Sunday, July 20, 2014

Nifty outlook for week beginning July 21, 2014

Nifty formed a bullish candle and closed near the high of the week recouping most of its previous week decline. The index, during previous week, gained over 210 points over four consecutive sessions and expected to pause and consolidate the gains in the upcoming week amid subdued global cues. After last week’s sharp decline, we expect the index to remain in a sideways consolidation mode between the broad range of 7800 and 7440 in the short-term

Stock specific price action is likely to continue within this consolidation phase as the result season pans out
A strong close above the recent life high of 7808 will confirm a double bottom formation around the 7440 region. This indicates conclusion of the secondary corrective phase and signals resumption of the upward momentum towards 8100 in the near term

The low formed last week (7447) is placed precisely near the late June 2014 low of 7441
The index has held above 7441 despite high volatility in last week’s trade. Only a decisive break and close below 7441 would put bulls on the back foot and open an extended profit booking towards the 7200 region to retrace the strong gains amassed during the May-June rally (6638 to 7808)

Next week, Q1 earnings from the following Index stocks - ACC, Ambuja, Asian Paints, Axis Bank, Cairn India, HDFC Limited, HDFC Bank, Wipro and Ultratech Cement

Important data releases for the week from the US would be jobs data (initial jobless & continuing jobless claims), housing (new home sales, existing home sales, home price index), retail sales and Industrial Production Data

Eurozone would be releasing data for Consumer Confidence and Markit Manufacturing, Services & composite PMI during the next week

Wednesday, July 16, 2014

Nifty tech trends for July 16, 2014

The Nifty gained 72 points over the day to close at 7526. Volatility returned yesterday and it favored the bulls as the
market weakened in the first half down close to 7450 levels but saw a smart recovery thereafter of almost 80 points
leading to a close at the day’s highest point. The Bank Nifty contributed significantly to the index gains. Technically,
the rally cannot be given too much importance as it has done nothing to suggest that the market is in reversal mode. After the big fall seen last week the hourly charts had turned a bit oversold and the sentiment too had turned overly pessimistic (suddenly) and this could have been normalized yesterday. The level of 7630 continues to hold a lot of importance and till the index is below the same on a closing basis we will have to believe that the correction is on.

Minor resistance seen around 7570 levels for the next day or two. The moving averages also remain above the price
action, which is important to monitor in the next few days. Given the trading action of the last three sessions, a new
support has been created at 7450 levels. Breaking this would trigger a move down to the levels we have been
presenting recently. The IT Index looks critically placed at this point. Either it would start a large leg down or
completely negate the set-up and resume the uptrend. This could potentially decide the fate of the Nifty. Overall, the
index is likely to run into resistance once again.

Support : 7516, 7500
Resistance : 7536, 7562

Sunday, July 13, 2014

Nifty outlook for week beginning July 14, 2014

After testing our weekly derivatives target of 7800 early in the week, the Nifty witnessed profit booking amid stock
specific leverage closure and in the process shed over 4.5%

Looking at the current set-up, the highest Call base is placed at the 8000 strike of over 1 crore shares. However, in the last couple of trading sessions, Call writing focus seems to be in near the money Call strikes, with OI of 7800 Call increasing to over 50 lakh shares. Thus, the level of 7800 is likely to act as a stiff resistance level in the coming week.

On the lower side, since the inception of the series, 7500 Put strike was commanding the highest OI addition and has
over 50 lakh shares in OI. The average shorting price for this strike is | 60-70. Thus, on the lower side, 7430-7440
remains the key support level

In the current decline, the advance decline ratio has constantly been in the red with stock specific leverage constantly pressurising stocks to head lower

A move below the aforesaid support zone may trigger a more severe leverage closure based selling, which could push the Nifty towards 7200, which was the break out zone post election verdict in May 2014

Nifty formed a bearish engulfing candlestick pattern in the weekly time frame and closed near the low of the week. Heavy profit booking during previous week saw the indices giving up all its previous weeks gain and closed near the previous low of 7441.

Key intermediate support for the index is around 7385 levels being the 50 days SMA and the 161.8% extension of the previous decline

Only a sustained break and close below the support level will indicate waning upward momentum and lead to a round of profit bookings towards 7200 levels in the near term

Post the election result session, index had formed a steady base precisely around 7200 region before embarking upon its current up move

Further the 50% retracement of the entire rally from May 2014 low of 6638 to the recent all time high of 7808 is also placed around 7200 making this a key short term support for the index

On the higher side Budget sessions high of 7730 will be acting as a major resistance for short term

On the domestic front, Industrial Production data and inflation numbers (Retail Inflation – CPI and Wholesale Inflation – WPI) will be released during the next week

On the corporate front, results of TCS, Kotak Mahindra Bank and Bajaj Auto will be announced during the week

Important economic events releases in the US for the next week - new home sales, existing home sales, home price index
Jobs data (initial jobless and continuing jobless claims) and industrial production data
From the Eurozone, important data to be released in the coming week will be industrial production, trade balance and inflation (CPI)

Saturday, June 28, 2014

Nifty outlook for week beginning June 30, 2014

A classical Doji candle on the weekly chart on the Nifty spot index. Next week, above 7595, Target 7745 and below 7440, Target 7290. Get ready for big moves as we enter a week ahead of a Budget full of sky high expectations.

Going ahead, Nifty is likely to find support near 7400 levels as the open interest base in Put options is almost equally spread out from 7400 to 7000 levels. Nifty futures open interest had declined by 30% in the last month with rise in Nifty from 7240 to 7493 levels when we compare May and June expiry closings. This time the roll spread had increased from 32 to 45 in the last few sessions near expiry. This means fresh long positions have been formed in the index.

Sunday, June 22, 2014

Nifty outlook for week beginning June 23, 2014

Nifty formed a small bear candle with a long upper shadow highlighting profit booking at higher levels after recent strong gains. Nifty during previous two weeks continues to consolidate in a tight range of 7500-7700

The index displayed resilience in the face of volatile global cues and rising crude oil prices over the last few sessions as it held on to its intermediate support around 7500 being the confluence of 38.2% retracement of the last up move (7218 to 7700) placed at 7500 and the bullish gap area formed on June 6, 2014 between 7497 and 7474

The Nifty has so far retraced just 38.2% of its preceding six session rise (7218 to 7700) around 7500 while consuming eight sessions

The larger time correction and shallow price correction indicates a healthy corrective decline within an ongoing uptrend. Therefore, we believe if the index holds above the bullish gap area of 7497-7474, that will keep bulls in fray for an eventual breakout above the recent all-time high of 7700

Volatility is likely to remain high in the coming week on account of F&O expiry of the June series on Thursday and rising crude oil prices

On the domestic front, there are no major data releases for the next week

Important economic events releases in the US for the next week apart from the housing (new home sales, existing home sales, home price index) and jobs data (initial jobless and continuing jobless claims) are the Q1 GDP data, manufacturing and services PMI, consumer confidence index

From the Eurozone, important releases would be the PMI data (manufacturing and services), consumer confidence, industrial confidence and economic confidence indices

From Asia, China is likely to post the manufacturing PMI data which would be tracked keenly while from Japan, unemployment data and inflation data (CPI, PPI) would be monitored closely

Sunday, June 15, 2014

Nifty outlook for week beginning June 16, 2014

Nifty formed a small bearish candle with a higher high and higher low in the weekly time frame thus consolidating its recent gains. The index on expected lines consolidated during previous week after nearly apprehending our target of 7730.The index remains in the midst of a strong up trend led by broad based participation

We expect the index to undergo a time wise correction to work its way out of short-term overstretched conditions on momentum indicators before resumption of the upward momentum

The confluence of key Fibonacci price extensions converging around 7730 makes this an intermediate hurdle for the index. Sustenance above 7730 on a closing basis will put the index on course for a move towards 8100 in the near term

From a short-term perspective, we expect 7500 to act as a key support for the index

The corrective price action after the last up move from 6638 to 7563 saw the index form a steady base precisely near its 38.2% retracement placed around 7200 before resuming the upward journey.Therefore, we expect the index to garner fresh buying support around the 38.2% retracement of the current up move (7218 to 7700) placed around 7500

The presence of the bullish gap area formed in last Friday’s session between 7497 and 7474 make it a key support area for the index

On the domestic front, the key data releases would be the wholesale price inflation

Important economic events releases in the US for the next week apart from the housing and jobs data are the industrial production, CPI, MBA Mortgage Applications, current account balance and Philadelphia Fed Business Outlook data. The FOMC will also meet to take a decision on the interest rates

From the Eurozone, important releases would be the Bloomberg Economic Survey, CPI, PPI, Industrial Orders, Trade Balance, Unemployment Rate, New Car Registrations, current account balance, consumer confidence index and industrial orders data

Tuesday, June 10, 2014

Tuesday, December 10, 2013

Nifty view for Dec. 11, 2013

The 5 day RSI is in the overbought zone which implies a southward movement of the Nifty for Dec. 11.

For Dec. 11, we can expect a downward move for the Nifty with support at 6270 levels which is the 33% Fibonacci retracement from the high of 6413.

Saturday, October 12, 2013

Nifty trading strategy for week beginning Oct. 14, 2013

One possible trading strategy for the Nifty is as follows.
1) Buy Nifty futures for Oct maturity, say @ 6124, one lot
2) Sell Nifty futures for Dec maturity, say @ 6208, one lot
3) Sell Dec Nifty call options 6100 strike @ 305, one lot
4) Sell Dec Nifty put options 6100 strike @ 205, one lot
5) Buy Oct Nifty call options 6400 strike @ 24, 4 lots
6) Buy Oct Nifty put options 6200 put strike @ 155 one lot
If Nifty goes up, the loss on 6100 Dec call options will be nullified by the profit on 6400 Oct call options. Then square off the 6100 Dec put option which would be in the money and take a fresh position of selling 6200 Nifty Dec put option.
If Nifty goes down, the loss on the 6100 Dec put options will be nullified by the gain on the 6200 Nifty Oct put options. Then square off the 6100 Dec call options which would be in the money and take a fresh position of selling 6000 Nifty Dec call option.

Sunday, October 6, 2013

Market moving events for Oct. 2013

• 04 Oct : HSBC PMI Services

• 11 Oct : Quarterly results of Reliance, Infosys and Axis Bank

• 11 Oct : Industrial Production

• 14 Oct : CPI & WPI

• 15 Oct : Quarterly Results of TCS

• 18 Oct: Quarterly Results of ITC, Bajaj Auto, ACC & Ambuja Cements

• 21 Oct : Quarterly Results of HDFC

• 22 Oct : Quarterly Results of Larsen & Toubro, Cairn and Bank of Baroda

• 25 Oct : Quarterly Results of ICICI Bank, PNB, Kotak Bank, Mahindra & Mahindra, BOB, HUL, IDFC, NTPC, Larsen & Toubro

• 29 Oct : RBI Policy Review

• 31 Oct : Fiscal Deficit INR Core