Friday, August 29, 2014

Are we headed for a major correction ?


Japanese Candlestick reversal warning patterns do not work every time. However, when a particularly bearish pattern such as two back-to-back Doji appear at the top of a long price advance, the follow-on result can be devastating.
One of the most important Japanese Candlestick reversal warning patterns is the "Doji," in which the Open and the Close during a given time period are the same, or very nearly so. The appearance of a Doji at the top of a long price rise is a potent warning of a probable decline in prices. When two Doji arrive there, back to back, we take special notice.




The chart patterns for the Dow Jones Industrial Average (DJIA) from October 1987 (Black Monday)& May 2011 and Nifty for Aug. 2014 show creepily similar candlestick patterns.

On October 2, 1987, the first of two Doji appeared. The Open and the Close of that Doji in the Dow Jones Industrials Index on that day were 2639.20 and 2641.00, respectively. The second of the two Doji appeared on the next trading day, October 5, its Open and Close being 2641.00 and 2640.20 respectively. (See chart below.)




Two Candlestick Doji appeared, back to back, on May 2 and 3, 2011. The Open and the Close of the Dow Jones Industrials Index on May 2 were 12810.20 and 12807.40, respectively.






Monday, August 25, 2014


One possible strategy for Nifty is :
Buy 20 lots Aug. 8000 strike price call options
Buy 4 lots Aug. 8100 strike price put options
The potential profit is illustrated below.



Nifty outlook for Aug. 26, 2014


The Williams indicator is showing a sell signal for the Nifty



From the MACD indicator in the below chart, Nifty looks top heavy, chances of a further correction towards the 7700 levels are possible.

Nifty view for week beginning Aug. 25, 2014


The Nifty gained 122 points over the week to close at
7913. It was only the session last Monday that contributed
almost 90% to the weekly gain. For the last four sessions
the index has been trading within a tight range where it
seems the bulls and bears have been testing each other
out. The bulls have had the upper hand but the index has
not reflected that in terms of momentum or strength. The
big positive development last week was that the Bank Nifty
cleared the major hurdle zone of 15600-15700 on a
closing basis. Technically, how the market deals with the
all-important 7950 level will decide the trend for this week
and first half of Sep 14. The index has been stuck within
the 7840-7950 band and a breakout from the same is likely
sometime this week.

We must point out that the technical indicators are not
supporting the price move as multiple legs of divergence
can be seen and this continues to bother us at the back of
our minds. At the same time one should be aware that in
strong bull markets this disconnect can continue for long
periods of time. Action on the bearish side should be taken
only on a break of supports. For the near term, clearing
7950 would set the market up for a move towards 8200-
8250 while bigger target is around 8650-8700. Only a
break of 7840 would call for a 3-5% correction. Overall,
since it all boils down to 7950 one should be prepared
both ways.

Friday, August 22, 2014

Nifty outlook for Aug. 25, 2014



From the charts below, Nifty looks overbought and poised for a breakdown next week.



Wednesday, August 20, 2014

Nifty outlook for Aug. 21, 2014


As per the 30 min chart below, the MACD, Slow Stochastics and SAR (Stop n Reverse) technical indicators are indicating a BUY signal for the Nifty with a stoploss at 7877 levels




The 14 period RSI indicator is showing sell signal. The Stop N Reverse (SAR) indicator is also indicating a sell for the Nifty with a stop loss at 7922 levels.



In the below 4 hourly chart, the widening gap between the MACD and Signal lines is indicative of the reversal of the uptrend.



Tuesday, August 19, 2014

Nifty outlook for Aug. 20, 2014



The short term indicators are mixed with MACD on the 30 min charts indicating a downmove and slow stochastics showing a bottoming out with possible room for a further down move.


Today is a crucial day for the NIFTY. If it breaks 7929 on a closing basis, then we are looking at 8295 as the next target. On the other hand, a close below the 7900 levels indicates a return to the 7400 levels.





The Nifty gained 23 points over the day to close at 7897.
While the closing at new life highs might present a very
rosy picture the index has actually not been showing
textbook strength. The open to close action was almost flat
and many popular stocks underperformed. The volume
activity and momentum has also been missing, which
should ideally not be a case in such a “good going” market.

Technically, the index got closer to our mentioned major
resistance of 7950. This is an important level based on a
number of technical studies. The Nifty will have to cross
this and the Bank Nifty will have to cross 15600-15700 on
a closing basis to prove its strength. If it does not happen
then the overbought technical indicators, oscillators and
the general “feel good” sentiment will force a reversal on
the markets. The next couple of days are extremely critical
as the market is likely to take a significant step one way or
the other. A close above 7950 will give the bulls complete
control and trigger a 5% upmove in quicktime. On the other
had a break of 7840/7750 will confirm the start of a
sizable leg down.



Monday, August 18, 2014

Nifty outlook for Aug. 19, 2014


The RSI is continuing to signal room for a further uptrend in the Nifty


From the chart we can see that Nifty is in an uptrend channel with a possible target of 8000 before retracing back to the 7500 levels.


Sunday, August 17, 2014

Nifty outlook for Aug. 18, 2014


Nifty is in an upmove today with immediate resistance of 7865 which was the previous high. IF 7865 breaks which is unlikely, then probability of 8000 is high.



Chaikin's volatility indicator in the below chart shows a declining trend.
Chaikin's Volatility indicator compares the spread between the indice's high and low prices. It quantifies volatility as a widening of the range between the high and the low price. A gradual decrease in volatility over time might mean that the market is reaching its peak.



Nifty shows a triple top formation in the daily charts. Max 40 points upmove remaining. There is a higher probability of a downward move for the Nifty on Monday.



In the absence of any major domestic trigger, stock markets are likely to take cues from global factors amid geopolitical concerns in Iraq and Ukraine this week, say experts.

Besides, trend in investment by overseas investors, movement of rupee against the dollar and crude oil price will continue to influence market movement. "In absence of any strong triggers, Nifty may trade in narrow range and show indecision at higher levels. In coming sessions, 7,750 shall be crucial deciding level in near term, and the index is likely to witness further buying above this level





If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.


Wednesday, August 13, 2014

Nifty outlook for Aug. 14, 2014


The 3 & 5 day RSI appear to be supporting an upmove for the near term.



As per the below chart, NIFTY looks set to have a northward movement on Thursday with the simple moving averages supporting the upmove




If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Tuesday, August 12, 2014

Nifty Outlook for Aug. 13, 2014


The Ultimate Oscillator (ULT) indicator shown in the below chart is a range-bound indicator, which means the value fluctuates between 0 and 100. Similar to the RSI, levels below 30 are deemed to be oversold, and levels above 70 are deemed to be overbought. Transaction signals are derived by finding situations where the price is going in opposite directions than the indicator.



Are we going to see for the third time a similar move in the 5 day v/s 40 day Simple Moving Average. A downturn followed by an upmove. Only the magnitude of the upmove keeps on reducing. In the current scenario, a potential upmove would not be more than 200 points from the current levels.



As per the below chart, NIFTY appears to have broken out of the downward sloping channel. Another upmove tomorrow will confirm the change in trend for a target of 8000 eventually by next week.



If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Monday, August 11, 2014

Nifty outlook for Aug. 12, 2014


NIFTY appears to be moving in a downward channel with resistance at 7700 and support at 7500 levels.



Nifty appears to have bottomed out as per the technical indicators RSI and slow stochastics. However 7700 and 7800 are the immediate resistance levels which would be difficult to break unless there is some major fundamental news.


If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Sunday, August 10, 2014

Nifty outlook for Aug. 11, 2014



Both the 5-day and 14-day Relative Strength Index (RSI) indicators are nearing oversold territory indicating a northward move in the NIFTY for the near term.


The MACD is showing a downtrend in the NIFTY and so is the Stop-N-Reverse (SAR) indicator. However going by past historical data, there is a high probability of the NIFTY correcting its down move and moving north on Monday


If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Thursday, August 7, 2014

Nifty outlook for Aug 8, 2014


On the charts we see two similar gap down openings for the NIFTY, Aug 1 and today. Will we see today's price move touching the 7450 levels before correcting back towards 7600


The 5 & 40 day Simple moving averages are converging, indicating a breakout which could be a 200 point upmove or a downmove.


The Nifty lost 78 points over the day to close at 7668. A “tit
for tat” kind of a scenario has played out at the markets
yesterday as the bears came back strongly and retraced the
entire gain of Tuesday. It has been hugely volatile in the
last few sessions and in such cases it is difficult to gauge
the real trend of the market. After the fall yesterday it does
seem as if the market is finding it difficult to sustain at
higher levels and the global newsflow is not helping.

The Nifty lost 78 points over the day to close at 7668. A “tit
for tat” kind of a scenario has played out at the markets
yesterday as the bears came back strongly and retraced the
entire gain of Tuesday. It has been hugely volatile in the
last few sessions and in such cases it is difficult to gauge
the real trend of the market. After the fall yesterday it does
seem as if the market is finding it difficult to sustain at
higher levels and the global newsflow is not helping.

The US and European markets are likely to see further
downside. The DJIA is on course to break 16000 levels.
Overall, follow-up weakness is likely.


If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Wednesday, August 6, 2014

Nifty outlook for Aug 7, 2014



The 33% retracement support at 7685 held for the NIFTY as per the below chart.


If NIFTY closes below 7700 today, there is a high probability of seeing 7500 levels in the NIFTY in the near term.


Nifty looks poised to breakout from the 7600-7800 range in a few days.



If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Tuesday, August 5, 2014

Nifty strategy for Aug. 6, 2014


Buy 10 lots of Nifty 8000 strike call options and to hedge it buy 1 lot of Nifty 8000 strike put options and another 1 lot of Nifty 7700 strike put option. The payoff is given below for various levels of Nifty. Pls note that the payoff does not include brokerage and transaction costs.

Nifty outlook for Aug. 6, 2014


An interesting 30 min chart over the past 15 days. The trend line shows Nifty capped at 7740 for the near term. If 7740 breaks on the upside, we should see 7800 and possibly 8000 being breached.


As per the Fibonacci retracement, the last resistance of 7741 has been broken on a closing basis today leading to the target of 7840 tomorrow.



In the daily chart below, RSI signals BUY but MACD and Slow Stochastics indicate a SELL. Take your pick.


In the monthly chart, Nifty looks poised for a major breakout. Either towards the 8000 levels or back towards the 7200 levels. Looking at the monthly RSI indicators, there does not seem to be much more upside to the Nifty as RSI seems to be heavily over bought and same applies to the stochastics. 8000 seems possible going by the market momentum, but a sustainable breach of 8000 is highly unlikely.



If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Nifty volatility for Aug


As most equity markets are near record highs, the volatility index in most markets are trading at low levels. However, due to news flows like UK BoE action on August 6, volatility may see an up move in these equity markets

Existing geo-political risk like the Gaza conflict, Ukraine and Russia conflict may also trigger a surge in volatility from record lows

India VIX is likely to remain in the range of 13-16. With the onset of consolidation in the Nifty, the volatility is likely to remain subdued, as option writing plays get aggressive in the Nifty for August series already

On the higher side, 18.5 is the 100 week moving average. This level is likely to act as a key resistance level for the index. The US Fed action/UK BoE action on interest rates or escalation in geo-political risk may trigger an up move in this index towards 18.5. However, this could be used as a short volatility opportunity via the Nifty options segment

Monday, August 4, 2014

Nifty outlook for Aug 5, 2014



The Nifty gained 81 points over the day to close at 7683. A
strong rebound at the markets yesterday as they opened
gap-up and then traded with a positive bias till late in the
afternoon only to see a sharp rally towards the end that
seemed on account of short covering before the event.
While the upmove was large it has still not done anything
to negate the price decline of last week.

Technically, the index is back to the breakdown point of
7700 and it would be interesting to see how the bulls and
bears fight over this level while the policy is out. We think
yesterday’s rally can be explained by a more sentimental
reason. The environment just got too pessimistic and
typically in such cases the market goes the other way for a
day or two. Based on the studies 7700-7730 is a major
resistance area and hence in a normal scenario the index is
likely to reverse from the same. The bigger resistance stays
around 7800 but is unlikely to be tested. We continue to
believe that the move last week is a short-term reversal and
hence rallies should be used to sell with a view to buy back
near supports. Minor support is seen at the level of 7600
below which 7450 will be in focus.


As per the below weekly chart, NIFTY is in a rising up channel with support at 7500



The Bollinger Band gives an interesting insight of an upmove target of 7886 for the NIFTY



The 9 day Exponential Moving Average (EMA) continues to be above the 40 day EMA which reiterates the bullish stance of the NIFTY going forward. The 5-day RSI at 45.9 and its uptrend also portrend an upmove for the NIFTY.




If you have found the above information useful, feel free to make a small payment as a token of your appreciation and to enable me to devote more time to this blog.

Nifty view for week beginning Aug 4, 2014


Nifty formed a bearish candle in the weekly time frame, as the index reacted lower after testing its all time high. Nifty closed in red in three out of the four trading session during previous week and in the process gave up 60% of its previous two week gains

A follow through weakness below the previous weekly low will signal continuation of the selling pressure and can test the lows of late June 2014 and mid-July 2014 placed at 7440 levels

The index since last two months is seen trading in the broad range of 7420-7800 after the strong up move in May’14 and can be seen as a base formation for the next up move. Only a decisive breach of 7400 will derail the current up trend in the market. On the higher side the recent highs of July 2014 placed at 7840 levels is likely to act as major resistance in the short term

Domestic data points to be watched in the next week will be India’s Services and Composite PMI and announcements in the monetary policy meeting scheduled on August 5th

Earnings (Q1FY15) for index stocks due in the next week are – Hero Moto Corp, Mahindra & Mahindra and State Bank of India

The data releases from US to be watched are – Housing claims, Jobs data, Markit US Services PMI, Markit US Composite PMI and Trade Balance for June

Eurozone data points that are awaited in the upcoming week are – Sentix Investor Confidence, Retail Sales for June and Markit Eurozone Manufacturing PMI

If you have found the above information useful, feel free to make a payment of any amount as a token of your appreciation and to enable me to devote more time to this blog.

Thursday, July 31, 2014

Nifty outlook for 1 Aug. 2014

The RSI, MACD and Stochastics indicate a downward move of the Nifty for the near term.




Nifty outlook for July 31, 2014


The Nifty gained 43 points over the day to close at 7791.
After two corrective sessions the bulls came back strongly
yesterday and ensured a move back close to the 7800
mark. The first half was mildly weak but thereafter a strong
rally was seen that triggered a 100-point move from the
lows. Technically, the abrupt turnaround yesterday seemed
pretty much out of the blue as there was no concrete
indication on the charts of such a smart move. The only
explanation was the fact that the index got close to the
7700 level, which we have been presenting at the first
point of support since last week and it has been seen in the
last few weeks that the market simply refuses to break
support levels whatever the set-up might up on the charts.
The upmove yesterday has brightened the possibility of
another higher high within the all-important 7850-7950
resistance zone. The moving averages have gradually
moved higher with the price action in the last few weeks
and it seems only on a close below the same do the bears
get complete control. The Pattern and Elliot studies
continue to suggest that the upside from here is not
substantial. Also, it must be highlighted that the rally
yesterday could have been account of the F&O expiry and
hence can’t be taken completely on face value. The US
markets are on the verge of breaking an important support.
For the day, support seen at 7775 and 7760. Overall, 7700-
7850 could be the applicable range until tomorrow.

Wednesday, July 30, 2014

Nifty view for July 30, 2014


The Nifty lost 42 points over the trading session to close at
7748. A bearish day at the markets on Monday as the
indices opened flat but started to loose ground thereafter
breaking one minor support after another to get close to
the 7700 number. The momentum was strongly in favor of
the bears and most of the stocks that underperformed
during the upmove last week were the ones to be hit the
most. Expectedly the Bank Nifty was majorly responsible
for the Nifty downtick.
Technically, the quick turnaround from that resistance of
7840 is now making the case extremely strong for a top
last week. If this indeed turns out to be true then the
indices could remain within a short-term downtrend for a
couple of weeks atleast. Both price and time correction is
likely in this corrective phase unlike the previous
corrections of the last three months. The technical
indicators continue to exhibit weakness while the patterns
on the hourly charts hint at a reversal to be taking place.
The moving averages play an important role in trending
markets and hence will be on test around the 7620 mark.
Above that 7700 is the first point of support breaking
which could have a cascading effect on the price action.
The upside is looking capped to the 7800-7850 zone. The
Bank Nifty has room to fall by more than 3-4%. Overall, the
set-up hints at more weakness ahead.

Monday, July 28, 2014

Markets and indicators in bull grip

Just a few points as July series comes to an end.
The June series expired at 7,493.20 points and the current close of NIFTY is higher by 297.20 points or 3.96%. This gives the bulls a lot of leeway and comfort. Even though the market is looking tired the bulls don’t have to make too much of an effort to keep things going in their favour. Second his effort is aided by the aggressive FII who is supporting the efforts. FII’s have bought Rs 1,950 crs in the week gone by and about Rs 11,000 crs in the current month of July. If one looks at the first half of the calendar year January to June they have invested Rs 62,600 crs.
To add to the bull’smomentum the government is keeping the investor interest intact. After the budget which was presented where FDI in insurance was to be raised to 49%, in the last week the cabinet has approved the same. This means that the government wants to send a message loud and clear that they believe in committing only what they will do. The mandate that this government has received is a clear mandate to rule for five years and without the give and take of coalition politics. The country wants delivery and governance and this is the same thing that investors want.
To help the bulls even rain gods are obliging. In the last couple of weeks things have improved significantly and the rainfall deficit has reduced. From a drought like situation it appears we are moving towards the long term average monsoon rainfall and at worst some areas nay remain deficient in rainfall. This improved situation will be a boon when Raghuram Rajan has his policy review in the first week of August. Efforts at containing inflation particularly food which were likely to go awry in case the monsoon failed are all set to return to normalcy and may prompt the governor to soften interest rates.
Yet another factor favouring bulls is the improvement in corporate results. It is becoming increasingly clear that the economy has bottomed out and the worst is behind us. The results of India Inc are reflecting this hope and turnaround.
While the markets may not do much in the short term having risen from just about 20,000 in February on the BSESENSEX in February 2014 to currently above 26,000, a gain of 30%, the long term augurs well. An economy which has begun to bottom out, a new government with a clear mandate and meaning to set new standards of governance and finally an investor class from around the world which is investing in this story. I believe the bulls have it completely in their favour and though corrections will always happen, it’s a one sided game as far as bulls are concerned. The dice is loaded in favour of bulls.

Outlook for July 28, 2014


The Nifty lost 127 points over the week to close at 7790.
Barring Friday the bulls were in control the whole of last
week and the trend of higher tops and higher bottoms on
the price action continued with ease. However only two
sectors namely, IT and FMCG, contributed significantly to
the index gains while others underperformed. Technically,
the index tested our mentioned resistance of 7840 last
Friday and witnessed a 50-point decline. While it is too
early to judge, we think the markets could have potentially
formed a ST top last week. At best we could see another
higher high into the 7850-7950 zone but that itself looks
unlikely given the global equity market set-up.

The local technical indicators remain in bad shape. They
have refused to move even into the overbought zone last
week. The Elliot set-up suggests that the market is likely to
start a leg down that could last a couple of weeks or more.
The support remains in the form of 7700 and a break
below the same on a closing basis opens up targets like
7600/7530/7450/7365. We continue to believe that a
short sharp correction would help the underlying bull
market and make the set-up stronger for the next phase
up. The underperformance of the Banking and Capital
Goods index is a major worry. The global equity indices too
look toppish. For the day, resistance seen at 7807/7840.
Overall, the bears could potentially take control starting
this week.

Sunday, July 27, 2014

Nifty view for week beginning July 28, 2014


Nifty formed a sizeable bullish candle with a small upper shadow on the weekly time frame, indicating continuation of the positive momentum in the short term. The index, closed in green in four out of the five trading sessions and maintained a higher high and higher low in the weekly chart.

From a short-term perspective, the index has rallied for previous two weeks and has gained over 5% in the process
After such a one-way rally, a round of sideways consolidation or minor retracements to correct the overstretched conditions is not ruled out

Fatigue is also visible in the broader markets as evident from the muted performance of the midcap and small cap indices over the last three sessions. However, the overall bias continues to remain positive.

Any cool-off towards the 7700-7650 region will help correct the short-term overbought conditions and be considered a buying opportunity

The index had formed two distinct lows around 7440 during late June 2014 and mid-July 2014. A firm closing above the intermediate high of 7808 signals a breakout from the double bottom formation indicating end of a secondary consolidation and resumption of the primary uptrend

The measuring implication of the price pattern projects upsides towards 8175 in the near term. The presence of 161.8% price extension of February – April rally (5933 to 6819) measured from May 2014 low of 6638 placed around the 8100 region makes this a key near term target for the index

Domestic data points to be watched in the next week are the fiscal deficit and India’s Manufacturing PMI Earnings (Q1FY15) for index stocks due in the next week – HUL, ITC, Bank of Baroda, IDFC, Bharti Airtel, Sesa- Sterlite, Lupin, Dr.Reddy’s Labs and Maruti Suzuki

The U.S. FOMC meeting outcome along with US GDP data will be keenly watched by the market participants
The data releases from Eurozone expected during the upcoming week are Consumer Confidence, Unemployment Rate for June, Consumer Price Inflation for July and Markit Eurozone Manufacturing PMI.



Friday, July 25, 2014

Nifty view for July 25, 2014



NIFTY PCR_OI moved further up 0.95 (below 1, 6mth low at 0.65, 6mth high 1.36 in OCT.); 7900
CE saw addition of 6.41 lakh shares (with total OI 55.37 lakh shares), PCR OI 0.07; 7800 CE saw addition of 2.52 lakh shares (with total OI 48.59 lakh shares); On other hand 7800 PE saw addition of 13.09 lakh shares (with total OI 30.84 lakh shares), PCR_OI at 0.63; 7700 PE saw continued additions of 10.53 lakh shares (with total OI of 71.35 lakh shares), PCR_OI at 1.53, clearly implying support levels for NIFTY at 7680-7750.


The Nifty got past the lifetime highs but volumes & Open interest readings did not pick up doubting
the strength of the breakout move. Price move again below 7800 would be the first possible sign of
intraday weakness. No directional bets were noted in Bank nifty.
FIIs action saw liquidation in the Index futures. Clients added on to put longs in options segment.
Options activity picked up significantly in 7800 & 7900 PE on possible PE writing. Shedding was noted in 7700 CE.





Wednesday, July 23, 2014

Nifty view for July 24, 2014


The candlestick chart is showing a doji pattern, indicating a potential sell off in the Nifty.






Nifty Strategy
One possible strategy for the current scenario is to buy 20 lots of Nifty 8000 strike price call options @ 3.65 and buy one lot of Nifty 8000 strike price put option. The potential payoff is as below.






The Nifty gained 28 points over the day to close at 7795. An important day yesterday that will go
into the history books as the index registered a new all time high. Barring this price development there was nothing that was in sync with this achievement. We say this because the euphoria was missing, the clean bullish momentum was not there, participation was limited to a couple of sectors and volumes were not great.


Technically, the indices have completed the “V” shaped recovery. What is interesting to note is that during this recovery the market registered higher highs every day for seven sessions. However what continues to bother us is the fact that none of the technical indicators have made a higher high. The candlestick patterns have not completely supported the bulls and the oscillators remain overbought. These factors do not allow us to give out big upside targets from here. Taking into account all studies we think 7850-7950 is at best the market can move to. The immediate support now stands at 7700 and a close below the same would be the first indication of weakness. The deeper support is around 7570 where the moving averages stand.


The lack of participation of the Banking, Capital Goods & Metals sectors is clearly a cause for concern. Typically in the past they are the ones leading the market higher. The indices cannot sustain at these levels with just IT and FMCG doing well.


NIFTY PCR_OI moved further up 0.95 (below 1, 6mth low at 0.65, 6mth high 1.36 in OCT.); 7900 CE saw addition of 6.41 lakh shares (with total OI 55.37 lakh shares), PCR OI 0.07; 7800 CE saw addition of 2.52 lakh shares (with total OI 48.59 lakh shares); On other hand 7800 PE saw addition of 13.09 lakh shares (with total OI 30.84 lakh shares), PCR_OI at 0.63; 7700 PE saw continued additions of 10.53 lakh shares (with total OI of 71.35 lakh shares), PCR_OI at 1.53, clearly implying support levels for NIFTY at 7680-7750.


INDIA VIX closed at 14.69 (closed well below 10 and 20 DMA ) holding below crucial resistance 18, till it stays below it will imply bias of VIX turning negative (can lead to some more move up on Index as uncertainty will decrease), that would clearly signal NIFTY may test resistance 7800-7850 levels.


FIIs volume pick up in Cash market, on Cash Front on Wednesday they turned buyers to the tune of 652 Cr. DIIs turned
sellers to the tune of 292 Cr.; On F & O Front, FIIs turned buyers in index Fut. to the tune of 52 Cr.; Index options turned buyers to the tune of 94 Cr., Stock Future buyers 625 Cr.; FIIs continue to be buyers on cash front (quantum drop), with buyer in Index Fut., along with buyers in Index Options, implying NIFTY hold support 7630-7670 levels.


Over all PE writers add aggressive positions; Index will find support 7630-7670 levels.



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.

LEVELS TO WATCH
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

Monday, September 23, 2013

Nifty view for Sep 24, 2013


If 5870 holds, are we looking at 6200 for expiry. Nifty has strong support at 5870 which if broken increases the chances of a slide down to 5700 levels.

Monday, September 16, 2013

Nifty view for Sep. 17, 2013


MACD is overbought and Stochastics are giving a sell signal. Looks bearish for tomorrow with support at 5750.

Thursday, September 12, 2013

Nifty view for Sep. 12, 2013


Looks like a gap down opening tomorrow for the Nifty. 5750 provides strong support on the downside.