Nifty made a low of 5925 and gave a sharp bounce to 5960 levels. As said in the previous post it is wise to square off the first set of short positions close to 5880-5940 levels and wait for a bounce to 6000-6030 levels for further trades. We might be listening to many voices related to the head and shoulders break down in nifty and one should be watchful regarding the relevance of the break down only after relating it with the performance of the large cap stocks and options data. As per options table the base still lies at 5800 strike and all the higher strike calls of 6100,6200 have been written heavily. Thus as of now it is wise to expect a rebound due to the activity in 6000 puts. The volatility index is close to the recent highs and the bounce back from 5925 was with decent premium. It indicates traders are busy creating long positions close to 5900 levels. The H&S pattern in nifty can be a failure pattern because of the width of the pattern as it is comparatively small. The levels of 5925 is eventually going to break but if it is after a bounce it would be a good distribution pattern and a wave 3 on the downside. If we see the stocks there are some stocks which are waiting for a rebound and i would first go with the ones like Federal bank and Auro pharma. Stocks like Reliance, SBI, L&T, JP associates are close to the support zones but wait for some more downside in these stocks to be a buyer. Among the private banking space Axis bank and ICICI bank are close to their 40 day moving average which is a positive factor for these stocks. 62-64 would be a decent price to add JP to the trading portfolio and as it is a high beta stock the returns would be pretty good. Re/dollar might fight some profit booking sessions close to the previous high of 57.30 but the trend is still intact. As of now we could see nifty in a range of 5920-6010 with 5920 as a crucial support zone for the month of June
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