Nifty update for 1-March-2012

It was quite volatile but as expected Nifty ended flat in a range bound market. It is actually good for the market to spend some time in a range bound market as the positions could get squared off and thus reducing the premium. I would not like to trade these range bound sessions till we get a clarity regarding the move. Till we get into a trending phase it is better to hold on to writing out of the money options a delta neutral position. It would be a fresh move on the upside above today’s high of 5515- 5520 range and it could take nifty futures to 5625 region once more. We need some confirmation regarding the upmove from our leading stocks; they are Jindal steel and ICICI bank. Nifty futures did not show any increase in the volume and as I said the short positions are lying between 5500-5550 zone and today’s move proves that point. If these short positions were lying from 5450-5500 zones it would have lead to a much greater short covering rally on the upside but it did not happen, thus I would go for a fresh long position only above 5515-5520 zones. Both of our leading stocks were on the negative territory and we could get the leading indication there itself. SBI would give another leading indication as lots of short positions are lying in 2300-2325 zone and we have discussed in the previous posts. It made a high above 2300 but failed to sustain above these levels indicating lot of options writing happening. Thus we need to get a short covering rally in all the mentioned stocks and nifty for any upmove. Two socks that witnessed short covering would be stocks like TATA steel and Wipro and it is yet to see it would lead to some fresh buying. On the downside one could closely watch 5330- 5400 zone and we should see whether some fresh buying is happening in the stocks. Let’s keep the range of 5400-5520 and on the upside it considered to be a break out trade towards 5625. Watch the mentioned stocks too for a better trading opportunity as these shares are 98-99% proportionate to Nifty’s move.

Nifty update for 29-Feb-2012

It did not break the base that built around 5330 levels and bounced back from those levels to confirm the base for Nifty. We could call it as a short covering rally than fresh buying and the poor turnover data shows that. Volatility index shows some fresh buying happening on dips close to 5350 levels and the cycle would be the same as that of first week of February when Nifty futures faced the resistance around same levels of 5440-5450. If these resistance levels are taken out I would be a buyer with a near out of the money call with an upside target level of 5550-5560 where most of the short positions are lying. Thus 5350-5440 could is a no man’s land and thus a possibility of range bound market is high if we inch higher. If we see the past data Nifty could surpass all the major resistance levels by spending enough time on a downside or a range bound market so that it could get some time for new buying. As an options writer I would like to make delta neutral positions as long as it remains in 5350-5440 range. In a range bound market you could see Nifty making new highs but suddenly dropping off from the highs as there is not enough volume for a sustained move. Thus on the downside, as I said in yesterday’s post create new positions in put options only below 5330 levels and think about buying close to 5240-5330 if the move could sustain or above today’s high of 5460 as there is a high possibility that one could get trapped in a range bound market. We could only see a marginal increase in the leading indicators of Nifty ie; Jindal steel and ICICI bank and a good move by these two could decide the move of Nifty. SBI could retain levels 2200 + levels due to some short covering and it would be a wait and watch game whether it could sustain these levels because there are lot many short positions lying in 2300-2325 zone. These important leading indicators would be the key for the market to watch out for in the coming days.

Nifty update for 28-Feb-2012

Nifty had a deeper cut below our support levels of 5440 and is touching some major support zones at 5330-5350 levels. It would really be a testing time for Nifty and it would be a wait and watch game whether it could hold these support zones. If we look at it as a corrective move we only had a 300 points cut for a 1100 points rally and it should be treated as a normal correction. As I was mentioning in the previous post we could get the first leading indication about the market direction from two major stocks they are Jindal steel and ICICI bank. These stocks did some serious damage to Nifty along with SBI. The banking biggie could not hold on to its support zone of 2200 and far below the support zone and it should be considered as a major threat for Nifty. Crude oil and dollar index would give some serious problems for Nifty on the upside. Thus for new buyers , you need to wait for the market to settle down and the first upmove should only be treated as a short covering and don’t get excited with any upmove. Our next Fibonacci number lies around 5240 levels and ideally that should be an ideal support zone. These support zones should be considered as places where one should cover his/her short positions and wait for the next move. Dollar has got enough time to move up and a move towards 52 zones could not be ruled out. As of now FII’s have not started their selling and it could be a tricky market at this point of time as there are yet some more moves left on the downside. f we examine the previous weekly posts 5330 would be an important area where Nifty did some base building process for the upside move and below that it could lead to 5240-5250 zones, but if nifty cracks below 5330 zone one could start covering their short positions close to these levels of 5240-50.Let’s keep the range as 5250-5440.

Nifty weekly update 27 Feb - 2nd Mar 2012

Nifty witnessed a profit booking session in the previous week and it gave a closing above our lower range of 5440. Though we could see some profit booking in banking and metal space Nifty is holding the important support levels at 5440-5450 levels. At this juncture it is important to have a look at three stocks and they are SBI, ICICI bank and Jindal steel.I had mentioned about the importance of SBI holding levels of 2200-2250 levels on the lower side and it held those levels till friday, but we could not see any short covering happening in the stock as of now We need to see whether SBI could hold these levels for any upside momentum in Nifty.Other two stocks, ICICI bank and Jindal steel are highly positively correlated with nifty and we did see some short covering happening in these two stocks. Thus any further upside momentum in these two stocks should be considered for any up move in nifty.These stocks have around 95-98 % correlation with nifty if we check the data for past one year and it would be an important indicator for any upside or downside move for nifty.If we see the attached chart(click on the attached chart)Nifty is hitting some important angles on the hourly chart which provides a decent support. Thus a break below the mentioned support levels could take nifty to 5350 levels and will show the first signs of a corrective move in nifty. We did mention about the bottoming out of crude in the previous weekly posts when it was at 4900 levels and could see a massive upside in crude to 5400 levels.It is quite surprising that the upward momentum in crude is not affecting nifty and dollar. On the way ahead it is clearly a negative signal for nifty but base metals like copper and nickel are getting some support.We should wait and see whether the supports are relevant and it could sustain in the coming days. Long positions could be made only above 5560-5570 zone as some short positions will get covered in  nifty.As per time cycle we have important dates coming around 21st of March and i would expect the next major rally in a time period between 2-10 April 2012.Lets keep the range as 5440-5560 .

Nifty update for 24th Feb 2012

We could see Nifty sliding below 5500 and though it attempted a comeback to 5560 zone it could not sustain above the mentioned resistance levels and thus closed below the support levels.Volume data does not suggest any reversal pattern or accumulation on the downside but as the volatility index too closed on a negative it should be considered as a profit booking session. Thus tomorrow can be a crucial day to show whether nifty has the strength to break out on the upside or downside.Below today's low we could expect some more selling pressure and that could take nifty to 5350 levels. On the upside we should consider 5560 zone to be broken for any upside momentum. As i said in the previous posts it does not make sense to hold on to long positions. SBI could play a major role in this trend deciding move of nifty and we need to see whether the banking biggie is able to hold on to 2200-2250 zone.As we could not see any major short positions or long positions in 5500-5560 zone it could be read as long unwinding in feb contracts and no major rollovers are happening in this zone. Thus the breakout of the range would be valid and it could give a trade of 80-100 points. Thus trade with near out of money options of April and we could get a higher delta to trade in a better way. The range can be 5440-5560.

Nifty update for 23 Feb 2012

It held our upper range of 5625 and came all the way down to 5500 which is a major support zone.One could easily square off the long positions at 5560 levels and go short from those levels. It could be seen only as a normal correction . Volume and turn over data shows still lot of buying is happening on dips and today's selling was mainly due to profit booking.On the 21st of Feb we could see an unusual increase in volatility index and thus we could assume that we have short positions lying only in 5600-5630 zone and all the rest of the selling happened due to profit booking.Though it was a little painful for the mid cap and the banking space it should be treated as a normal correction. Thus if you have any puts bought below 5560 take a chance and hold it if nifty futures crosses 5500. This is only the second phase of the current rally and we still need a secondary rally to confirm the top. The immediate support zone lies at 5440 and we could consider 5330-5350 as the base for the current rally and trade accordingly.Lot of liquidity is yet to be pumped in to the system by retailers who did not get much opportunity in the current rally.We could book some profit in SBI above 2400 and that too on time and the stock was the only one which showed some trend reversal.On e the upside keep an eye on 5600-5630 zone is getting covered . Lets keep a range of 5440-5560.

Nifty update for 22 Feb 2012

  

Nifty futures failed to sustain above our upper range of 5625 and we saw a day with lot of volatility coming into the system. The Volatility Index saw an unusual increase of 8% with a good open interest and reduction in the premium it is an indication of short positions in the market. As a normal trader there is no need to consider buying put options as our previous swing low of 5560 is not taken out till now. Thus one could trail the stop loss to 5560 levels in nifty futures. The volumes of equity markets were higher revealing a higher participation from the retail front. Reliance has again given a break out above 830 levels but sustainability above these levels is a matter of concern as it is famous for giving break outs at the wrong time. If it could sustain above these levels of 860 could be seen. The upward momentum that is happening in dollar and crude oil should be considered on a serious note as these could affect the current uptrend in a bad way. As of now nifty is still maintaining its momentum and it did not take out any swing lows and we did not even have a small correction and secondary rally. Thus there would still be some time for a major top. From the stocks front A2Z mes is showing a bottoming out pattern and seems to be in a mood for a rally above today’s high of 143-144 levels. I would like to buy in small quantities and 125-140 would be a good price band as a short term investment.Let's keep the Nifty range as 5490-5625

Nifty weekly update 21 - 24 Feb 2012

Nifty registered a new high close to our upper band of 5625 and it would still be a market to be bought only on intra day basis. It would be illogical to continue buy and hold strategy at these higher levels especially when nifty is giving large moves of 80-100 points. On the upside Bank nifty gave the first break out and lead nifty from the front and on the downward move too bank nifty should give the leading indication which has not happened yet. In a trending market like this we could see that traders were trying to catch the top and go short but got stopped out at each high but we could see substantial amount of buying in the second phase of this rally around 5350-5400 levels. Thus these levels could be considered as a base for this market rally. At these levels we could see crude oil at important resistance levels but in a rising trend and the metals like copper and nickel in a selling trend. Equity markets always witness good amount of pressure to ride the up trend when metals like copper and nickel face selling pressure. Thus now it is time to coordinate these moves to catch the further trends in nifty.The next reversal for the dollar would be above 49.90 levels and once if it is able to cross that level , 51 could be seen once again. Any correction in the current bull market could be seen as a normal bull market correction and buy the dips after a healthy correction. Keep the previous swing low of 5500 as the cushion for all trading longs and as an investors i wont go for any fresh buying at 5600 levels. As per the time cycle we have some important dates coming around March 21 and 2nd week of April. In the second week of April we could expect a major trend deciding move in Nifty. Lets keep the range as 5490-5625 and consider the break of this range for an intra day trade.

Nifty update for 17 Feb 2012

Nifty took a pause after a great rally of 100+ points. We could see SBI rallying above 2350 levels and I think it was the right day to take some 20% of your investments in SBI. It does not mean that it would come down immediately but it could be the ideal way of booking some profits. Turnover data of equity market shows that it was a day with some higher volumes, but the volatility index is showing some heavy short build up at the top. Building up of short positions on the top does not mean that it should come down immediately. If we see the market rallies right from 5300 we could see short build up at the top but eventually all these shorts got covered up and market rallied on the upside. Thus search for an opportunity on any dips to get inside. We have multiple support levels lying at 5440 and 5330 and these would be ideal points for squaring off any long positions for trading purpose. As nifty is not taking out any previous swing lows it is still in a strong position and we can still maintain a target of 5600+ on the upside but use higher levels to exit and it does not make sense to get into this crazy market with out a correction. It is true that people need to get convinced of a correction as it was such a huge rally. Thus limit your buying positions from an intraday perspective and it is better to trade in at the money options as we can get it at a cheaper rate as we are close expiry. In the medium term we need to closely monitor the movement of dollar index and crude oil. Interestingly these two charts are also kind of a bottoming out pattern and nifty would never move in the same direction. Thus moving forward these are the two major components that would lead nifty to another level. Let’s keep the range as 5440 - 5625

Nifty update for 16 - Feb - 2012

It did not even come below the important level of 5440 levels and we could see massive activity in the mentioned 5500 call February. Traders who bought the call above the mentioned levels could have doubled the money within a day's time.Except Reliance both HDFC and ICICI bank gave decent upmove along with L&T and TATA motors.As i was saying in the previous posts any buying above 5440 should be from an intra day perspective and as it is giving a massive rally like this it is illogical to hold the positions for a longer time frame.The actual target for nifty futures would be 5590 and 5625 but this would be exit points and investors are advised to book 20-30 % profit in their portfolio especially in stocks like SBI.We had a thousand points rally and there would be some more steam left on the upside but take a wise decision to step out and book some profit.Traders will still have plenty of opportunities as it is not a range bound session and movements are so sharp that short sellers are getting stopped out at every move.It will not be a rational decision to go short from the top and we have our immediate support levels lying around 5440 levels.If investors want to stay long this would be the trailing stop and all the fresh buying positions could be sold off intra day for better gains.We could see one of the greatest turnover days ever in the equity market and volatility index was on the negative side. Thus the market could be read as buy on dips as per the current scenario.Lets keep a range of 5440 - 5625

Nifty update for 15th Feb 2012

Nifty futures gave an interesting close above the mentioned levels of 5440. Though some of the major large cap stocks like HDFC, Reliance and ICICI did not break out from the major resistance zones buying in TATA motors , SBI and l&t helped nifty to catch an important level.On the way ahead we should have a careful look at the mentioned price levels of 5500 call ie; between 35-45.Thus above 5440 in nifty futures one can buy near out of the money call of 5500 and above 5440 nifty futures is expected to trade higher till 5500-5510 range.As we had a good consolidation period for a week after 5th of Feb it is good to respect that consolidation period and it never took out our support zone of 5330.A good consolidation period would help Nifty to balance with the time factor and give a break out.A false break out would be seen if the mentioned stocks like ICICI, HDFC and Reliance not breaking out with Nifty.Thus traders could watch these stocks and near out of the money calls for confirmation of any upmove.I expect a decent correction and not a consolidation this time , of 200-300 points and a secondary rally would be seen after that. Possible dates for a major top would be 18th-22nd of March and second week of April 2012.On the downside one should watch out for 5380-5370 to square off all long positions.Thus let's keep the range of 5370-5500.

Nifty update for 14 - Feb - 2012

It was a quiet day for nifty except the result day for SBI.Nifty futures once again failed to cross 5440 levels and closed below that important level.One could see 5500 call were written between 35-45 range and as i said in the previous posts instead of short selling in futures,options are getting written at higher levels.Some of the major large cap stocks are some major resistance zones and lets wait and watch whether these stocks would give a break out or not.We have ICICI bank giving a break out above 950 zone , Reliance above 865-870 levels, HDFC above 703-705 levels.Bank nifty and nifty are almost at par by hitting the major levels on the top for a few days. Thus these stocks should give a really good break out for nifty futures to surpass 5440 levels. We should observe the rates of 35-45 in 5500 call as if it breaks these levels on the upside we could see squaring off of these positions and it would help nifty to go up to 5500 levels.On the downside 5330 would remain as a major level of support and a break below that would confirm the top of 5440. Thus as a trader one should show the patience to see some break down below 5330 before buying put options.Volume and turn over data shows that not many short positions are left in the system except the written calls of 5500, but the volume of equity market was really disappointing. I would like to watch the above mentioned stocks for any break out on the upside or downside.One could see the chart (click on the chart ) that in the previous 3 occasions people tried to catch the top and go short but got stopped out and the shorts got covered , but in today's move the written calls did not get covered (green color) if these calls get squared off it could trigger a move to 5500. On the downside break of 5330 could confirm the move to 5230 levels. Lets keep the range of 5330-5440.

Nifty weekly update 13-17 Feb 2012

We had a consolidation period after our previously mentioned time cycle date of 5th of February and we are yet to break out of the important resistance zone of 5440. As we were seeing the break out on the upside is happening with only 10-15 points and we are seeing sharp sell off from those levels.If we see the upper channel between 5400-5400 instead of short selling we could see lot of options writing happening in 5500 calls.The clarity came when every time Nifty was going down the volatility index was not going down and this means every dip was bought and when ever market came back from our support zone of 5330 it came back with lot of buying interest and not because of short covering.Thus it is a confirmation that lot of buyers are there in the zone of 5350-5400.If we are breaking 5330 on the downside we could see these long positions getting squared off and i would not be surprised if nifty gets into 5150 -5200 zone before the next upmove.Consider these as normal bull market corrections and once we get a rally of 800-900 points a minor correction of 200-300 cannot be ruled out and these would be really good for a good bull market.When Nifty is giving a break out on the upside every day with 10-15 points move every day but fails to cross above these levels it is a clear evidence of option writing and not short positions in the futures.On friday Nifty could not cross our mentioned resistance levels of 5440 and thus there is a valid reason to consider that zone as a huge resistance zone. Thus 5400-5500 zone is still to be considered as a no man's land and if anybody has to buy he/she must be doing only from an intra day perspective and that too near out of the money calls.If Nifty takes one more dip to our support zone i would not be a buyer and wait for some lower levels for a new entry on the long side.As i said in the previous posts when ever we are getting a break out we are hitting the top channel and it is clearly an exit signal for long positions.Lets keep the range as 5230-5440.

Nifty update for 10 - Feb - 2012

Nifty once again showed that it is not yet tired for any upmove and nifty futures successfully held our support zone of 5330 and registered a close at 5440 levels. Though we don’t have to buy puts on any top buy any upmove clearly from an intra day perspective and buy only out of the money options to play any upside. It is still moving very clearly through the up trending channel and till it moves below 5330 on the downside the channel looks firm. Thus as a trader there wont be much opportunity to play on the upside on a positional basis. If we see the upward channel it looks like 5500 on the upside but the channel top is moving up with the nifty, thus we have a top placed at every upmove. I had mentioned about a consolidation or trend deciding phase in the weekly post after 5th of Feb and we saw the consolidation phase only after the mentioned date. Thus if we analyze the time cycle charts next major trend deciding moves could happen on 21-March 2012 and from April 2-8. As we said in yesterday’s post the high light of today’s move was the way metal index moving ahead of Nifty. One could see major metal stocks like JSW steel, Jindal steel, Bhushan steel gaining more than other large cap stocks. We had a good turn over data showing that every dip was being bought and a negative Volatility index is showing the same. If Nifty is able to cross 5440 on the upside it could stretch 50-60 points. In the larger framework I am surely in favor of a healthy correction and expecting the major rally to happen by the second week of April 2012.From the trading perspective one could expect a little more up move as the momentum is strongly on the upside. One could watch Biocon (above 291) and Oil companies like Hind oil on the buyer’s radar.Let’s keep the range as 5330 – 5500.From the trading perspective one could expect a little more up move as the momentum is strongly on the upside. One could watch Biocon (above 291) and Oil companies like Hind oil on the buyer’s radar.Let’s keep the range as 5330 – 5500.

Nifty update for 09 feb 2012

It was quite a tough market to trade with. As we mentioned in the previous post there is no need to initiate short positions in Nifty futures before crossing 5330 and we should consider that as a key level of support on any downward move. Nifty is still holding the channel and it shows some weakness only below the above mentioned level. As we could see nifty took a turn around from 5425 levels but the volatility index never turned positive and it indicates it was a just a profit booking at top levels and there are only quite a few short positions in the market. In a nutshell we could see regret from the part of retailers that they could not enter the market at lower rates and they are not leaving any dips into a short selling situation. If we see the history this is the place where most of the retailers are getting trapped on the long side, thus play nifty only with near out of the money options. In the commodities market base metals are showing some strength and as a continuation we could see metal index showing a strong upmove in today’s session. If the metals are going to gain it would be a strong signal for nifty to go up. Except TATA steel every other stock in this particular sector was on buyer’s radar. We have significant resistance points at 5430 as mentioned because we have a 50% pull back resistance at these levels. Thus consider buying out of the money calls only on the upside break out above these levels. We can comfortably buy puts only once Nifty futures crosses 5330 and not before that. Let’s keep 5330 – 5440 as the range and break of this range should be treated as a trading opportunity. On the upside just consider it as a momentum buy valid from an intra day point of view and on the break out of the down side consider buying puts at least for two days. On the break out of 5330 the downside target till remains at 5230 – 5250 levels.

Nifty update for 08 - Feb - 2012

We had a negative closing in Nifty after a decent rally till 5400+ levels. Nifty futures held our upper range of 5400 but did not take out the low of 5330 levels. Thus wait for a confirmation of a correction once it crosses this low and this could possibly take Nifty to 5230-5250 levels.The volatility data shows that it is a normal profit booking session and some shorts are placed in 5380-5400 levels.The volume data shows lot of buyers were there at the break out of 5400 on the upside and surprisingly short are placed at lower levels than 5400.Short positions will get added once Nifty futures crosses 5330 on the downside.As of now it looks like a normal bull market correction and lets wait for our range of 5230-5400 to be fully filled. Bank nifty is yet to make a reversal pattern and this could be watched carefully. If there is a profit booking session it should happen in those sectors which have rallied the most and they are metals and banking.Dollar index is all set to move up after forming a base and this could adversely affect Nifty's possibility of breaking the highs of 5400.If Nifty breaks 5330 l&t and Tata steel would suffer the most and as usual reliance gave a break out on the upside at the wrong time.On the upside above 5400 we could still see some short covering rally and it could help nifty to gain some points on the upside.Volume data shows a clear exit signal in nifty close to 5400 and it is time to close some of your trading longs and wait for a good correction to get in. Lets keep 5230-5400 as the trading range.

Nifty update for 07 - Feb -2012

Nifty futures held our upper trading range of 5400 and we could see a positive day even in the starting of 2nd week of February. As i said earlier we have some important time cycles due in the second week of feb. If we take the corrective wave pattern from 6335 to 4531 we could see Nifty corrected about 1804 points.Take the half of it (1804/2) = 902.If we add 902 to 4531 we will get it at around 5433 levels and any 50% upmove from the bottom is ripe for correction.Nifty did this magic within a month's time and it is clearly over balancing with the time factor.Thus Nifty should consolidate or correct after reaching the mentioned levels and thus the price levels would square off with time.We have our support zone lying at 5230 and any break of today's low would confirm the top of 5400 and a move to 5230 is quite possible.Though it would confirm a top investors could wait for a much more deeper cut for any further investment.On the upside above the upper range of 5400 it should be considered as a break out trade at least for 30 points. Play with these range with near out of the money options.Though i'm okay with the over bought levels in the price oscillators ,(as it is quite natural) the cash flow getting stretched to over bought zone is a real worry.Any downside break out should be considered only as a normal correction and it is still in the first leg of a bull market.Thus lets keep a range of 5230 - 5400.

Nifty - weekly update 06-10 Feb 2012

We had a quite surprising but a very good rally from the fist week of January and is still going strong without any pause.One good thing happened on Friday would be the break out given by Bank nifty on the upside.As i said in the previous post 5330 would be the maximum upside for Nifty for me to square off my trading long positions.It does not mean that Nifty could not go up further, Nifty could go all the way upto 5400+ levels and nothing could stop it if it wants to.I would like to play any upside move would by creating a bull call spread with a delta neutral position.You have a much shorter expiry compared to previous months and Nifty is close to the top.Thus make use of the time value that is available in February options and keep 5230 as the cushion for all long positions.One good signal of a strong market would be moving higher without taking out the previous swing low. Except once (when it took out 5170) it moved creating new highs with out taking out the lows.If we carefully observe the Nifty chart we could see that traders are creating short positions on every rise at 5230 and 5290 levels.Both these tops were taken out because of the short covering happened above these levels. In a nut shell we could see that in the recent move from 5230 - 5350 levels bank nifty gave a break out only in the final hour of trading and metal index closed on a negative note. Thus there would be lot of short sellers at every top who wish to catch the top and go short in the market.If we look at the market situation there would not be any opportunity to buy puts before crossing 5230 on the downside and these short positions got stopped out at every new high. It would be illogical to go short in this kind of a market without any reason. It is a fact that Nifty got stretched on the upside and a healthy correction would be inevitable. A correction does not mean that Nifty would lose 400 points , it can correct 150-200 points and new buyers would get in on every dip. Use the current situation as a buying opportunity in the equity segment on every dip and for any short positions let it make a top by consuming some time.Let it be a bottom or top , any market has to spend considerable amount of time at the bottom or top.Cash flows are getting stretched on the upside so as an investor i would not buy any stocks in the current situation but would like to stay with my current portfolio.As per time cycle we have important dates coming up in this week for some major moves.The exact date would be 5th of Feb, but as it is a Sunday we could except the reversal moves in the coming week. Lets keep the weekly range as 5230-5400.

Nifty update for 03 - Feb - 2012

Nifty continued its uptrend and nifty futures registered a new high close to 5300 levels and it seems to be a decent exit level , wait for a healthy correction for the next entry. As i said in the previous posts one could extend the actual targets on the long side to 5325-5330 levels but i would not like to add positions on the long side at these levels.One could see huge volume in equity market and all the stocks especially in ICICI , and SBI futures. Bank nifty also added some additional volume. Nifty witnessed a profit booking session with a considerable loss of premium.Volatility data shows that some short positions are getting created at higher levels and the bigger volume shows that Nifty is awaiting a major move.Bank nifty once again failed to close above the mentioned resistance levels.Excess liquidity created by the institutional investors would be the only reason for such a huge rally. Nifty could probably add more buyers on a dip than on the upside breakout. Thus if Nifty crosses the levels of 5330 it might extend to 40-50 points but the reversal would be soon. Thus options traders are advised to create spreads so that they can utilize the current situation in a better way.In the equity segment as a trader one should book profits and wait for an entry point at lower levels.Investors could stay with the market as they got stocks at much cheaper levels. As i said in the weekly post there would be trend deciding moves after 5th of February. Lets keep the range as 5170-5330.

Nifty update for 02 - Feb - 2012

The rally got extended to 5270 zone and the day saw some good amount of long build up in many sectors.We are close to the short term target of 5290-5300 zone and it could extend upto 5325-30 levels. I would like to exit my longs close to 5290-5300 levels and wait for a correction for any more buying positions. We did see good rally in the mentioned stocks like Jindal steel, Bhushan steel and SAIL.Though i would like to exit the market even at today's levels i would not be in a hurry to buy puts.It is really good to see a decent rally after a long time and we could hardly find major stocks not participating in this rally except Gail and M&M.As i said in the previous posts bank nifty has to get out from 9900-10000 zone for further upmove and it would be considered as a new leg of a bull market.The turnover data was also supporting the upmove as we saw an exceptional volume in the equity segment with good advance/decline numbers.The only worry would be the premium rising to 30-35 levels.If we analyse the previous data we could see that Nifty topped out when ever it traded with the maximum premium of 30-35 points.I was focusing on 5170 on Nifty futures as lot of short positions got covered and buyers are getting added in that region, thus it would act as the immediate support zone.One can exit the long positions either at 5290-5300 levels or at the breach of 5170 on the downside.Thus stay with the trend and don't over trade or go short in the market unless there is any particular reason.The days range would be 5170-5330.