HUGE SELLOFF DUE TO OVERBOUGHT SITUATION

We have seen huge selloff on markets due to overbought situation; it is a good sign for a healthier market. Nifty may face some more pain. Banking, metal, oil & gas stocks may witness selloff.exporters like IT and Gems and Jewelers stocks may get firm support due to weak rupee.
Nifty will have support at 4379. Below it may test 4289 and 4200 levels. On the north 4565 will be a major hurdle.

July 4600 long straddle costs more than 500 rupees suggesting highly volatile movement ahead of budget on cards.

Investors those who missed the investment vehicle are going to set fresh opportunity once again, use it wisely.

AN OVERBOUGHT MARKET

NIFTY has breached 4610 level, but failed to close above this because of overbought situation. The 5 day RSI is above 87 and 5 week RSI is 97, suggesting higher level profit booking. The ongoing rally may be terminated, but it can resume its upward movements on Wednesday. The key support level for Nifty will be at 4518, 4456 and 4416. Resistance will be at 4650 and 4686.

US dollar is getting strength against major currencies and it will adversely affect the precious metals and Indian Rupee. Pharma and large cap IT stocks may get renewed buying interest because of weak rupee and oversold situation of these sectors too.

MARKET ENDED IN POSITIVE ZONE

NIFTY finally managed to close higher today, but confronting the resistance at 4610. If Nifty can break this level, then it may test 4687and 4725 levels. In simple we may see a short-covering above 4610. I think banking stocks and Bank Nifty will take the lead tomorrow, because Bank Nifty seems more oversold and many institutional investors are keen in investing in banking stocks, because of low discounting. Right now crude is at $67.86 likely to test $69.9 mark very soon.

India’s monsoon is below 35, but expected resume around 8^th of June, which will have positive impact on economy.

Nifty will have resistance at 4610 and 4687. Support at 4565 and 4553.

BUYING CAN EMERGE TOMORROW IN FRONTLINE STOCKS

Nifty closed 0.12% higher on Wednesday, after a choppy session, profit booking was visible in banking, oil and gas and capital goods stocks. Selective buying interest was visible in mid cap stocks.

As the extreme short term indicators are corrected to certain extend, we can see selective buying in A group stocks. As the high beta stocks have gained over a period of time, we can expect low beta stocks (especially FMCG and Pharma) will get renewed buying interest.

Nifty has support at 4480 and 4430. Resistance at 4550, 4578 and 4610.

STRONG FUNDAMENTALS BUT OVERBOUGHT

NIFTY closed 1.82% higher at 4529.70. A lot of midcap and small cap stocks were in good demand and over all breadth was positive.

The 5 week RSI is overbought and we may see profit booking from higher level by tomorrow afternoon or day after tomorrow’s opening session. We had seen sign of fatigue in banking stocks, this can happen to many other sectors too.

Today Shree Cement came out with its export numbers. It was quite impressive. FIIs has purchased nearly 20,000 crore US Dollar worth securities in the month of May. The inflow can be much bigger because the manufacturing sector growth shows steady growth. The Markit Purchasing Managers Index (survey based on 500 companies) shows a growth of 55.7%, it was around 44.4% on dec.2008, suggesting economic growth.

MARKET MAY MOVE UP FURTHER

Today we had seen fresh buying due to strong quarterly numbers of L&T, M&M and SAIL. Nifty tested a high of 4358 and it is likely to test 4420 and 4500 in the short run. Being the first day of new contract one can expect better opening, minor profit booking in the second half. Avoid large cap IT stocks, preferably small cap stocks also for the time being due to overbought situation.

BULLS BACK IN ACTION

Bulls forced the bears to cover their short positions ahead of expiry, and finally they succeeded with the help of global cues. Both Nasdaq and Dow ended higher on expectation of early revival of US economy. Crude surged above $62 mark.

Banking, ADAG stocks, metal and oil and gas stocks led the rally. Tomorrow we may see a gap up opening but one should expect choppiness due to expiry. 4319 and 4364 are the resistance on the north, and support at 4256 and 4189.

As long as Nifty stays above 4100 one can expect further uptrend and it may test 4390 and 4465 in the short term.

MARKET ENDED INGREEN

The markets had opened on a flat note on the back of subdued cues coming in from the global markets and moved up soon but could not sustain at those levels and slipped into red in the mid morning session but the formation of the new government and the strong financial reforms expected from the government weighed more and the markets were pulled up from the day’s low with strong buying emerging in ICICI, SBI, Reliance and L&T. The markets were volatile in the afternoon session but remained strong with an eye on the reforms of the government which will be revealed in near future. Further support came in the US index futures and European markets which were in green and our markets finally came to a close for the day and week after gaining 1.1% and Nifty on the other hand gained 0.66%.

For Nifty the major support is there at 4150 and 3886 which is still intact while the resistance is there at 4375 and 4450 levels.

LIKELY TO SEE CONSOLIDATION

Nifty closed 1.39% lower at 4210 due to weak global cues and over bought situation. Major heavy weight stocks’ valuation are over stretched and it helped profit booking. There was also a paradigm shift from large cap stocks to small cap stocks.

Markets likely to remain volatile in one or two trading sections more, but sharp reversal can be seen on mid Monday.

Nifty has support at 4186 and 4156. Resistance at 4268 and 4320.

NIFTY IS OVERBOUGHT

Nifty once again closed negatively at 4270, but mid-cap and small-cap stocks moved up sharply. The same trend may continue for another few more days before making a big leap. The 5 week RSI is above 90 suggesting possible profit booking on heavy weight stocks. Both Reliance and Reliance Petroleum remained negative, because Reliance Petroleum will be merged with Reliance Industries. It prompted institutions to book profit at these counters.

Nifty has major support at 4260 and 4156. Resistance for Nifty will be 4360 and 4400.

TRADE HALTED FOR THE DAY

Market has tested the 20% circuit filter in the initial hours. Due to this reason both exchanges closed for entire day. In the pre market section most of the ADR stocks started trading 15 to 25%higher than the Friday’s closing. Today’s strong move was unexpected, but the low volumes indicate un-sustainability at higher levels. For Nifty 4500-4550 levels are very crucial. If there is a profit booking then it may fall towards 4100 levels.

Morgan Stanley ups India to overweight for the first time in country portfolio model.

Midcap public sector stocks are in good demand. The same trend may continue for some more time.

Rupee started appreciating. May be it may revisit its early highs, on expectation of high FII inflow.

MARKETS AHEAD OF ELECTION RESULTS

The markets had opened on a positive note tracking the global cues and moved up on volatile grounds expecting a positive election outcome tomorrow. The tea stocks were on the move as the FAITTA came out with an announcement to raise the tea price by Rs 40 in two installments. Fall in inflation number helped the sectors like Capital Goods and Banking to move and give support to the markets to win the race. The recent exit polls showed that the winning percentage is more for the Congress led UPA and also the news that the other small allies are in talks with the Congress leaders gave further strength to this expectation. The election result is going to have a direct impact on the markets in the next trading day. The market is going to test key resistance levels if any of the major political front UPA or NDA comes into power. If that happens then Nifty has target of 3727, 3750 above which it can test 3900 and more. It is unlikely that the third or the fourth front will come to power and if that happens then we may see Nifty going in search of supports of 3510, 3353 and 3137 levels.

NIFTY FACING RESISTANCE AT 3720 – 3745 LEVELS

Nifty has once again touched an intraday high of 3709.60 and come off from highs and closed at 3635. This is the third attempt of Nifty to break the 3720 levels but once again failed. The volatility has increased dramatically, that will increase further and will reach maximum on Friday, especially in the second half. Investors should reduce both long and short positions and can create Nifty call option/ put option according to the risk appetite.

Nifty is having support at 3534 and 3510 and resistance at 3720 and 3745.

The probability of Nifty to move above 3826 during the expiry would be around 31% and its probability to move below 3456 would be only 30.56%.

AN EXTRA ORDINARY SHARP MOVE

Today Nifty opened with an upside gap, but got support at lower levels, and it rebounded sharply towards 3700 levels, the sharp move up was extraordinary in nature, participants either has given importance to poor IIP data or China’s higher trade deficit news. We can call these up moves as pre-election rallies; tomorrow market can change its direction, which in turn will give high volatility to the Nifty. Yesterday Nifty’s MACD, one of the strong technical indicators has given a sell signal, but today again it has given a buy signal. I had seen these types of movements on MACD very few times in the past, usually it will give a major sell-offs at the end. Nifty’s volatility index had moved up sharply and PC ratio is also declining also indicative of highly volatile movements ahead. Investors should use strict stop-loss for both long and short positions.
Nifty has firm support at 3600 and 3527. Resistance will be at 3700 and 3727. If Nifty trades above it then Nifty can test 3800, 3900 and its major higher level target of 4100. On the other hand if Nifty falls below 3500 then we can expect an intermittent downtrend.
The probability of Nifty to move above 3810 during the expiry would be around 37% and its probability to move below 3471 would be only 28.25%.

HIGHER SELLOFF AHEAD OF ELECTION RESULTS.

Even though Nifty opened with an upside gap, it was struggling to move above 3660 levels, and finally closed 1.83% lower on higher level selloff ahead of election results which is scheduled on 16th may. As the major technical indicators are on the sell side, we have to expect more selling in coming days than buying. Investors and fund managers don’t want to take a risk at this time. Nifty has support at 3505. If closed below it may test the 200 DMA of 3366 in coming days. If there is a revival in sentiment, auto sector stocks can be a good bet for.

FIRM US MARKET MAY SUPPORT NIFTY

US stocks on Friday rose as the stress test reveals signs of economic recovery, and US job data also suggesting the worst is over for banks. Majority of the banks closed higher.

In the domestic market nifty close at 3620 and is still above the 19 day simple moving average of 3545 and the key support at 3545. Nifty may open with a gap and will try to break 3720 levels barrier. If so we may see further uptrend.

As we have 5 more working days ahead of election results declaration, one should reduce carry over positions and add more puts of Nifty or should create more hedge positions. This advise is partly due to overbought situation of Nifty.

If we use probability at this juncture the probability of Nifty to move above 3832 would be 30% and probability of Nifty to move below 3437 would be 25%.

VOLATILITY REMAINS HIGH

Nifty tested an intra-day high of 3717, could not able to break the crucial resistance of 3720, and finally closed at 3625. Stocks which moved up substantially in the last few trading sessions have witnessed profit booking. DLF, ICICI Bank, HDFC and HDFC Bank were the prominent among them. The ongoing rally is losing its upward momentum due to over bought situation. The weekly RSI is above 88, clearly showing the over bought situation, a part of the broking fraternity is also worried about the Stress Test results of Bank in US.

The key support for the Nifty will be at 3590, if Nifty falls below then it may find nearly 100 points lower support, because of gap filling. On the other hand movements above 3700 still be possible for the Nifty, in that case it may test 3750 and 3800 levels.

If we use probability at this juncture the probability of Nifty to move above 3803 would be 35% and probability of Nifty to move below 3427 would be 31.57%.

VOLATILITY TO REMAIN HIGH

Both Nifty and Sensex had taken a breather after up move of yesterday. The technicals are supporting the uptrend except the weekly charts. The 5 weekly RSI is around 88 levels suggesting unexpected selling.The nifty has support at around 3590 levels. If it trades below for more than twenty minutes, then Nifty will fill the yesterday’s gap up opening, thereby it may test 3490 levels. On the other hand if it stays above 3678 levels then it can easily break the resistance of 3700 and 3750 levels.
We had seen huge buying interest in sugar stocks and realty stocks, both of these sectors may find lower level support, but later it can move up further.
With the asset price at 3660, implied volatility of a call at 46% and expiry on 28 may 2009, the probability of nifty to move above 4050 would be 19% and to move below 3160 will be only 12.60%

NIFTY TURNED TO BE POSITIVE

The major technical indicator MACD on daily has reverted its direction and has given a break out pattern for Nifty. The short-term moving averages also suggesting further uptrend for Nifty. The ongoing rally can continue, and may test 3790, 3820 and 3900 levels before 16th May 2009. Better than expected quarterly results, stability in China, expectation of rapid economic prosperity in US are the key reasons for the uptrend. In the F&O segment majority of the stocks ended at higher with moderate open interest on the first day of expiry. Banking, IT, Oil, Auto sector stocks backed the trend.
In normal market condition we may see a gap up but, minor correction is sets in the first half, but recovery is expected. Nifty support at 3587, 3500 and 3432.

MARKET TRADED STRONG MOST OF THE DAY

Indian markets had opened on a positive note on the back of mixed to positive cues from the global markets and traded strong most of the day and closed for the day in absolute positiveness on the day of expiry. The markets got support from the positively trading US index futures and the European markets. Even though the markets showed some volatility, the strength showed by stocks in IT, banking, technology and oil sector fueled the uptrend in the market. The Nifty rollover was decent and was around 67% showing that more investors were rolling over their position to the May F&O series. Finally the markets came to a close with Sensex at 11403.25 gaining 3.65% and Nifty closing at 3473.95 gaining 3.32%.

When considering the sectors, all sectors were gainers today. The major gainers were IT up 4.95%, Bankex up 4.47%, Technology up 3.99%, Oil up 3.48% and Power up 3.17%. On Nifty the major gainers were ICICI Bank up 9.11%, Sterlite up 7.1%, Tata Power up 6.86%, Reliance Capital up 6.43% and Suzlon up 5.82 while those on the losers' side were Reliance Power down 2.38%, IDEA down 0.77%, Grasim down 0.37%, Ambuja down 0.18% and NALCO down 0.09%.

Nifty is having support at 3422 and 3351 while the resistance is there at 3492 above it can test 3518 and 3550 levels.