Nifty update for 30-Nov-2012

Nifty held the support zone of 5660 and made a quick move (a bit surprising though) to 5800+ levels.I might have missed a 50-60 points upmove above 5760-70 levels and should accept that it was an opportunity loss. The move in the final hours were quite convincing as all the major stocks could participate in the rally except some metal stocks. Institutional traders are pumping in money and the turnover data is showing that. Thus there is no need to create any short positions in the market and the major development that has happened is bank nifty leading nifty from the front. As mentioned Dollar/Inr got well resisted at 56 zone and that would act as a stiff resistance in the near term. Volatility was on the rise as this could be read as building of positions for next season and not short positions. Huge build can be see in 6000 strike and that could be the ceiling for nifty as of now as per the options data. Technical targets are close to 5940 - 50 levels and any dip close to 5730 levels would attract lot of buying interest. Among the stocks i think it is time increase the beta of the portfolio for Santa rally in December. HDIL and Canra bank would be top picks as both of them have similar chart pattern and i am expecting a return of 7-8% return from both these stocks.

Nifty update for 29-Nov-2012

Nifty broke 5660 on the upside and moved towards 5730 zone and we got a good intra day trading opportunity above the reversal point.The advance/decline ratio was good and the turnover data too was good but the large cap stocks were lacking the momentum. We are at 61.8% retracement level of the fall from 5820 levels and 5730-5750 are another crucial points from where it can go back to 5660 levels. Thus the previous resistance zone of 5650-60 zone would act as the support in the near term as lot of buyers came in after that. If we analyse the time cycle of 2010 and 2012 there are couple of similar happenings. It formed a top around 7-8 of Nov 2010, came down and started moving up from 26th of November and started falling after December. In 2012 too nifty is following the same time cycle and we could see 20-21 Dec and 4-5 Jan as crucial days.Among the stocks Hindalco is about to break out from a bullish flag formation and it would be trade on the long side above the previous high with a stop below 3-4 points.

Nifty update for 27-Nov-2012

Nifty held the resistance zone and one should consider the reversal only above 5660 zone and till the trend is negative and there are no signs of further strength as it was really evident from the way USD/INR was performing. As mentioned in the previous post 5600 call again made a high just above 60 and it is giving enough time for options writers to sell the call at 60 levels and thus 5660 remains a crucial resistance as per the technical charts and derivatives data. The major reason for the dull movement is the lagging metal index and we could see stocks like TATA steel, Jindal and JSW are almost dead, once the momentum starts picking up in these stocks nifty could inch up to 6000 levels and i expect that to happen around 20th of December or 4-5 th of Jan 2013. Traders are so optimistic that they are not allowing the market to go in a complete sell mode and that is acting as a cushion for all long positions. If nifty is able to cross 5660 that can probably be a whipsaw as it is ahead of the expiry season. Thus we could definitely have trading opportunities in banking names and wipro.Bank of India and Biocon are the best ones on the long side (above the previous highs) if we are able to cross the resistance level.One important development that has happened in the inter market co relation would be Dollar/INR hitting new highs and moving close to the tough resistance zone of 56 from where it actually started falling. Thus a lot of selling can emerge close to 56 zone and that can be helpful for nifty to stay in a range for some more time. There is no doubt that dollar index and nifty are in an uptrend and there is no way that both of them can resume the uptrend at the same time , one has to slow down and that is the way it works.

Nifty update for 26-Nov-2012

Nifty continues to hold the 5600 levels and it is expected to face stiff resistance close to 5650-5660 zone. It had been quite a good week for options writers as they could get around 70-80 points if we combine 5600 call and put.On the upside there was lot of call writing has happened in 5600 call close to 65-70 rate and this would be a crucial level to watch for. In a nutshell even if nifty crosses the upside hurdle it could most probably a whipsaw if the rates of this call is failing to surpass the previous highs and the simple interpretation would be the smarter traders are writing the options at higher levels. In any upmove it is better to avoid nifty and concentrate on stocks if you are a nifty futures trader. The weakness in nifty is still evident and i expect nifty to form a five wave decline to 5300 by December and we could see the weakness in largecap names. Poor turnover data is arresting some the downward momentum and helping the market to be range bound ahead of November expiry and options traders would not be much happy to be a buyer in options in the expiry week. 5650-5660 levels are crucial as we have the near term resistance placed over there and the convergence of some important moving averages.

Among the stocks there could be a trading opportunity in 3 namely Wipro,Motherson Sumi and Auropharma. Wipro is all set to break above the highs to 400 levels and it needs some support from the nifty too which is not gettting as of now and December 400 call would be the cheapest investment for this. Motherson Sumi is at a new high and technically new highs have to be bought. Auropharma is in a sell mode and it is a short sell below the previous low

Nifty update for 23-November-2012

Nifty had a range bound session extending the bounce back to 5650 levels. The upper levels in nifty seems to be capped at these levels and we could see some sell off happening at higher levels and it is clearly indicating that if anyone wants to be a seller in this market it has to be from the top and break down trades can be a trap. Turnover data was poor and short covering in stock futures triggered the upmove. One stock that is clearly giving an upside momentum would be WIPRO and it is showing the signs of a bullish break out from a downward slopping channel to 400 levels soon. Let it break out from the previous high and December 400 call would be available at Rs.3-4 and i would like to go long here in this counter. On the sell side ICICI bank is getting resisted at some major moving averages and it is expected to trade lower in the coming days.Volatility data is showing a marginal increase in the premium with a negative closing for the volatility index indicating some long positions were created at lower levels but due to the tight range traders are playing safe by booking at higher levels.

Nifty update for 22-Nov-2012

Nifty gave a quick bounce after hitting the lower levels close to 5570. It is expected to give a range bound session between 5600-5650 before heading to 5300 levels. Before falling it broke from 5650 levels and lot of options built up could be seen at these levels. Though it gave a bounce we could see some major stocks like JSW steel, SBI and BHEL closed in the negative zone. In the hourly chart nifty broke the falling trend line for a bounce and it might extend upto to 5650 levels but there is no change in opinion as the advance/decline ratio is not convincing and we could not see any major accumulation pattern in stocks.If the bounce is here to extend i would like to go long in stocks like IDFC and Kotak bank above the previous as short term trades.From the telecom space R - Com too looks good in the chart. On the sell side there would be much bigger downside for stocks like JSW steel and SBI.We could not see any substantial increase in the premium and if there is long accumulation happening in nifty it would reflect in the premium and open interest. Volatility data is showing people are getting out of long trades at higher levels. Cyclically it is forming the same pattern that we have seen in 2010 ie; it formed a top between Nov 5-10 and in 2012 it formed the same pattern and i expect the same pattern to continue with 20-21 December and 4-5 th of Jan as major trend deciding days.

Nifty update for 21-Nov-2012

Nifty slipped down due to selling pressure at higher levels and in the medium term (end of December) it is expected to trade till 5300 and it seems to be a sell on rise market till now. Though it the index is maintaining a tight range one could see that major large cap names are moving down the trading channel and it would present a worrisome picture for all the traders. Though it can be considered as a normal bull market correction till the market settles down there is no logic in catching a falling knife. I expect the range bound to negative bias to continue till 20-21 of December 2012 and the market would start climbing up after that. Thus let nifty complete the price or time correction first and then be a buyer in midcap and large cap names.In the metal sector too we could see some major correction in stocks like JSW steel and TATA steel and Jsw will have a much lower target close to 670 as the distribution is happening after a long time. Volatility data is showing that long positions are not able to sustain beyond 5600 and they are getting squared off at higher levels. Turnover data is showing that institutions have not started selling in midcap stocks and only the largecap names are sliding and the implication could one more round of selling can emerge at bounce back.

Nifty update for 20-Nov-2012

Nifty had a flat session but it is expected to trade till 5520-30 levels in the short term with a reversal above 5660 levels. The medium term view has also turned negative with a target of 5300 where it matches with the 50% retracement level. The index is making lower tops in the daily chart and most of the major large cap banking stocks are forming rounding tops which is a major threat for nifty in the near term. Axis bank is one of the large cap names where we could see a major break down in the daily charts. The stock has been forming a top close to 1230-40 levels for quite some time and broke out of the topping out pattern. The view is bearish with an immediate target f 1160 in the near term and i would see this only as a normal bull market correction.It would be difficult for nifty to catch upto 5800 levels in 2012 because when ever there is a bounce back it is not giving positive impact on stocks. Nifty had a much needed bounce bounce back and it increased the premium t 20 points and that would again trigger a selling trigger. If nifty spends some time here at starts trading above 5650 levels the view can be changed.

Nifty update for 19-Nov-2012

Nifty broke the immediate support zone and now it would be a sell on rise market for a target of 5520-5530 on the downside. There is no point in selling the further break downs as the premium has also come to nil and only sellers are dominating the market. In the stocks front there would be lot of stocks which are on the verge of a break down like SBI, Ranbaxy and Bank of Baroda which would come to a complete sell below the previous low zone. Volatility index is showing that lot of short positions were built up in 5630-50 range and that would be an immediate resistance zone or the stop loss for the short positions. Turnover data is showing that institutional traders are still betting on some stocks and thus dont get trapped by going short below the breakdown and instead do it from the top close to 5630-5650. S&P has reached an immediate support zone of 61.8% retracement zone and gave a bounce back from there. Thus i would not expect much downside in nifty futures but stocks are expected to slide more especially the PSU banking space. The lower end of the range could be 5520-5530 levels where we have a well built trend line support holding the higher top higher bottom formation.

Nifty update for 16-Nov-2012

Nifty broke down to 5620 levels where some short covering happened and there is no evidence to see that the recovery was due to addition of long positions. We could not see any significant increase in the premium and thus it can be assumed that some amount of short covering is happening at lower levels but the volatility data is showing that the downside pressure is increasing. We had a false rally towards 5800 levels two weeks ago and whenever we have a false rally the resulting move would be very severe on the opposite direction and that is what we are seeing now. The turnover data was good and the advance/declining ratio was in favor of declining counters.Nifty is yet to decide whether it has to break below the previous low or not but the false upside moves happening in stocks would be giving a signal that some more downside is left in the market especially in infrastructure stocks. If nifty is making a pause here two stocks to bet would be HUL and Bata India (above the previous high's). Both these stocks are consolidating at lower levels for quite  few days and these stocks are seeing good accumulation pattern in daily charts.S&P has almost reached the closest support zone of 1350 and i expect the market the consolidate in 1340-1350 before any downward move.

Nifty update for 15-November-2012

Nifty broke below 5700 and is expected to trade till 5600-5620 in the short term with a reversal above 5740 levels.As mentioned in the previous post 5700-5710 was a crucial support zone as far as nifty futures was concerned and it was decisively broken on the Diwali day. The rate sensitives like banks and infra would be under pressure and  i dont see any logic in holding these stocks when the market is heading down. S&P would be moving towards the 61.8% retracement zone of 1350 levels and it could offer a possibility of bounce back close to that level. Though the break down in nifty would be slow because of the good amount of optimism but i am expecting a stock like SBI to face pressure in the near term and is expected to trade till 2050 in the November series. If we look at the options data we could see that because of the number of holidays and nifty held 5750 levels for quite a few days there was enough time for options writers to sell 5800 call options. Thus it would be difficult for nifty to regain 5800 zone in the current series.One sector that is offering some hope on the long side would be tea companies like Jayshree tea , and Goodricke group where we could see huge delivery as compared to the total trading volume and traders seem to be accumulating these stocks on every dip. Volatility data is showing that long positions got squared off below the psychological support zone of 5700 and i would not be a buyer till nifty makes a pause and it is wise not to catch a falling knife.

Nifty weekly update for 12-16 November 2012

Nifty failed to surpass the high of the tight range and once 5700 is taken out it might be getting ready for a 100 points fall. Nifty is getting decent support at 20 DMA but large cap stocks have started declining from the support zones.Stocks like SBI and ADAG stocks are on the verge of a decline and we need to watch the previous low zone of nifty as it was acting as the support zone till now.Nifty could get some buying interest at lower levels and that was evident from the increase in premium after hitting the low. As of now no distribution pattern is seen in nifty futures and traders are accumulating long positions despite the weakness in the global markets. If nifty is holding the low and moves REC would be one among the few bets on the long side as it is consolidating close to important moving averages and likely to move to 235 in the short term. The volume is still low and would be lower in the coming days too because of the Deepawali and it could arrest any major moves this week and stocks would perform in its own way. SBI is still a stock to worry and a level below previous days low could take the stock again back to 2050 in Novemeber series and 2150 would be an important support zone for the stock as it is close to the 50 day EMA. Cyclically 5-10 of November are important dates and it is the cyclical anniversary of the high of 6335 made in 2010 and the dates could normally act as pressure dates for the Indian equity market as these are considered to be trend deciding days.  

Nifty update for 09-Nov-2012

Nifty held the lower bands once again and that proves that the buying happening at lower levels is done by stronger hands. Tomorrow would be an important day as we have results of two large cap ie; SBI and TATA steel. Volatility data is showing that long positions are getting booked at higher levels and thus we could see some reduction in the premium. As long as the support zone holds  we can expect the positive momentum to stay. Except L&T all other large cap stocks are still staying in the positive zone. Though we have the result of tata steel tomorrow the stock is seeing a good accumulation pattern in the technical charts. Turnover data was not so bad and institutions were net buyers in the equity market and dollar index is close to the mentioned upside target of 81.5 and these things would be in favor of bulls. One major threat that is facing Indian equity market would be the under performance of U S market and the market is a strong sell mode with some bounce backs.Thus the strategy should be to lessen the volume and duration of long trades should be short. The only one worrisome stock would be L&T and it can test 1600 levels once it breaks the previous low zone and i feel market will maintain the tight range with some outperforming stocks

Nifty update for 08-November-2012

Nifty held the support zone and broke out of 5800 zone after a long time. It is expected to trade till 5840-50 with a reversal below 5700. Though there was a shocker from the U S market the structure of Indian equity market has not changed. S&P is at a major support zone of 1390 and break below that could lead to a major fall in the U S market and it could under perform the Indian market in the medium term.As i said in the previous post the premium was so heavy so that it could compel any nifty trader to cut off the long positions above 5800 mark level. The charts of stocks are still interesting and many stocks are giving break out on the upside like Infosys and PFC but wait for the dust to settle down and create positions above the previous high if there is no panic selling in the market. Volatility data is showing addition of long positions and it was very evident as it was not a gap up opening.Turnover data is showing an uptick in the volume and fii's have again started pumping in the money. This shows that lot of buying positions have been created by traders and it would not be practical to say that Indian market will come down once the U S market fall.Thus any fall in the market could be used as a buying opportunity and the stop should be tight around 5700 and as long as S&P is holding 1390 levels i dont see any panic selling happening in the market.

Nifty update for 07-November-2012

Nifty held the support zone and broke out from the tight range after a long consolidation and it is expected to trade till 5840-50 levels with a reversal below 5700. Volatility was at the peak and it is expected to come down in the coming days as it is happening just ahead of the event. Thus it would not be a time to create any fresh buying positions in index options as the premiums will come down drastically even if nifty gives a big move either side. As it is a new high in nifty within a month come out of defensive's and it is time to bet on some rate sensitive one's like SBI. The stock is ripe for an upmove ahead of quarterly result and that quick trade should be done before the announcement as the implied volatility in the particular stock options is expected to rise ahead of the big day. Turnover data has not picked up till now and it is expected to increase in the days to come. Thus the strategy would be to start booking long positions in nifty any level above 5800 (if it does so) and move to banking stocks like SBI and DLF. As said in the previous posts both base metals and US markets are giving sharp up moves and this can have a positive impact on nifty. I would like to book the long positions in nifty above 5800+ just because of the heavy premium available in index and that would be a good sign for an index trader. Thus as a trader one should be fast enough in churning the portfolio with the changing market conditions.  

Nifty update for 06-Nov-2012

Nifty held 5700 once again and it is expected to trade till 5840-50 in the short term. It was good that nifty got some buying interest at 5700+ levels and the volatility index took its own time to adjust to the upmove. If we see the uptick in volatility index and currency market it is evident that the moves were overdone and dollar/inr is moving towards the 61.8% retracement zone close to 55.Thus that could be a positive factor for nifty on the way ahead. Apart from PSU banking space and some real estate stocks all other sectors are looking for an accumulation pattern. Turnover data is very low and if the volume is less it could arrest the downside pressure too and it is clearly telling that nifty would take some time to reach the upside levels but one has to be stock specific moving ahead.In the commodities market base metals are showing good positive momentum and that would be encouraging for the metal stocks especially the dead ones like Jindal steel and Tata steel.The current market structure looks like a buy on dips market or buy near out of the money calls above 5750 mark. The U S market is waiting for a bounce back from the support zone and selling could get arrested in close to 1395-1400 levels.

Nifty weekly update for 05-09 Nov 2012

Nifty closed at the upper end of the channel and a break out above the upper end would be the right to initiate some buying positions in nifty. Though the downside targets were unfinished and nifty got support at 38.2% retracement and that is a good sign for the index is concerned. If we have a look into the turnover data its still low and one has to be stock specific if you are long. Volatility data is showing addition of long positions at 5700 levels but the move on the upside wont be quick even if breaks on the upside. The volatility index is again at historic lows and it would be threat for nifty's upmove and the premium is at the peak of 35-40 points which shows extreme demand conditions in the market. Some stocks like Sesa goa and Hexaware are on the verge of a break out and these are the stocks to consider if one has to be a buyer in this market. If we look at the attached chart of nifty we could see that nifty is getting supported at one of the most important angles and any downward move could get enough buying interest. The upper end of the channel lies close to 5950-6000 and that has to be the target as long as 5700 holds on the downside.That upmove should complete a 5 wave pattern in nifty and that could be considered as a long pause for the current rally.

Nifty update for 02-November-2012

Nifty once again held 5600 and the short covering rally can be expected to continue in the coming trading session too.Though the downside targets are still unfinished nifty is likely to be stuck in the range for some more time and then inch up after 5th of November. If we look at the turnover data and bank nifty we could see the market is lacking cash based buying and most of the banking stocks are still waiting for good buying interest. Volatility data is showing some buying happening at lower levels but the premium in nifty is once again at the peak of 30-35 points and i would not be a buyer in nifty but many stocks are giving excellent trading opportunities. There are a few stocks which were in the buyers radar like TCS and Bharti which are expected to move up in the coming days. Bharti is expected to break out from the consolidation range of 280-282 and buying could emerge only above the zone and traders should watch out for good trading opportunities in this stock. TCS is also expected to break above 1315-1325 range which would attract more buying interest in the stock. Thus it could be worth putting some money in these stocks than nifty as there are unfinished targets on the downside and these stocks are not very much positively correlated with nifty.