Nifty update for 29-June-2012

It was a quiet expiry without much noise but and as expected it closed below 5200 mark. It has been a testing time for nifty traders for quite a long time and it is expected to break the range after some major events in the coming week. We could see some stocks breaking down the range like SBI, Axis bank and some were giving whipsaws on the upside. These break outs might have happened due to the expiry as the current month contracts got squared off. On the way ahead as long as 5090 levels are holding the bias is towards the upside but without bank nifty it could be difficult for nifty to sustain at higher levels. It is surprising that nifty could not get fully utilize the benefit of falling crude because of rising dollar. Towards the end of the day we could see some huge build up in 5000 put July and 5300 calls too. Thus as of now traders are considering 5000 as a decent base in the short term and betting on higher levels. If we see the individual stocks as said in the previous posts in the large cap front only SBI and TATA motors are looking weak but rest of them are holding their support levels and bounce could be expected at any sharp cut in nifty. The support zones of 5080-90 would be the key if you are on the long side and 5300 would be the upside cap. The trading range can be 5080-5200.

Nifty update for 28-June-2012

Nifty is still holding the major support zone of 5090 and trading much above the mentioned level ahead of expiry. As said in the previous posts if you are not an options writer it would be quite difficult for a nifty trader to trade this tight range. Rollover statistics is still in favor of bulls and we need the confirmation from institutional investors for any up move. On the other hand a break below 5090 can take nifty to 5000 levels and it can definitely give a trade too as it is a huge consolidation break out. Though it is a tight range major stocks are not showing any distribution pattern except SBI.

Stocks like JSW steel and SESA goa are on the verge of an upside breakout with decent volume and thus it is fair enough to expect these stocks to give 5-6% return if nifty breaks on the upside. News flow from Europe would be a major trigger for markets to set the next move. In the commodities market copper broke out from a range bound session and it can give some positive momentum for metal stocks. If we have a look into the chart of Dow jones 12400 would be a major support zone and a break below this could see a sharp cut of 500-600 points. Volatility data shows some long build up happening at lower levels but wait for a break out to take any trade in nifty.

Nifty update for 27-June-2012

It managed to hold the mentioned support level of 5090 and closed at 5130+ and the price action is clearly telling that option writers have an upper hand in a market where equity traders are least interested and they are eating the premium by playing the range. Poor turnover data shows the lack of interest by traders but one cannot expect a huge selling pressure due to lack of volume. It is just testing the patience of traders by giving sideways move and for a nifty futures trader it is difficult to trade unless and until he trades the range quite well. The stock specific actions are quite promising and on any upside breakout stocks like TCS and Wipro(above previous day’s high) are expected to give a bounce and Hexaware is another good chart looks promising for an upside move. If nifty is able to break 5090-5080 (which is quite possible) SBI would be the first stock to sell for 80-100 points cut on the downside. The rollover data shows some long build up is happening in July contracts thus even if there is a break down it can be limited as long as we have multiple support levels on the downside. A range break out is inevitable to take a better trade and till then traders should get satisfied with small profits by playing the range and on any up move volume should confirm that and thus it is important to have a look into the turnover data and see what the institutions are doing. The trading range can be 5080-5200 and consider the break of the lower range to exit long positions.

Nifty update for 26-June-2012

Nifty is still not able to break the range and closed at the lower end of the range. As mentioned in the previous posts 5080-5090 is a major support zone where lot of buying has happened and a breakdown below this could be a short term trend reversal but use the deeper cuts to enter the market. The medium term bullish trend is still intact with a target of 5300 as long as the multiple support zones of 4950-5000 holds. Thus if it breaks down one will get an intraday trading opportunity on the short side and wait for a proper time to enter the market. On the upper end 5200 still remains as a major resistance zone and lot of call writing is happening at that zone. As the upper bands got tested on the first week of the expiry day it would be tough for nifty to cross 5200 on the upside before the expiry. 

Volatility data shows some short positions are getting accumulated on the upside but we could not see any huge selling pressure in the equity segment. As of now SBI is one large cap stock that is showing good positive correlation with nifty and trade the stock when gives a break out. Let’s keep a range of 5080-5200 and consider the break of the lower band as a break down

Nifty weekly update 25-29 June 2012

Nifty maintained its tight range ahead of some major events but it is maintaining the support zone of 5080-5090 so well that lot of buying activity has happened at the particular level. As mentioned in the previous posts some short positions are lying at the upper range of 5160-5170 and long positions are getting initiated at the lower part of the range. Thus a range break out will trigger a faster move and it will definitely give a trading opportunity. Technically a trend is intact as long as the reversal in price is not happening and thus as long as the immediate support zone of 5080-90 holds the short term bullish momentum is up for a with a target of 5300 on the upside. A trend reversal could happen only when the price gives a downward move by breaking 5090 and traders can think about initiating short positions. Anyway if the market rallies to higher levels it would be a clear exit signal for long positions as the volatility index would again come at a lower level that would be very dangerous for any further up move. Another concern would be the rising dollar and just because the crude oil is trading at years low the equity market does not seem to be taking that into consideration. If there is a condition were crude rises from the lower levels and dollar maintaining the upside momentum it can be a dangerous case for equities and appears to be the major risk at this particular point of time. On any upside breakout we need to confirm the up move with a confirmation of the turnover data as the volume should confirm any price movement.

Stock to watch - Maruti Suzuki
The stock is holding its support zone of 1050-60 and is expected to end its bear market move close to  these levels. If nifty gives an upside break out i would like to go long on this stock as an investor by keeping a closing stop below the support zone.
Time cycle

As I mentioned in the previous post if there is an up move towards 5200 zone it should happen between 22- 25 June 2012 otherwise there is a higher probability of prices heading down as it is not maturing with the time cycles. Indian market is usually taking 90-95 days cycle to give an up move and we are close to that after 25 Th of June as the last one happened in the end of March 2012.

Nifty update for 22-June-2012

The index futures saw some buying activity happening close to 5100 and gave a rally close to the previous top of 5190 which is the upper band of the range. As said in the previous posts it is wise to book the long positions close to the upper band as we could not see much activity happening in the options segment. The volatility index gave a sharp fall indicating buying happening at lower levels and stock futures were also trading with decent volume and good open interest. On the other hand if we see the equity market turnover we could not see much buying activity happening and institutions are still net sellers on the higher end of the channel. Dollar/INR has made a new high and it is quite illogical to believe that equity markets would rally along with the dollar. Thus it is time for us to wait and watch the movement in the currency market as by making a new high it is again gaining attraction among the nifty traders. Copper is again back to 415 levels after a short term rally and this might pause the current rally in metals. Nifty is continuously getting good support at every dip and if there are any long positions left in the system 5090-5080 levels can be the stop and on the upside I would like to maintain 5200 as the immediate resistance and a close above the upper bands would be the trigger for next move.

Nifty update for 21-June-2012

Nifty is still stuck in the tight range and it is yet to get out of the range for a smart move. As it is getting support at lower levels it and getting resisted at upper bands it is always better to buy the dips and exit at higher levels. Technically along with the price moves if we see the time spend we could see buying is happening on dips and till 5020-30 levels are held the trend on the upside is intact. Thus it is worth taking a chance on the long side by keeping a stop below 5020 and going short on the upside by keeping a stop above 5200. If nifty has to rally it has to do it within a week or so as the volatility index will again start trading below 20 and that would be a major threat for any up move. The volume is still on the lower side and dollar/inr is still trading on the higher side. As said in the previous posts 55.30-55.40 would be the major reversal point and till then market could remain range bound but with a positive bias as all the major events are priced in. In the equity segment Ranbaxy is holding the support zones and 470-475 seem to be a decent support zone for the stock. As long as these support zones are held the stock could see a rally upto 510-515 levels. The trading range for nifty can be 5020- 5200 till next week as we are yet to see major activities in the options segment.

Nifty update for 20-June-2012

Nifty held the mentioned support zone and gave a decent bounce to 5100 zone. The structure gives us a typical feature of the range bound market with a positive bias in the short term. Volatility data shows some long build up happening at lower levels and take out profits close to the upper bands of 5150 – 5200. As we are close to the expiry week it is yet to see whether nifty would take a pause close to 5200 levels. If we observe the chart pattern it is evident that some profit booking is happening at higher levels and nifty needs some liquidity driven rallies to have some more upside. It is interesting to see the dollar still at 56 even after nifty rallying all the way from 4800 to 5100 and it is really a great concern for the markets. As mentioned in the previous posts copper gave a decent rally on the upside and thus metal stocks are holding the support zones. In the commodities market crude is in the process of building a base around 4600 – 4650 levels and ready for a move on the upside and in the medium term this could be a concern for equity markets. In these kinds of tight range bound markets we could see extensions or false break outs and these are the levels to take out small profits and exit.

Nifty update for 19-June-2012

Nifty made a high close to 5200 and fell to 5030 level after the RBI policy. It is expected to take support at 5020 – 5030 levels and give a small bounce to 5100 levels before any crash. It is still maintaining a tight range giving false breakouts on the upside. Thus the only way to be a buyer should be to buy the support zones and test the previous swing lows as your stops are close by. The short term trend is still intact but it is yet to see how the market would react to the negative news flows. 5020-5030 is a decent support zone and it is better to close all the long positions if nifty starts trading below this and wait for a decent entry level. As mentioned in the previous post we could see a sharp fall in the options premium as the positions have already been made by options writers ahead of the big event. We could not see any accumulation pattern as of now and it might take some more time to give a smart rally on the upside and it is a stock pickers market rather than playing in nifty. If we have a look into the stocks we could see some smart moves by stocks like TATA steel and ABAN even in a falling market. One shocker for market would be Dollar/ INR holding the support zone of 55.30-55.40 and coming to 56 zones once again. Though dollar index and copper have given signs of reversals this would be a head ache for the market in the coming days. The trading range can be 5020 – 5110 and consider a fall below the lower band as a break down.

Nifty weekly update 18-22 June 2012

Nifty gave a sharp bounce from the previous low zone and it is expected to trade till 5300 with a reversal below 5020. As it is an action packed week with RBI policy and Greece drama the market can be quite volatile but the option premiums are expected to fall sharply as we could see very high IV’s in the current series. It has clearly established a short term support zone close to 5020-5030 levels and that too without even going back to the Fibonacci zone of 4950 and it tells us the momentum is on the upside but the volume is still on the lower side and this could be a worry for a further rally. Thus as of now it is fully driven by the domestic and global news flows and we need to go in that direction. If we notice the momentum we could see nifty making new highs every day with an interval of 10-15 points starting from 5130, 5140 and 5150 levels and for a chartist it could be addition of long position but it clearly tells us that the news flow will give the further direction . One important positive development for the equity market would be the short term reversal in copper and dollar index which could be in favor of bulls. As lot of short positions has been accumulated during the last week (and the above chart says that these got accumulated at 5130-5140 range) any up move could be a short covering and as per the options data long positions have got accumulated from the lower range of 5050-5060. So it is giving as a tight range of 100 points and a range break out on the upside is a break out from the downward slopping trend line which could lead nifty to higher target of 5300 though it could take some time. On any up move in nifty I would like to go with a stock like Tata steel which could see good accumulation pattern and it is a decent break out above the resistance zone of 415-420 for a 5-6% move.

Nifty update for 15-June-2012

Nifty made a top and registered a low close to 5040 and it is evident that a tight trading range is in the process. It would be a tough time for futures traders as it is a range bound market. We could see heavy premiums in options ahead of the major events next week and it is better not to be an option buyer as the premiums would reduce substantially after the major events. As said in the previous posts we could see nifty making a top and heading lower and if it immediately goes back to 5100+ zone there would be a possibility for nifty making a bearish island at these levels. Thus 4950-5000 is a decent support zone where some buying can happen and volatility data suggests some additional short build up at 5100 + zone. Nifty spent 3-4 days in that zone and it gave enough time for the distribution activity and there is no case to believe traders would accumulate nifty in a single day. Thus it would be interpreted as a range bound market waiting for the news flow in the coming week. If you are a trader in equity it is better to reduce the high beta ones and try to be on the long side with those stocks which are not positively correlated with nifty, like techmahindra and sesa goa. These stocks are holding well to their support zones and would try for a rebound. Turnover data is also showing that it is a low turnover day that did not result in much selling activity. The trading range can be 5020 – 5110.

Nifty update for 14-June-2012

Nifty registered a new high but it is struggling at highs close to 5140 and a lot of resistance points are meeting at the zone. Thus the chances are high that it can give a false break out on the upside as we could see some distribution pattern in nifty at higher levels. As I said in the previous posts it could still be within a range of 5150 – 4950 and if it is a range bound market it would be difficult to maintain long positions at higher levels and buy the dips close to 4950-5000. On the upside the breakouts should be with good volume and any moves on the upside can be seen only as a short covering rally as lot of short positions are already there in the system. Volatility data shows long liquidation at higher levels and some short build up. It looks like the market is waiting for RBI policy out come; inflation data and this could be a trend setter in the short term. On the downside 5080 could be a stop for any long positions and wait for a deeper cut close to 4950 to get in as a fresh buyer. In a nut shell 5140+ levels is not a level to create fresh buying positions but one can hold the existing positions with a trailing stop.

Nifty update for 13-June-2012

Nifty gave a dip close to 5000 and held the support zones to give a smart rally above 5100. It gave a decent close and that could take nifty to new highs. It is still in a tight range as it has to go through some serious consolidation stages. If we have a look into the chart it is clearly stating a trend line break out on the upside. The support zones below 5000 are holding well and it would be wise to take a long trade as long as the support zones are held. It is good to see nifty futures trading in premium and the volume is expected to be better after the RBI policy as it has an upper hand in deciding the short term trend. Turnover data does not show much participation from the institutional traders and it is important for nifty to get the help of bigger funds for a sustained up move. Volatility data is showing some log build up happening at lower levels and 5020-5030 would be a crucial in the days to come as traders are showing some buying interest close to that zone. If we have a look into the stocks, cement sector has started showing some momentum on the upside and Ultra tech would be the favorite among all as it is a late mover. The stock is getting consolidated close to 1380-1400 for quite a long time and expected to break on the upside as the accumulation pattern is good. The volume is comparatively low but a smart trader could get it by keeping a closing stop below 1380 for a 100 points move

 in equity.

Nifty update for 12-June-2012

Nifty respected the major resistance zone of 5100+ levels and closed on a negative note at 5040 levels. It is expected to trade lower till 4950-70 zone where it can attempt a bounce back as lot of long positions got added in that region. If we have a look into the turnover data we could a huge increase and the institutional volume was less. Thus it could be interpreted as lot of retailers got trapped in their long positions above 5100. On the downside 4950 – 70 zone could hold as some Fibonacci numbers are lying close to that and nifty’s current up move got the real momentum from these levels. Thus it would be crucial whether nifty could get support at these levels. In the currency market dollar/Inr is bouncing back from the support zone of 55.40-.30 zone and nifty would be under threat till these levels are broken on the downside. As you see in the chart nifty has already completed a 5 wave cycle in the short term and it is yet to see whether the up move would be a secondary rally to confirm the top or a fresh move. There could be a chance for reversal in the medium term as long as 4880-4900 levels hold on the downside and the bulls could have an upper hand till these levels hold. In a nutshell the levels of 4950 – 70 are not to go short and as a trader it is worth taking a chance on the long side if the levels hold on a closing basis. Volatility index saw an uptick with decent volume and open interest and shows some short positions are getting accumulated at higher levels. The trading range would be 4960 – 5100.

Nifty weekly update 11-15 June 2012

Nifty held our lower range of 4970 and gave a sharp bounce back and ended close to the resistance zone of 5100.As it has established multiple support zones close to 4970-80 zone it is better not to go short in this market and use the dips to build long positions if there are any further dips. As i said in the previous posts nifty would be a little expensive above the resistance zones and thus instead of creating fresh long positions it is better to hold your existing positions. The turnover data is showing some improvement and some positive news flows are good for the market at this point of time. It would be interesting to watch how nifty would deal the downward slopping trend line resistance and other hurdles above 5100 levels. As a trader it is better to wait either for a top formation or for a dip for further trades. If there is no major news flow 5200 levels are seen only between 22-25 June 2012. Thus it gives the trader to wait for a small range bound session in the coming weeks and the chart says it is safe to exit longs at any levels close to 5100 levels. Volatility data shows huge short covering and less buying in nifty futures but mid cap stocks are really giving some smart moves on the upside and it is for us to wait and see how nifty is planning to move.

Nifty update for 08-June-2012

Nifty gave a dip close to 4980 and the first dip was being bought as said in the previous post. It might head to 5100 zones but it would be clearly an exit signal than creating long positions. As I said in the previous post if there is a dip a long position is justified but otherwise if you are a buyer nifty would be expensive at 5050+ levels. It would be interesting to see how much this liquidity driven rally can make the move on the upside. Whenever there is a rally due to some extra money in the system it would be a ‘suckers rally’ to trap the traders. As of now we are in a short term uptrend and the turnover data would be the primary evidence for this. One interesting stock to be watched would be DLF as it has spend enough time in the zone of 175-190 for more than a month. I would be a buyer within this range as I would like to respect the time spend by the stock on the downside. It is yet to be seen whether it is a trading buy or a short term investment. Turnover and volatility data show some buying happening at lower levels and that could trigger some more upside. Thus let’s keep a range of 4970 – 5100 and testing the upper or lower bands would be an exit signal from the buying positions.

Nifty update for 07-June-2012

Nifty crossed the mentioned resistance level of 4880 and gave a decent rally on the upside close to 5000 levels. Apart from the gap up opening above the resistance zone it did not even give an opportunity to get in as a buyer. It is expected to trade till 5050 by getting support around 4880-4900 zone. If you are a buyer exit the buying positions above 5000 levels and if you are waiting on the sideline wait for a profit booking session to get in as a buyer. The immediate resistance point lies close to 5100 but as a smart trader one should get out as early as possible. We could see a tremendous increase in the turnover showing some buying is happening at lower levels and it would be an indicator for any turnaround in the short term. As a medium term view it is still bearish with 4500 levels on the downside as no major reversals have happened till now. A high volume day cannot be ignored just as a short covering rally and the market breadth and volatility data were also showing some buying happening at lower levels. In a nut shell one should not be a short seller at this point of time and wait for a valid top formation for initiating any short positions.

Nifty update for 06-June-2012

Nifty ended close to 4850 in a range bound session and 4880 level would be the key for a further move as we could see lot of short positions are lying there and It could come in a buying zone above the mentioned levels.  We could see good short covering in most of the large cap stocks ahead of RBI policy and this could lead to buying if nifty could surpass the mentioned resistance zone. On the downside the support zone would be around 4770 levels and as long as nifty is within this range it is better not to take any trading positions. Volatility data shows some short build up happening at higher levels and thus any move on the upside would be a short covering rally and it is yet to see whether this move would trigger some buying opportunity. Turnover data is not showing any improvement and Dollar/ INR is getting good support at lower levels of 55.30-55.40 levels as mentioned in the earlier posts. These would be two key trend reversal points for Indian equity market at least in the short term. 

Nifty update for 05-June-2012

Nifty retested the previous low zone of 4760 (as mentioned in the previous report) and gave a sharp bounce from the support zone. It is expected to head lower till 4500 in the medium term with some resistance points close to 4900 levels. Dollar/ INR would be interesting to watch at 55.30-55.40(futures) as a break below the support zone would be confirm some selling pressure at least in the short term. If it happens and give a lower close that would give some relief for nifty at least in the short term. If we have a look into the turnover data it tells the bounce is purely a short covering rally and the institutions were still net sellers in the equity market. Thus the first reversal for any upside should happen from Dollar/ INR and the beaten down large cap stocks like SBI, ICICI and L&T. Though all the major large cap stocks are still looking weak  Axis bank is trading close to an interim bottom and it says there is only one more wave on the downside and it can end anywhere around 870-900. For an investor it would be a decent price for a large cap stock like Axis. Volatility data shows some short covering happening close to the previous support zone of 4760-70 levels and let nifty confirms a short term bottom around this level for any fresh buying.

Nifty weekly update 4-8 June 2012

Nifty almost kissed the mentioned target levels of 4800 and it is expected to trade down till 4500 in the medium term with some short term bounce backs to 4950 zone. As said in the previous post we could see some of the major large cap stocks cracking below important support zones. Bank nifty is breaking down from the support zones and if there is any downward move ICICI bank and SBI could lead that. Another large cap stock that can accelerate the downside momentum would be L & T and the immediate target lies around 1050 level. In the commodities market we could see some heavy selling happening in crude oil and base metals which could be a leading signal for any crash in the equity market. Volatility index shows some short build up on ever rise in the market and global cues are contributing to the downward momentum. On the upside we could see some resistance points close to 4880-4900 as lot of buyers gave up at these levels. In the short term nifty could test the previous bottom of 4770 as the distribution pattern is very evident in the charts. Though the turnover data is low it is expected to increase if there is a further break down. Nifty could trade in a range of 4760-4880 and a move to 4770-60 should be the level to take off some money if you are on the short side.