Nifty update for 09 - March - 2012

Though Nifty futures made a new low it did not sustain at the lower levels and gave a decent bounce back,ended the session without much loss. As the volatility index gave a negative closing for two consecutive days it is evident that short positions are getting covered at lower levels but no signs of long accumulation could be seen in the chart. Dollar /Inr gave a lower closing due to some short covering and it triggered some buying happening at 5200 levels.Poor turn over data shows that not much accumulation happening in the equity segment but short covering was evident in stock futures. As I mentioned in yesterdays post there is no need to initiate any fresh short positions at lower levels and wait for a better trade after this range bound session. An interim bottom cannot be formed in a day and above the day’s high of 5280 levels we could see some more upmove but it could get resisted well at upper levels. One could see a significant reduction in the option premium and thus options’ writing is not advisable at current levels because of the local events ahead.  The multiple support levels and the liquidity waiting on the sidelines could give some buying levels at lower levels but let it give a more sustainable rally for more buying positions. If nifty futures breaks out above today’s I would like to take a trade on the long side with a near out of the money but only from an intraday perspective. If we compare our charts based on the time line nifty futures downside level was mentioned at 5180 and it almost achieved that level, (click on the chart and compare it with the same chart of yesterday) now wait for some volatility to come in and let it cool down for a trend reversal on the upside with good volume. On the upside 5350-5400 seems to be a major hurdle and above that we have lot of short positions lying at 5440 levels. In a nutshell if one has any buying positions, hold it only from an intra day perspective and let it give a convincing move on the upside for a reversal. On the downside even if there is cut I would not be going short as the time cycle data shows an interim bottom is close by and we have a top confirmation close to 20-21 of March. Let’s keeps 5180-5330 as the range.