Nifty did make a pause close to the mentioned upper level of 5050 and made a low close to 4950. There would be some more short term relief rallies and after some sideways move it is expected to trade till 4800 in the short term. It is testing the 61.8% Fibonacci zone many times and all the short term bounce backs till 5130 are expected to be sold into. Volatility index closed on a negative note an we could see a marginal increase in the premium. It indicates some short covering happening at lower levels and the indication is not many short positions are trapped at lower levels. Thus we could not expect a short covering rally, and we could see some buying happening at lower levels. Though i'm not denying the buying happening at lower levels smart money is not entering the market and the lower levels in SBI is an evidence for that. If we observe the Dow chart we could see the secondary rally started from 12750- 12700 levels and traders should consider these levels as important as Dow could slip to 11000 levels once again after the support zone is taken out. We could see Dow flirting around the support zone in this week and it is yet to be seen whether it is doing a base building process or getting ready for a downfall. At this point we focus on Dow too because personally i don't believe Indian markets could be decoupled from the rest of the world.
Nifty tested its 61.8% level close to 4950 but the corresponding level in Bank nifty would be around 9200.The level is yet to be tested and with the fall we had in SBI after a quick bounce in the morning it is evident that no strength is there for a meaningful upside journey. One stock that i would like to get off would be Orchid chemicals (below the previous low) as the distribution pattern is getting dangerous and as an investor it is better to avoid this stock. A short covering rally in nifty could save the stock in the short run but the structure looks really disappointing in the longer term.
Hi Vinu... Thanks for your reply yesterday regarding my query on Axis... I squared off my PE's early in the day after which Axis bank rallied all the way to 1000+... Great call!! I would have been in a big loos otherwise... :)
ReplyDeleteSince you expect the market to go down to 4800 levels I again bought Axis Bank May 900 PE @ 8.5 (1 lot) when it was around 1003 and LT May 1050 PE @ 16.5 (1 Lot). Should I add more if the markets rebound next week? If yes can you please give exit and stop loss levels if it's not too much trouble?
When all the others failed to hold the lower levels Axis bank did come up from the lower levels and went above 1000. It depicts some strength left in the stock.The corresponding level of Bank nifty with Nifty's 4950 would be 9200-9250 levels and it has made a low close to that. Thus i would not like to chase banking majors as a short selling idea and never chase a stock only for the sake of trading. I am just giving my views of particular stocks and i want you guys to take better trades than me based on your own knowledge and judgement.As per my opinion no need to hold the put if it breaks previous high. By buying an options contract on friday you are giving up the time value of that option in favor of the options seller and that is why i told you to exit it on friday. As a research analyst there are some limitations for me to give a direct trade as it is against the rules of the firm.All the best for your trades and keep reading the blog
DeleteHi Vinu,
ReplyDeleteHow r u??
Nice Chart. Your outlook on HDFC Bank and Tata Steel was bang on. Both fell more than 5% on single day last week. I am going to short Orchid on Monday. Option table reveals no put trades last few days. Strange...
Thnx
Vijay Kumar
fb- Vijay Financials
Hello Vijay..hope you are doing good.I think i mentioned about Tata steel and orchid chemicals in the previous week's post!As the volatility index has risen this much i would also like to write calls than buying puts.
ReplyDelete