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.