12 Dec'08: Over Bought

Yesterday nifty opened with a mild positive note. During the first half of the session nifty was trading in the negative terrain and very often tried to move into the positive side and failed. Also on the lower side nifty defended the 2900 level by sharply bouncing back. In the second half of the session nifty saw the selling pressure and sharply dived till the day’s low of 2861. The last hour of trading was marked with surprise like that of last session where nifty saw a very sharp pull back and closed almost flat. The last hour pull back was contributed by major heavy weights like Reliance Industries, etc. IT sector was hammered during the session. The Nifty high, low & close are as follows:

H: 2945          L: 2861           C: 2920

 

US market closed in negative with their indices loosing around 2-4% in the last hour of trading. Asian markets also have opened and trading in negative region. Nifty is expected to open with a negative bias. Inflation has been reported 8% against the previous value of 8.4%.

 

On the upper side nifty may find resistance near 2956 or 2993 levels. Similarly on the lower side support exists near 2873 or 2825 levels. If nifty can manage to break and stay above the first resistance level it may add more momentum to the nifty towards 3000 levels. Since nifty has entered the overbought level, correction may be expected in any time.

 

Happy Trading !

 

22 Oct'08: High Volatility

As we were expecting, yesterday nifty opened gap up and showed some genuine pull back in line what we had mentioned in the last update. Due to high volatility the intraday chart was very choppy. During the day nifty moved up with a positive bias and closed near the day’s high. The weekly pivot point of 3256 offered a strong resistance for nifty to move further on the upside. There was strong pull back recorded in important nifty stocks like Reliance Industries, etc. which is a positive sign for the market.

The US market opened weak closed with a very negative note. US market indices also recorded a volatile, choppy trade yesterday and most of damage was done in the last hour of trading to close around 2-4% down. Asian markets also opened and trading with a negative bias. Nifty is expected to open flat to mild negative.

For today on the lower side nifty may find support near 3202, 3189, 3149 or 3065 levels. Similarly on the upper side resistance exists near 3287, 3320 or 3347 levels. It is important for nifty to close above 3200 level to keep the upward momentum intact. Nifty is expected to experience a strong resistance near 3330-40 levels and breaching of same may propel nifty to higher levels.

Happy Trading !

24 Sep'08: More “N” More Damage

In lines with the expectation nifty had a gap down opening below 4200 and found support near the mentioned level of 4141. In spite of a very weak US cues and weak Asian markets nifty did not had a very big gap down opening. Gap down opening was followed by a recovery which may be due to short covering or manipulation by operators which was not expected with weak US and Asian cues.

Nifty rallied to recover and fill the opening gap down up to yesterday’s closing only to fall back to breach the support level of 4141 which eventually took nifty even down to close at the lowest point of the day. Nifty is becoming weaker and weaker day by day and more damage been done in the charts in continuation with yesterdays fall. Intraday nifty trend was mostly dominated by the price movement of Nifty heavyweight champion “Reliance Industries”. Also IT and Bank stocks were hammered out of shape with their index down by 4-5%.

Inline with weak US and Asian market cues, nifty may also open with a weaker note. Nifty may find support near 4110 or 4088 levels. Trading below 4088 for a while may take nifty to test 4051. On the upper side nifty may find resistance near 4150 or 4195 levels.

My gut feeling is that either nifty may breach 3800 in case of increased downward momentum without taking any breath or it may take a pause near 4051-3992 levels. One interesting point has to be noted is that in this ongoing bear run, most of the global indices either tested or breached their 200 week moving average except our market. So it is logical to expect our index also to test or breach its 200 week moving average which is at 3639.

Happy Trading !

23 Sep'08: “U” Turn

As expected yesterday nifty opened mildly gap up to test the 20 day and 50 day moving average crossover resistance of 4280-4300. During the day the trend was very choppy which is typical for expiry week. Nifty tried to break the Fibonacci retracement level of 4268 (which was mentioned in yesterdays notes) three times but could not succeed.

The way market closed at the low of the day suggests exhaustion of upward momentum and weakness in the upward trend. Also it has to be noted that whatever rally we say last week from the low of 3800 was held with the help of nifty heavyweights like Reliance Industries which also shows weakness in the charts.

Yesterday US market had a one way slide and closed at its day low with most of indices are down between 3 – 4%. Asian markets are trading mixed. On the backdrop of whatever happened in nifty and US market yesterday, expect a gap down below 4200. Nifty may take support near any of the levels of 4141, 4110 or 4051.

Happy Trading !