Nifty update for 15 March 2012

It was a decent gap up opening and filled our upper range close to 5550. Thus as I mentioned in yesterday’s post it would be an exit signal at higher levels. It is evident that Indian markets are waiting for big events that would be happening by the end of this week and the story is yet to get unfolded. The time cycle chart says on every upmove nifty is hitting a top and thus I would not like to be a buyer even if nifty breaks today’s high. On the contrary if it takes a dip to 5400 levels we can think about building up buying positions targeting 5600 levels. In a nutshell if nifty starts moving up we might lose an opportunity to go long but it would be a safer bet to go long on dips. Long positions are still active in nifty and every dip has been bought by traders. Banking stocks are back in a party mood ahead of RBI policy. Buyers have been emerged from 5430-5450 zones and this would be a crucial support zone as lots of buying positions are lying there. Below this we have a support zone only close to 5330-5350 levels. Thus if these positions are getting liquidated nifty would give some wild swings between the support zones and I would wait for a better opportunity to get in as a buyer. On the upside there is no significant resistance till 5600-5625 but as it has already touched 5540 today I would not be a buyer from today’s high but only on a dip. In the commodities market base metals like nickel and copper are continuing their upward journey but copper might take a pause on the upside cap of 432-435 level. Thus it is ideal to wait for a better momentum in base metals for a better buying level. Dollar index is getting ready for a move on the upside and that would be a real threat for nifty on the upside. Bank nifty has not shown any signs of reversal for the downside and still trading strong with an upside momentum and that would be a key index for nifty traders to watch out for. One could see banking stocks are really expecting something very big from the RBI event and trading with huge volume and open interest. A long straddle position would be ideal for major banking stocks like SBI and ICICI bank from two days perspective. Volatility and turnover data shows long unwinding at higher levels and buying only on dips. Thus there would be a good possibility of creating a trading range before the budget.Let’s keep a range of 5390-5550 .