it held the top of 5060. Though Reliance under performed,
L & T held high and helped Nifty from going down. If nifty is able to cross 5060-5070 levels it is expected to rally till 5130 where the first resistance is placed. On the downside one should be watchful at 4980-90 levels where we have some crucial supports are placed. If Nifty crosses 4980 on the downside it is expected to consolidate around 4840-50 levels and it would confirm the top of 5060.Even if it comes down if it consolidates around 4840 levels we still have a higher bottom , higher top formation.Volatility data shows that there are lot of short positions accumulated on the highs around 5040-50 levels. Thus any upmove above 5060-70 levels could take Nifty to 5130 levels due to short covering.The turnover data shows lack of buying interest on highs , but buy puts only after the high of 5060 is confirmed. As bank nifty was a better performer in the current rally it should lead the the downward move too. Thus for any downward move bank nifty should give the first indication.Lets keep 4980 - 5060 as the range and any break out should give some decent profit in Nifty.

Nifty weekly update 23-27 January - 2012

We had a decent pull back rally extended upto 5050 levels.Nifty futures closed at our upper range of 5060 and it hit those levels before 23rd of Jan as mentioned in 18th Jan post.We are at a crucial level of 5050. The level marks a major Fibonacci number as well as a trend line resistance. A break out to 5100 zone may turn the whole setup to a bullish one instead of a bear market rally.If you join all the short term trend lines o a daily basis we could see it is a fresh break out above 5050-5060 levels.Volatility data shows that short positions are getting accumulated on highs and it gives a possibility of a retracement towards lower levels. Thus as i was mentioning in the previous week's posts buy the dips and square off your positions at the upper end of the channel.A retracement towards 4800-4900 levels would still be good for a bullish setup as we have a higher top and higher bottom formation.We have a trend line and fiboancci resistance at 5060 levels and a price resistance around 5130 levels. Thus remember these highs for squaring off the positions and new break out levels on the upside.As per time cycle we have a range bound market with a 200 points swing but a major move is expected only close after the first week of February ie; 8-10th of Feb 2012.(Followed by Nifty weekly chart analysis from 2001-2012)

Nifty - An analysis based on weekly charts from 2001-2012

(Please read the analysis based on the same chart on 19-23 December. As it is a continuation based on the same chart it is better to have an idea about what i said in the previous chart)
Nifty had a smart pull back rally from 4530 levels and we are at some major resistance points.Lets have a look into the weekly chart.As of now the chart is saying that it is a usual bear market rally and we have a reversal above 5130-50 levels where we can say it is a temporary stop to this bear market.As i said in the previous chart about the long term pattern i mentioned a reversal point above 4840 levels.Thus if we could be a buyer in the current rally it would have been above 4840 levels as it was a key reversal point in the short term.(Please read the chart of December 19-23 , 2011 for better understanding).If we look at the short term charts we have some important fibonacci numbers at 5050 and 5150 levels thus it calls for a retracement towards 4800-4850 levels.As an investor it would be a normal profit booking session and even if it retraces it would still qualify for a higher top higher bottom scenario. Thus investors are advised to buy the dips and should not leave any opportunity if you are considering an investment horizon of 3-5 years.As history tells one should buy the blue chips on those bottoms where we can see panic selling or selling climax points.People searching for market bottoms are just like answering a question in a quiz competition. Nobody gets any reward for picking the bottom and it is time to use investors wisdom where value buying is possible.As i mentioned in the previous post in December 4300-4500 could be bottom level for me it reached almost 4530 and many of the stocks were at attractive levels. During my previous posts i was mentioning about only 2-3 stocks for investment, they are Coal india ( around 300-310), ICICI bank (650-700) and YES bank around 250-260.Another sector i'm quite bullish is the infra space where it has spent enough time at the bottom. There are some smaller stocks which are attractive at these levels , they are HDIL,IDBI bank , Escorts and LITL. These smaller one's are for a larger horizon of 3-5 years.Another interesting stock that has not rallied till now would be Bhushan steel.It is consolidating at lower levels for quite a long time and will give a break out above 355.It is always good to notice that if the stock has a larger consolidation period the upmove would be very good.As an investor i would like to exit FMCG, Pharma and Cement sector stocks and banking would be the sector to concentrate in the coming years.
As per time cycle it would be a range bound market till the first week of February and Feb 8-10 are some important dates to watch out for a major move

Nifty update for 20 - Jan -2012

Finally it broke out above 5000 and it is close to the upper band of 5050-5060. It would be an exit call at any levels above 5000. As I said in earlier posts anything close to 5000 or above should be considered as a bonus for a long position is Nifty and use dips for further long positions. The immediate support levels are around 4880-4900 and it is expected to have a good profit booking session to create further buying positions. Thus no need to buy breakout highs as it would be a risky call just because we are close to the upper end of the channel. The whole market set up still appears to be quite bullish and when ever we talk about a correction in the short term it should be considered as a profit booking session instead of a short sell. It is time for experienced options traders to start writing far month calls instead of buying put options. As of now the current rally is being built up by relevant consolidation and profit booking sessions and thus the setup looks quite attractive on the long side. Volatility data shows buy on dips would continue for some more sessions and profit booking is happening at highs. Cost of carry is increasing but on regular intervals it is giving time for profit booking sessions too. Thus traders are getting enough time to book their positions and not many people are getting trapped at the highs. If it is a downward movement the cost of carry would be at the peak and the market would be biased towards the long side. We are close to that kind of a market where every body is bullish and it would be extremely biased towards a single side. Thus one needs to be really cautious on the highs if you have a buying position. The range can be 4880-5060

Nifty update for 19 - Jan -2012

We had a range bound profit booking session in Nifty with average volume.Volatility data shows t only a few short positions are getting accumulated on highs and 4880-4900 would act as good support levels for Nifty.If you read the chart Nifty, it is incorporating everything that is needed for a strong bullish setup with some profit booking sessions.It would really give time for accumulation or distribution of stocks and a much needed process for bottoming out at least in the short term. As i said in my previous posts anything above 4950 should be considered as a bonus for a nifty trader and should be booking profits at these levels. It would still be a buy on dips market as long as Nifty futures hold support zones of 4880 and 4820.On the upside Nifty would be defended at any level above 5000.One worry on the upside momentum would be the inverse movement between Reliance and Nifty. Thus as a logical process if we consider the current momentum Nifty's upmove would be a catalyst for a positive movement for Reliance and if the range bound market continues with some profit booking sessions in RIL would actually be a benefit for the bulls as they can move together.Dollar index is finding tough to sustain at upper levels and this would be a positive signal for Nifty.Keep an eye on the downside levels of 4880 and 4820 as a cushion for the long positions.As per time cycle If Nifty has to hit 5040-5050 levels it has to be before 23rd of January 2012.Thus lets keep 4880-5050 as the range.

Nifty update for 18 - Jan - 2012

Nifty had a decent run up above our resistance levels of 4930 and it gave about 50 points on the upside. As I said in the previous posts any run up above 4950 should be considered as a profit booking opportunity and look for an entry at lower levels. As an investor one should stay with the buying positions as it is in a strong short term uptrend. There is no need to go short in a rising market and use the dips to create buying positions. One can see multiple support levels at 4880 and 4820. Thus use these levels to add some positions in the stronger sectors. If the market is moving up further one can see some profit booking happening in the defensive sectors like pharma and FMCG. Thus traders should reduce their buying positions when we are close to the upper channel of 5050-5060 (strictly for traders and investors should stay invested) and would be looking for short positions if it is giving a topping out pattern.The turnover data is still disappointing but as long as the trend is up we need to be with the trend.Volatility index is showing strong buying and some short covering above 4930 levels with a good advance/decline ratio.On the upside next important channel resistance is seen around 5050-5060 levels and we need to see whether that channel would be broken on the upside.Keep 4880 – 5060 as the range for options traders.

Nifty update for 17th January 2012

It was a range bound session with a positive bias and we could a lot of positive movement in many large cap stocks like SBI and l&t. The turn over data is still low and it shows the lack of interest on highs. Thus lets keep 4770-4800 as the down side support and till these levels are taken out we should maintain our upward bias. As i was mentioning in the previous posts SBI had lot to offer than many other banking stocks as it had a better consolidation period than any other stocks.Though we don't have to be short in the market at this point of time there is a good opportunity to book profit at the current level and any thing above 4950 would be a bonus for a Nifty trader.At the top i would be looking for opening short positions in 4950-5000 range.Turnover data was very low and volatility was on the rise with a decrease in the cost carry indicates short positions getting accumulated at the highs. Thus we could say that above 4900 there are some short positions and above 4930 short covering would lead to much higher levels above 4950. Thus play these higher highs with near out of the money call options as we are close to the top.
As per time cycle we have a top due, but we are not expected to have wild swings.Till first week of February we will have a range bound market with a 150-200 points swings.Thus it could be read as a bottom formation pattern at least for a shorter time frame.

Nifty update for 16 - 20 Jan - 2012

It was a positive close for Nifty after some time. Now we need to see how long would be the recovery process.If we have a close look at the beaten down sectors these sectors have given a much more meaningful or added some kind of an 'extra effect' to the rally.Many of the large cap stocks are close to their resistance points and would likely to face some pressure moving forward. There are some important Fibonacci numbers place around 4950 and any thing above should be treated as a bonus and one should book partial profits in long positions.There is a break out pattern around 5050-60 levels in the medium term and thus investors are advised to stay with their buy positions.As a trader i would be happy to square off my long positions at the current level or any where close to 4950 -5000 level.Though Nifty had a good rally stocks are being reacting as if it is in a bull market. Thus it is time for many of the large cap stocks to retrace back to a low though it would not be a new low.Volatility and turn over data are not showing any kind of reversals and we would be in the third stage of the rally in the coming week ie; we had a rally a profit booking session and the secondary rally to confirm the top.As per time cycle we had a top due on the 9th of January and we are expected to form an interim top around 16,17 th of January. Lets keep 4810 - 4950 as the new weekly range.(Followed by an analysis of world markets)

World markets - A long term view

Please read the post on 02nd December 2011 before reading the post for a better understanding

1. DOW - One of the major indices in the world which gave decent performance in 2011.It is close to the upside cap mentioned in the previous post ie; 12600 levels.The view would be range bound with a negative view only below 11200 levels.

2. DAX - There is a slight chance of recovery but the confirmation of the up move will come only above 6500 where the recent top is placed.In the short term there is a higher bottom formation and if there is a recovery in the European markets this would be recovering at a faster rate.

3. FTSE - As compared to Dow jones and DAX, this would be the weakest market among the three.
I had mentioned about the prevailing bear market in FTSE in the previous post too.One good argument for a bullish turn around would be the double bottom formed around 4900. The confirmation of any up move can be confirmed only above 5900 levels.

Nifty update for 13 - Jan -2012

We had a profit booking session and as expected the first dip was met with lot of buying interest.Finally as said in the 11- Jan post SBI gave a break out and had a decent rally towards 1760-1770 levels. If we look at the time it has spend at the bottom there is much more to come if Nifty is moving towards 4950 zone.I would exit all other banking stocks now would bet only on SBI for any up move.To confirm another big move for SBI nifty has to surpass 4900 levels.Turn over data shows that profit booking is happening at higher levels but short positions are not very much. I would like to read it as a buy on dips market.Thus 4770-4800 would be an important range to watch out for as a cushion for your long positions. As i said yesterday i would like to book profit in some large cap stocks like l&t, axis bank and ICICI bank. As a buyer i would like to concentrate on mid cap and small cap space.If Nifty is not making a dip again i would be waiting for 4930-50 levels on the upside.Lets continue with the same range of 4770-4930.

Nifty update for 12 - Jan - 2012

It was a quiet session except some stock specific up moves. The turnover data is comparatively low and volatility is giving an uptick.This could be considered as a profit booking session and short selling at higher levels.One can maintain the short term bullish setup till 4930-50 levels.Even if there is a dip to 4800 levels that would be met with buying and no need to misjudge it as a short selling idea.As we have Bank nifty as the leading index we could see some of the major banking stocks hitting some important resistance levels. We could see ICICI bank facing some major resistance levels at 790-800 levels and from a trading perspective i would be booking profit at these levels and would look for an entry from a lower level.As the cost of carry is increasing only at a nominal rate it would be an indication that traders would like to buy on dips and not the highs.This kind of situation happens when Nifty is moving up by buyers and not by short covering.Lets keep the same range of 4770-4930.

Nifty update for 11- Jan- 2012

Finally Nifty broke out from the range bound trade and closed above the break out level of 4840.As mentioned in yesterday's post two stocks were not ready to move and finally it gave a break out from the tight range and those are l&t and SBI.Bank Nifty gave a break out above 8500 levels and it gave us 250+ points on the break out trade.Thus buy the first dip and we have our first resistance levels close to 4930 - 50 levels. The turn over data was on the rise and Volatility levels are showing buying emerging on every dip.Though SBI gave a 4% upward move it has to participate in this rally in a much meaningful way at least giving levels of 1750-1760 levels.Now we have a base formation pattern where is floor is placed at 4690-4700 levels.We had a date for the top on January 9th but it did not form a top and broke the resistance levels, thus we have dates for the top only after a few days.As i said in the previous posts i would not be in a hurry to go short in a rising market, thus let it give a rally , give a profit booking session and have a secondary rally to confirm the top.Lets keep the new range as 4770-4930.

Nifty update for 10th January 2012

It was again a quiet session and nifty again retested 4700 levels but held 4690 once more.Though it made a come back from 4700 levels the turn over was on the lower side.Bank nifty failed to close above 8500 level and again it is proving to be a difficult level to cross on the upside.Turnover and volatility data show that short positions are getting created at the top but not on heavy volumes.Thus as an options trader keep the bias up only till 4690 holds on Nifty futures.All the major indices are giving an upside momentum with a good advance/decline ratio.We have two more large cap stocks to perform for Nifty to give an up move, they are l&t & sbi. L & t has to cross 1100, sbi has to give a break out of this tight range.Thus don't do any kind of over trading , let it give a break out and Nifty is still holding our range for the past 10 days.Thus lets keep 4690-4840 as the range.

Nifty weekly update 9-13 January 2012

Nifty had a quiet week and Nifty futures held our range of 4690-4840. It is still within that range after successfully testing 4690. If we analyse the turnover data we had a good advance/decline ratio in favor of bulls with short positions accumulating only on a single day. Thus through out the week we could see some buying activity happening especially in banking.Short accumulation happened only on Friday's opening trade and those shorts got covered supported by buying at lower levels.I would like to read it as a rally contributed by buying and not because of short covering. The rally would be a false one only below 4690. As said below 4700 we squared off all the longs but buy puts only below 4690.If Nifty is not even ready to go and fill the gap of 4640 i would not be in a hurry to create short positions.4840-50 levels have to be watched on the upside as we have a major trend line break out on the upside above these levels.Option traders are advised to create long straddles with near out of the money calls and puts as the break out is expected soon.You could see some short covering happening in weaker stocks in the cement and auto sector. Bank nifty would be an interesting chart to look as it is a clear break out above 8500 and as i said in the previous posts banking should hold for any upside rally in nifty.It should continuously trade above 8500 for banking stocks for a decent move.As we have a bad result season coming up consider this as a relief rally before that.Dollar index rallying above 80 is still a concern for Nifty and consider that as a serious threat for nifty in the near term.Thus lets keep the same 4690-4840 as the range for the coming week. Options writers could have made use of the range in a profitable way.

Nifty update for 06-Jan-2012

It was again a quiet day for nifty with some major moves especially in Reliance. It ended below 700 levels and it should hold the 52 week low zone for Nifty to break out on the upside. It is a tight range bound market with a 100 points range and a break out on either side should be considered as valid.As i said in the previous post banks should hold for nifty to break out with a positive bias.Thus bank nifty would be leading but it has to first cross the price hurdles around 8500 levels by giving a closing above that.As said in the previous post cement and some of the auto sector stocks are giving exit signals and investors should exit from these stocks.Short term bounce back rallies should be considered as opportunities to exit.Volatility data shows some buying happening at lower levels but stocks are seeing serious profit booking. Thus it would be a little difficult for futures traders to be in the market.As per time cycle if we have a top it should be formed around 9th of January.Turnover data is showing a steady increase but with a profit booking session in bigger names like Reliance is really a concern. Thus keep a cushion of 4700 for any long positions. As of now there are not many short positions but short positions might get created below 4700. The range would still remain as 4690-4840.I would like to create a buy or sell position only on the break out of the 100 points range of 4700-4800.

Nifty update for 5th Jan -2012

We had a quite session in Nifty with a favorable advance/decline ratio on the bullish. As said in the previous post ICICI made a decent intra day move of about 3% from our buying level.Though Nifty is still holding some important levels Reliance is still a disappointment in this current bear market rally.It is still the weakest among the biggies.It is better for investors to exit counters like ACC (below 1000), Ultra tech cement and auto biggies like M & M and Bajaj Auto. Though HUL is an out performer don't create any buy positions if it cracks below 395.We still have our upper levels placed around 4850 levels as long as it holds the low of 4700 on the downside. Banking is one sector that should hold up for the rally to continue.Thus before going short Nifty should confirm a low below 4700 to tell you that it was a false rally. We still have some more upside left but as a buyer you have two levels to watch out for.One would be below 4700 as one should square off their long positions at that level and at 4640 levels we need to watch out for a new buying level.On the upside if it crosses today's high wait for 4840 to square off the long's.Investors should exit cement stocks like ACC (below 1000) and Ultra tech cement.We had a good turn over compared to yesterday and it reveals that people are booking profits much before any resistance levels in Nifty. Thus if it is a consolidation phase with a floor of 4640 it is well and good for the bulls.Lets keep 4690-4840 as the range.

Nifty update for 4th Jan 2012

Nifty extended its short covering rally to 4750+ levels and it was a rally with volume.It was spending one week with out volumes with a negative bias and when it started moving up we had a massive rally with good turnover.We had our upside range around 4730 and it gave around 50-60 points on the breakout. For a trader Nifty had a decent consolidation on the down side and it should be a buy on dips market with an upside cap placed at 4840 levels.This upside cap of 4840 would be the level to book your long positions but don't go short in a rising market.The interesting stock for a buyer would be ICICI bank above 735 levels and the stock could be a decent bet for 770-780 levels .As a nifty trader 4700 would act as a cushion on the downside.As mentioned in yesterday's post Nifty had some serious short short covering and SBI gave as an upside profit of 50-60 points.Turn over data is showing a come back of institutional traders and they were net buyers at the end of the day.Volatility data is showing massive short covering and buying at lower levels indicating a range bound market with a positive bias.As a buyer i would be concentrating more on some metal and banking stocks rather than weaker names like Reliance as it has not spend enough time at the bottom.Thus the new range would be 4690-4850.

Nifty update for 03-Jan-2012

We had a quiet session with lower volumes but nifty could see some serious short covering activity below 4600 levels.Some major stock specific moves are happening in many counters like JSW steel and Bajaj auto.It was another low volume day and Reliance is leading the short covering rally. Though Reliance has covered some shorts it is still the weakest among the pack.If there is any stock to be played on the upside it should be SBI. Above 1635-40 levels it could give a rally of 50-60 points, but first it should cross these major hurdles.As far as Nifty futures is concerned our upside range of 4730 would still act as a major reversal point on the upside.Turnover and volatility data are indicating short covering activity in the market. As long as it is not a long accumulation the there should not be any case for a bullish reversal.Thus we can still keep 4530-4730 as the range for Nifty.Dollar index is still trading around 80 levels would be a major threat for any rally.

Nifty weekly update 02 Jan - 06 Jan 2011

We had a range bound session with a negative bias and it was a week entirely for options writers.In the coming week it wont be range bound session and Nifty is expected to see some volume trading days within a week or two.As suggested in my previous weekly post a delta neutral position would have earned decent risk less profit.The major worry for Nifty in the coming week would be the new 52 week low made my Reliance in the previous trading day. Though some of the biggies held their 52 week lows they are on the verge of break down. Nifty could most probably test its 52 week low zone once again and the major levels can be decided from there.Though we have a break down pattern the cash flow in the market is close to bottoming out and there would be some chance for bottom fishing and investors could utilize these selling climax points as buying opportunities.There would be many reports saying Nifty could crash further and it is difficult to recover from this bear market.As an investor on every 100 points cut one should be adding at least blue chips like ICICI bank, Coal India in small quantities.One should be buying the last leg of a crash and make use of the available opportunities in equity segment. For a trader it can be true that Nifty could find a new bottom but as of now 4300-4400 could be seen as major point for reversal. As a weekly range we could keep 4530-4730 as the new range.Fridays turnover and volatility data show that short positions are getting accumulated on every rise.Dollar index breaking above 80 for the second time would be another worry for the bulls.