Nifty spent the week in a tight range of 5640-5740 and is expected to trade within the range till the current expiry.If we look at the chart of major global markets we could see that all these major ones are close to the support zones. Dollar index is close to an important support of 78.5-79 which i think would not be broken in the near term. As long as these support zones are held a bounce to 81.5-82 zone is quite possible and traders in the equity market should be aware about this development as it can have an adverse effect in the Indian equity market. Now come to the charts of major large cap stocks like l&t and SBI (i am referring these charts as they were the out performers in the previous season). Both these stocks are kind of making a rounding top and is considered as bearish in the shorter term.These can just move to their medium term moving averages and usually in a bull market that is the way how large cap names perform.In a nut shell we have strong support zone close to 5600-5640 where lot of huge put options build up can be seen and on the upside the resistance levels are clearly marked close to 5740 zone. If we are in a structural bull market it is wise to buy the dips than buying a break out trade. As of now a break below the support zone can just be a bear trap as lot of traders might find it as the beginning of a new downtrend but it is better to wait as a buyer than a short seller especially in nifty.The stock specific data is telling us to go long on some of the stronger names like LIC housing (close to 235-240) and WIPRO (close to 335-340).We could see these stocks are stronger names in their own respective sectors but have corrected more than other stocks. As these are close to their intermediate support zones any dip close to these levels are buying opportunities and avoid large cap names like SBI and l&t.In a nutshell wait for a buying opportunity in nifty as it is not giving much evidence of holding the support zones but i would be a buyer in the mentioned stocks close at those support levels.As a trader it is always wise to keep the volume in control so it gives a much room for flexibility in churning the portfolio thus don't jump into lot of buying positions and let the market give us a clear direction.
Time cycle analysis
Nifty is close to the strong support zone of 5600 -5640 and i dont see it breaking before this expiry as options build up is happening in that way.Close to 25-26th of October cyclical charts are not showing any levels below 5600 and it is wise to sell at the money calls if you are buyer in nifty futures.On the upside too it is not showing any levels more than 5740 in the coming week.Thus the large cap names can correct than nifty thus dont jump in as a buyer.Volatility and turnover data showing that the short build up has already happened at higher levels and the cost of carry is really low so that we cannot assume further short build up at lower levels.
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