Nifty update for 31-August - 2012

Nifty made a new low just below the mentioned range but made a quick comeback to 5300 levels. It was a much needed bounce and it is expected to trade till 5220 levels with a resistance close to 5360-5380 zone.If we look at the charts of nifty and bank nifty we could see a triangular pattern formation in both the charts and the same pattern was seen in SBI before a month ago.Thus i would like to read these as distribution patterns as SBI has already given a leading indication on the downside.We could see a chance of pull back close to 5200 levels as we have a crucial short term support close to those levels. A break below that could lead as to 4950 zone where the long term support lies. The medium term view will change to negative when a if a break below 5200 happens or bank nifty breaking out of current support zone.At this juncture bank nifty could be a leading indicator and would tell us whether nifty is going to break 5200 or not. If we analyse the charts of these two indices we could see nifty making a new high in the previous two months but bank nifty did not make one and this is showing a clear under performance. 

If there is a pull back from 5200 levels there could be some buying happening in stocks which are holding the major moving averages like Biocon and Siemens but there are unfinished targets for banking majors like Axis bank and ICICI bank on the downside. As a trader one should be watchful for levels of 1400 in S&P as it is a crucial support zone ahead of the FED  meeting.

Nifty update for 30 Aug 2012

Nifty made a new below 5300 but was well within our range of 5290-5380 and expected to trade till 5220 with a bounce to 5350-5360 levels. It would be important to watch U S market at this crucial level as the news flow would be coming from there too and i wold be closely watching 1395-1400 levels in S&P as it is the crucial level to watch for. Volatility index is showing some short accumulation at higher levels and turnover data is showing portfolio unwinding in many stocks. As said in the previous posts wait for a decent pull back to go short in nifty and let the bounce complete the short covering activity and let the trend unfold.Though we could not see much short covering activity the risk reward ratio is not in favor of short positions once the stocks have already broken down from the highs. A break below the current level with a bounce would complete the short term 5 wave decline and we should recheck then whether the medium term outlook is also turning negative or not. The trading range can be 5270-5350

Nifty update for 29-August-2012

Nifty made a pause at the immediate support zone of 5330-5300 levels and it might be preparing for a small bounce ahead of expiry. The picture looks dirty and it is expected to correct till 5220-5240 after a small bounce. Bank nifty looks vulnerable and is trading close to the immediate support zones.Though some exceptions like Dr Reddy's and Siemens are making bullish patterns the overall structure of the market seems to have broken down. As nifty has reached the first target zone it is time for not to be short in the market and wait for a bounce close to 5400 levels to be short in the market again.If we see the market structure we could see Bank nifty is on the verge of a break down in the daily chart and Axis bank is one stock that is a clear 'avoid' rating among the group after a sharp bounce stock is expected to trade till 940-950 zone in the month of September. It would be encouraging for bulls that a tleast some pharma stocks are giving a buying opportunity but if the market is weak one should not look for buying opportunities and use the bounce backs to exit your long positions in weaker counters like banking and metals. If we look at the US markets one should closely observe 1395-1400 in S&P and a slip that would lead to a 5 wave decline and could have a negative impact in nifty too. Dollar/ INR is expected to trade till 57 zone with a reversal below 54.80 and any dip could be considered as a buying opportunity as long as the mentioned support zone holds. The trading range can be 5290 - 5380. 

Nifty update for 28-August-2012

Nifty spent the day below 5400 and is expected to trade till 5300-5330 levels with a resistance close to 5410 zone. The day saw some big downward momentum in stocks like Jindal steel, ICICI bank and Axis bank and the scenario does not look good when the stocks are crashing like this. We could say nifty is coming down due to short positions and some profit booking but the short positions in stocks would be a major threat for nifty to move up. Stocks like SBI and the biggies from infra are looking the weakest of all. Turnover data is showing lack of interest by retail investors but nifty is expected to maintain the tight range of 5300-5400 till expiry.Volatility data is showing the addition of short positions close to 5380 levels and 5400 calls have to watched carefully for further moves in nifty. It would be a waste of time trading nifty in this tight range and stocks are giving much better trading opportunities at this point of time. A further dip could be followed by a bounce back close to 5300 and and that is where one needs to look for a bounce back. The trading range can be 5310-5390.

Nifty weekly update for 27-31 Aug--2012

Nifty spent the week in a tight range and is expected to trade till 5330 with the reversal above 5460 - 5470 levels till first week of September.As per the nifty chart there wont be any range breakouts on either sides as all the dips are being bought and all the resistance levels are being sold into. Thus till the expiry nifty can spend the time within a broader range of 5350-5450. If we have a look into the stock specific data we could see some of the major PSU banking stocks and real estate stocks are clearly under performing for a long period of time and it is clearly telling that the interest rate sensitives are still under pressure. Without these biggies and the mid cap index it is difficult to imagine that nifty is gonna make a new high above 5630 in the calendar year. All the bounce backs in these beaten down stocks would attract severe selling pressure. IT and pharma space are the two sectors that is driving nifty from the front. A severe under performance from the stocks like Jindal steel, TATA steel, Hindalco and YES bank are really disappointing and the correlations are not working for nifty right now. When the correlations don't work usually the market should trap the bulls on the upside. The volatility data is telling some short positions are still lying around 5450 zone and we have to wait for some big news from the U S markets. If the markets are set for a rally on the upside it has to spend some more time in a tight range bound markets as it has made the current rally with out meeting many downside targets. 

Stock to watch

Biocon - The stock is in a consolidation mode for the past 4 months and is getting ready for a break out above 250-255 range. The turnover data is showing that trades are occurring at huge volumes and the stock could be expecting some news in the recent time frame. I guess the stock is getting accumulated at 240-245 levels and that could be the stop for my long positions once it breaks above 250-255 zone. If it breaks out the stock can touch upper levels of 275-280 within a period of 3-4 weeks time.  

Nifty update for 24-August-2012

Nifty gave a new high but closed below the high zone and it is expected to trade till 5330 with a reversal of 5470 on the upside. As we are almost done with the upside target of 5470 which is an important fibonacci zone and in the medium term 5470-5500 could be an important resistance zone. We could see the upside momentum is getting weaker with every upmove but the immediate medium term support lies at around some important moving averages close to 5300-5330. In a nutshell nifty could see a range bound session between 5270-5470 in the coming month.I am not expecting a bigger downside risk in the short term as lot of buying can happen at lower levels just because the retail participation is very less at higher levels. There could be a few stocks like Biocon and Indus ind bank that could attract buying at every dip and the downside levels can happen in nifty in a week or two. Volatility index is telling that some short positions are getting accumulated at higher levels close to 5450-5460. Turnover data is showing lesser participation at higher levels. Bigger stocks like L&T and Reliance Infra are on the verge of a break down and advance/decline ratio is deteriorating at higher levels. Though ICICI bank gave a break out at higher level it seems to be a trap in the short term and it is better to book the longs if get wrong on the buy side.Nifty can give a move in a range of 5350-5450 during the current expiry and could head a little more lower in the next season. It is clearly not a level to buy nifty at 5400+ levels in any case as the divergence is clearly visible. 

Stocks to watch.

1. Reliance Infra - The stock seems to be one of the weakest even in the big rally. Below 495-500 zone stock is expected to fall till 450 with a reversal above 515which is the recent high.

Nifty update for 23-August-2012

It was a flat session and it is better to get rid of nifty and focus on individual stocks when tight ranges are forming with low volatility.The trend is still up with an immediate target of 5470 and nifty has almost done with it. If it moves above this zone it is worth playing stocks like ICICI bank as the stocks seems to giving a consolidation break out.Thus i guess 1000 call September would be decent bet if it goes above 980 zone and gives a good closing. When nifty is at the upper end of the channel go of options as the prices are cheap and there is no point in investing in a stock like ICICI  bank at this point of time.Turnover data still remains a worry and the poor turnover shows that retailers are still waiting for a major dip to be buyers. Traders have to watch the reduction in premium and moves in volatility index closely to identify any topping out patterns.As of now it is inching towards upper levels close to 5470 and may be above that mainly because of the up move in base metals and a dip in the dollar index. Thus the reversals have to happen in the dollar index for any downward move.The trading range can be 5400-5470.

Nifty update for 22-Aug-2012

Nifty broke out of the consolidation and moving closer to the mentioned target of 5470 levels and the poor turnover data is showing that it is a traders market and it is time for investors to be cautious if one needs to start new. We could see some long accumulation in today's trade and the 'so called bullish effect' can last till the current expiry season as the move above 5400 was good enough.It was good to see some buying interest happening in large cap stocks like ICICI bank and L&T and this could trigger some more up move in nifty. Though volatility index showed some short build up in the first half of the trade it got covered in the second of the trade and nifty could inch up to the target zone soon.As i said in the previous posts stock specific trades could get better return when nifty is at a crucial juncture like this. It was interesting to see the up move in a stocks like ICICI  bank and it is once again close to resistance zone of 970-980.If stocks like Reliance capital and ICICI bank could surpass the resistance zone both have the potential to give 4-5% return if nifty could come close to its target zone of 5470. The turnover data is poor and it shows the lack of participation from retailers and they are still doubtful about the rally. When liquidity is driving the rally it is better to get into and get out as soon as possible as the run up cycles would be short with decent returns.The range can be 5390-5470.

Nifty weekly update 21-24 Aug 2012

Nifty spent the week in a tight range of 5350-5420 and it is expected to trade higher till 5470 with an immediate support zone close to 5310-5320 levels. Though the targets are a little bit higher than the current levels it is time to unwind some of the long positions and it is not a time to create any fresh longs. It has spent enough time at 5400 zone and the levels are once again proven to be difficult to cross. The volatility index is trading close to the years low and nifty could drag from the current levels as the volatility is expected to rise in the coming months. The current expiry could be peaceful as we are close to it and the options positions are already been built in. Turnover data is showing liquidity is driving the rally and lack of retail participation is still a drawback for the current rally. If we look into the stocks stronger stocks like Axis bank, ICICI  bank are close to resistance zone and struggling at the upper end of the channel. In the large cap front L&T is the only hope and was a clear out performer in the whole rally. The trading range for the week can be 5320-5420.

Nifty update for 17-Aug-2012

Nifty held 5350 on the down side but gave a negative closing after a tight range bound session.It is expected to trade till 5470 with a crucial support at 5310-5320 levels. As i said in the previous posts stocks could lead the rally a bit more but nifty is showing the weakness in momentum and it is time for unwinding the long positions in a systematic manner.Turnover data is showing some participation from retail investors too and that would be quite good for individual names. Volatility index is not showing any signs of strengths and we could see some writing happening in 5400 call.We got a trend reversal at 5270 levels and these levels would be considered as the entry of smart money into the system and a key support zone too. Moving ahead it is yet to wait and watch whether stocks like TATA steel and SBI are still under performing or consolidating for a bigger up move. Thus it is expected that nifty could maintain this tight range for the days to come too and it is good to see that stocks like l&t and Axis bank have emerged as relative out performers.

Nifty update for 16-August-2012

Nifty made a new high above 5400 and it is expected to trade till 5470 with an immediate support at 5310-20 levels.As i have discussed in the previous posts though 5470 is the ultimate target we could use any levels above 5400 to unwind long positions instead of creating new. In the case of stocks the scenario would be different as stocks could rally a bit more compared to nifty. The volatility index is one of the major factors that could slow down the rally in nifty as it would fix its own limit to go down.Turnover data is showing is weakness in momentum and the rally is purely liquidity driven by the institutional players.If the excess liquidity is pumped into the system market would always give a trading opportunity than an investment opportunity. Thus trade the levels with strict stops as the reversal could be harsh. In the equity front IDFC would be one promising stock from a trading perspective. The stock is expected to give 5-6% return above the previous high as it is a break out trade and the stop can be around 126-128.At this point of time when the global rally is triggering an up move in the Indian equity market it is wise to look out for reversals in global trends as it would give us a leading signal. On the downside 5310-5320 could act as a strong support and any dip towards 5250-5270 could attract lot of buying and the options data is showing protection of 5200 levels till the August expiry. 

Nifty update for 14-August-2012

Nifty continued to remain in the same range and is expected to break out from the range within a week.If we see the stock specific data a sudden up move in mid cap stocks is visible and that can lead the nifty in coming days. Mid cap index was under performing nifty for quite a few weeks and the recovery would be encouraging for nifty for an upside move.As the volatility index is still on the downside there is no point in buying a break out in nifty thus in the coming days buy the dips than break outs as it makes sense when the volatility index is down. It would be interesting to see how much nifty can move up besides a poor earnings season and inflation data. World markets are seeing flat session close to the previous tops and they could drift lower after some more flat sessions. Volatility index is showing strong support at 5310-5320 levels and buying continue to emerge at those levels and this could be a crucial support zone for all buying positions. Turnover data was poor and retail participation is still lacking on any up move in nifty. The trading range can be 5310-5400 and use the upper range break out for exiting the longs instead of creating new . 

Nifty weekly update for 13-17Aug-2012

Nifty spent a range bound week between 5300-5400 and it is expected to consolidate further in the coming week but the range can be 5250-5350 as the momentum is weakening without a consolidation. In the previous session we could see a significant reduction in the premium and can be interpreted as a weakness in the momentum.Institutional traders have done their work with good buying interest but the retail investors are still not convinced the moves and turnover data is showing the same.We could see SBI breaking down below the immediate support zone and this would be a major set back for bank nifty in the coming week. A weak advance/decline ratio and a lower volatility index can be seen as the signals of a valid top formation but as it was a decent move on the upside we could see a secondary rally on any dip and 5470 can still be an achievable target on the secondary rally and that rally can be a trap once it moves above 5400 zone as the valuation would get rich. If we see bank nifty as a leading indicator in nifty we could see Axis bank is the only one good performer in the large cap banking space and all other banks should contribute for the index to move up. The trading range can be 5310-5400 and i expect a dip below 5300 zone would attract some buying with a stop of 5250. 

Nifty update for 10-Aug-2012

Nifty spend the day in a sideways mode and it is expected to consolidate close to 5300 levels before moving up. 5400 levels has been declared as a resistance zone by the call writers but the volatility index is not reacting as in a bad way. Thus it could assumed as long unwinding instead of short positions. The IIP data once again proved that the rally is not running on fundamentals and liquidity is driving the rally. Turnover data is showing some profit taking at higher levels.Dollar/INR is close to the crucial support zone of 54.80/55 levels and as mentioned in the previous posts a bounce could be expected from these levels.As i said in the previous posts too a long position in nifty could only be initiated with a stop close to 5250-60 levels and let nifty come close to these levels to be a buyer. Global markets are at the upper end of the channel and profit booking is obvious in that case too. The trading range can be 5310-5400.

Nifty update for 09-Aug-2012

Nifty made a new high close to the mentioned upper range of 5400 and gave a close at 5350 level. Going ahead we could see some consolidation between 5250-5350 zone and could move upto 5470 zone. We could see some long unwinding at 5380-90 levels where it is clearly telling about the active call writing happening in 5400 strike. Volatility index is supporting the long liquidation but no fresh short positions are there in the system. Turnover data is telling some huge volume at the top of the market which shows that the maximum buyers have come in and wait for a consolidation session and no need to buy the break out highs.Advance/ decline ratio is favoring a profit taking session in long positions and wait for good levels close to 5300 to be a buyer.Dollar/ INR  might give a bounce close to the support zone below 55 level and this could have a negative impact on equity market too. Thus it is better to understand that it is a liquidity driven rally and movements can be sharp to trap the trader. The trading range can be 5310-5400

Nifty update for 08-Aug-2012

Nifty has surpassed the previous swing high on the daily chart and it is expected to move to 5470 with some profit booking sessions close to 5300. On the downside 5250-70 can be seen as a major reversal point. If one has to go long it would be better to keep the stop below reversal point.As the stop is too far wait for a dip as an entry and till then stocks should give decent returns than nifty. Volatility index is standing still and that would be good for the up move as of now but eventually it has to rise as the downside targets are still pending. Turnover data is showing lack of participation from retailers and institutional traders are pumping in money in large cap names.If we have a look into the stocks, Jindal steel and Hindalco are looking good for a quick bounce and can give 4-5% return from the current levels. It is better to avoid over valued names like HDFC and HDFC bank as the upside is limited from the current levels. Dow is moving towards the previous high where we could see some profit booking sessions and try to correlate the movement with Indian markets too. The trading range can be 5310-5400

Nifty update for 07-Aug-2012

Nifty kissed 5300 zone once again and gave a closing below that. Though the stock specific action is telling that the positive momentum is still there it is better to go for stocks than nifty. Volatility index is telling some long addition happening on every dip. If we see the world markets Dow is close to the previous top and that can act as a stiff resistance zone and we could see the after effect in Indian markets too. Turnover data is suggesting some cash inflow from institutional traders and we could see the effect in Reliance Industries. Going ahead Infosys is one stock that looks promising from a trading perspective. Above the previous high the stocks is expected to touch 2300 in the coming week. For nifty 5190-5200 can act as the immediate support zone where we could see some moving averages are placed. On the upside nifty is expected to face stiff resistance close to 5350 zone where the previous swing high is placed, thus it is wise to go for stocks than nifty. 

Nifty weekly update for 06-10 Aug 2012

Nifty made a decent come back from the the lows below 5200 level and we could see the extension of the pull back rally. It would only help the stocks to come back to the previous highs that would act as a stiff resistance zone. The volatility index is showing some addition of long positions at 5170-5180 levels close to 20 days moving average which could act as an immediate support zone. Thus if the extensions could allow nifty to close above 5300 levels that could be a good sign for bulls (a weekly close).If we have a look into the stocks we could see lot of stocks waiting for a dead cat bounce like Jindal steel and Wipro. If we have a gap up close to the end of a rally that would usually be treated as an exhaustion gap were we would not buy that gap. I am not very bullish on nifty for two reasons 1. The volatility index is trading at years low and give it some time to get adjusted. 2. The premium is getting heavy as we could see only buyers and usually a market tops out at these kind of situations.The trading range can be 5190 - 5310 and use the break of upper levels for exiting long positions .

Nifty update for 03-Aug-2012

It was kind of a range bound session and nifty again proved that crossing 5270 is not that easy. The index is trying to make an intra day high during the final 5 minutes of the trading session and this would not be a good sign for bulls.Volatility data is showing some short build up at the top and writing in 5400 calls. Turnover data was poor with close to 5000 cr shares traded and it indicates lack of triggers on the upside. On the downside 5190-5200 can be a short term support zone as we could see some buying emerging from that zone. Thus it is still logical to bet for 4950-5000 levels till a reversal comes above 5270 zone. I am not eliminating the possibility of nifty crossing 5270 if we see the positive momentum in stocks but these are upmoves just to test the previous high.For example Axis bank would be one exception in the banking sector providing a positive momentum but the stock is famous for giving breakouts at the wrong time. Thus it is yet to be watched whether the optimism in these stocks are valid or not. The trading range can be 5140-5270

Nifty update for 02-Aug-2012

Nifty spend the day in a range giving a close near the resistance zone of 5270. In an upward move it is better to avid nifty and concentrate on individual stocks as the up move can be tricky. We could see the volatility started rising and it is not coming down with the positive momentum.Turnover data is showing huge cash inflow for the past one week and we could see the effect on mid cap and small cap stocks. In the coming days we could closely watch 5250-5270 to be taken out and if it does that it could again retest the previous bearish island of 5340-5350 levels but i would not be a buyer at this zone. As a trader i would be waiting to initiate a short in this zone as the stop is close by. If we see the individual stocks we could see some positive momentum in stocks like Reliance and Axis bank but the large cap stocks like SBI is still on a recovery stage from the heavy fall. ICICI bank is another one where we are yet to see whether the stocks can surpass the immediate resistance zone. I would still maintain the same range of 5140-5270 and a range break out can be used to exit longs in nifty and focus on individual stocks.