Short term correction can give medium term buying opportunity - 20th October 2010

There is an old saying that "People have Short Memories". After all the gung-ho on Indian economy in 2007, the next two years just saw the opposite before another reversal happened and markets climbed to their all time high. But has the time to book profits have actually come???

Honestly, the answer is "No". No doubt markets have corrected in the last two weeks and why not?? After tremendous rally in the market in September, its time to book some profits and take money out of the table. But that doesn't mean that rally has ended... It is just an intermediary phase. So bulls hang on a bit before you can throw your towel in the ring...

Anyways coming back to the today's market. The markets today opened flat in the morning and then escalated sharply in the afternoon after Tax collection figures appeared. But then in the last hour of the day, the markets again corrected and closed down around 1% down. The volatility has not increased much which indicates that correction may likely to continue for a while.

The provisional figures released by exchanges indicated buying by Foreign Institutional Investors (FII) by around 120 Crores and Domestic Institutions by around 200 Crores. Though Dow Jones has opened in red trading around 1% down on account of China curbs.

China curbs will likely to affect Indian equities in a positive way as Chinese market will now become less attractive for equity investments and hence, will now divert more money into the Indian markets allocated for Asia by Foreign funds.

Tomorrow markets are likely to open in Red. The support zone for Nifty Spot is around 5980-5990 where one may buy Nifty futures with Stop-loss @ 5960 and target price range of 6070. In case Nifty Spot breaches 5960, then we may sell Nifty with Stop-loss @ 6000 and target price range of 5890.

One may also buy Bank Nifty if is trades in 12080-12100 range tomorrow morning with Stop-loss @ 12030 and target price range of 12380.

Wishing you a great trading day tomorrow!!!

Liquidity defying fundamental issues in Indian stocks Market, trend dangerous - 13th August 2010

Indian Equity Markets had a volatile session on Thursday as markets try to balance it out between adverse global cues and renewed optimism in Indian companies after Tata Motors and SBI results lately. The markets opened weak on account of overnight weak closing in US markets, but consolidated at the lower levels and gradually recovered to close flat. The Industrial Production data for June came lower @ 7% against 14% on m-o-m basis, but ably covered by steller results by SBI which posted growth of 25% on y--y basis.

Among the sectors, Banking sector did pretty well on account of good SBI results. Stocks like PNB, Axis Bank too rallied alongside SBI which helped the benchmark indices recovered as weightage of banking stocks in the indices is quite high.

Fundamentally, stocks markets have few concerns which they need to overcome. The most important one is weak global cues. US and European economies are again facing the headwinds. The unemployment numbers, trade deficit data are indicating that growth has still not picked up in these ecoomies.These will surely impact the profitability of Indian companies as well, especially in Information Technology, Textiles, Oil & Gas sectors.

Another cause of concern is Inflation. Earlier the blame game was put on Food items which were called expensive due to weak monsoon last year. But the data in the last few months have indicated that it has now spread to non-food items as well. The steep slash in benchmark rates last year, though has propped up growth but also increase the inflation as well. Now central bank is hking the benchmark rates and that will surely going to hit the profitability of India companies as interest rates increase.

Technically, markets are already trading at almost all time high PE valuations of 20-21 times. The global and domestic level concerns do not justify such high valuations. The only suporting factor is the high amount of liquidity in the equities world due to almost zero benchmark rates overseas. It is causing immense speculation in the markets due to which we are seeing markets scaling new highs despite the fundamental concerns.

Henceforth, we advise clients to stay put from the markets for a while and keep themselves in cash by atleast 30%. Also one must trade with strict stop-losses and target levels to keep its books running.

Technically Nifty is trading in a narrow range throughout this month. Traders are advised to maintain "Sell on Rise" strategy till the time Nifty breaches 5470. Hence, one may sell Nifty @ 5425-5435 range with stop loss @ 5470 and target price of 5350. In case, Nifty breaches 5470, one may go long on Nifty with target price of 5525 and Stop-loss @ 5435.

Wishing you a great trading day today!!

Rich valuations of Indian equities likely to bring more pain than global equities, caution advised - 12th August 2010

Indian Equity Markets had a weak opening on Wednesday, following the weak outlook by Federal Reserve. The rich valuations of Indian stocks are making it further more attractive to sell. The stocks remained in pressure throughout the day and finally closing the day down around 1%.

Among the sectors, almost every consumption and investment related stocks fell. Commodity stocks like Sterlite, Tata Steel fell. Construction and Infrastructure and related stocks like IDFC, Unitech, HDFC too fell putting more pressure on Indices.

US markets have too opened weak on account of negative Fed Outlook, slowdown in Chinese economy and weak economic data today. Dow Jones is currently trading 200 points low and we will most likely to have weak opening on Indian bourses tomorrow as well.

Technically, Nifty may go down till 5335-5350 where it might try to find some support. If Nifty slips below 5335, then we might see some more correction coming in which might take Nifty to 5280. Hence, traders can initially buy Nifty in 5345-5350 range with Stop-loss @ 5335 and target @ 5370. In case, Nifty breaches below 5335, then traders can go short with Stop-loss @ 5360 and target price of 5290.

Among the stocks, one may buy Cipla @ 306-309 range with Stop-loss @ 301 and target price of 321. The stock has corrected by good 15% and likely to find some good support in 305-310 range.

Wishing you a great trading day tomorrow!!!

Federal Reserve meeting likely to provide short term direction to Indian markets - 11th August 2010

After a hiatus, it feels good to come on Writing board on blogger. Thanks to blogger for providing me a personal space.

Anyways coming back to Indian Equity Markets. After breaking the crucial technical levels last week, Indian markets remained in backfoot during the first two days of the week. This seems anticipated as Indian markets look richly valued at the current levels. The earnings season has been a bit disappointing, though monsoon and other macro economic indicators are giving a positive signal. Another factor which is driving the markets has been liquidity. FIIs have been pumping continouous inflows into the Indian equities and help the markets sustain at the current levels.

Today is the critical day for the markets as US Federal Reserve will be sitting tonight to gauge the current economic scenario. It is highly probable that US Federal Reserve will announce more stimulus measure for the economy to help it tide over the current recession.

The downside tonight in US markets could trigger short term blip in Indian equities which might take benchmark index Nifty to 5350-5370 levels. If this level too gets breached, then next support only come at 5280. On the contrary if US markets overcome the initial weakness and opened flat / in green tonight, we might see Nifty heading to 5525-5540 levels in the short term. I am quite optimistic that liquidity situation should help its reach these levels.

Fundamentally, two stocks which are looking attractive at the current levels are GMR Infra and Suzlon Energy. Both the stocks have been languishing in 55-60 Rs range. Both the companies have been saddled with debt burden but are doing their bit to tide the difficult situation and can be accumulated with a long term perspective.

Wishing you a great trading day tomorrow!!!

RBI tightening and lack of extra-ordinary results keeping markets in check - 29th July 2010

Indian Equity Markets had a weak trading session on the backdrop of correction in big heavyweights like Reliance, HUL, DLF and L&T. Also the unwinding of long derivatives positions also put further pressure on the bourses. Another factor which is causing worry for the markets have been lack of any positive trigger from the results. The growth expectations have already been factored in. Also, it is feared that RBI tightening of policy rates will put pressure on lending rates and hence, can squeeze the profit margins of the companies.

Provisional data released by FIIs indicate some encouraging picture. In the Capital Market segment, FIIs have bought equities worth 500 Crores while in the derivatives segment, they have sold futures positions worth 700 Crores.

Technically, the target given for Nifty has been achieved for today. Nifty after reaching its recommended sell price of 5440 later hit the target price of 5410 givin returns of Rs. 1500 per lot.

Dow Jones has opened negative on backdrop of some weak orders data. The correction in the US markets is expected after steep run fro 9800 levels to 10550 levels. If the trend persists and Dow Jones closed in red, we may see negative opening in the bourses tomorrow morning.

In case of flattish opening, one may buy Nifty in 5385-5390 range with Stop-loss @ 5375 and target levels of 5420. In case of gap down opening, the support levels can be seen @ 5350-5355. One may buy Nifty in these levels with stop-loss @ 5335 and target price of 5375. In case of positive opening, one may sell Nifty @ 5430 with stop-loss @ 5445 and target price of 5410.

Wishing you a great trading day tomorrow!!

Indian Stock Markets facing heavy head winds at upper levels, correction likely - 28th July 2010

Well RBI Quarterly Review Policy has finally come and thankfully brought no major surprises!!! Well, there has been so much of discussion happening in the economic circles regarding RBI stance in its quarterly review policy and whether it will take any major step to combat the inflation which is going steadily above 10%. Much to the relief of the markets, it has not brought any major surprises - Reverse Repo Rate up by 50 bps, repo by 25 bps, CRR remains unchanged.

Two major heavyweights - Reliance Industries and L&T have announced their results today. L&L results have been disappointing, but Reliance Industries Results have come in line with the expectations. As Reliance results have come after the market closes, we may see some positive action coming in the stock during early trade tomorrow.

Real-estate sector stocks have rallied after RBI didn't brought any major surprises in its review. DLF rallied by more than 2% and so do other real-estate stocks. The stock markets did rallied a bit after RBI announcement but closed a tad lower. Sensex though is able to give a closing above 18000 which is an encouraging indication.

Technically, the markets have been in a bit of over-bought zone. As results of the heavyweights have not been exceptionally great and RBI tightening its interest rate regime, these will surely put pressure on the equities in the coming few months. Any further rise can only be due to tremendous FII inflows and can be taken as good way to book some profits.

Dow Jones has opened flat and is likely to show some resistance around 10500-10550 mark. In such backdrop, we might see some flattish to negative opening in the market tomorrow. Also, we might see the unwinding of long positions for July series which might bring some more pressure on the indices.

Tomorrow one may adopt "Sell on Rise" strategy with major resistance levels now seen at 5450, 5470 in case of positive opening. One may put a stop-loss of 5487 and target price of 5420. In case of flattish opening, one may keep a resistance levels of 5435-5440 with stop-loss of 5455 and target price of 5410. For deep down opening, one may keep resistance levels of 5400, 5410 with stop-los @ 5430 and target price of 5360.

Wishing you a great trading day tomorrow!!

RBI Quarterly Review, RIL and L&T results likely to dominate Markets on Tuesday - 27th July 2010

Indian Equity Markets had a volatile trading session on Monday, one back of event-filled Tuesday. Tuesday will see three major events happening - RBI Quarterly Review, L&T and Reliance Industries Quarterly Results that are expected post-market.

Among the sectors, Pharma sector saw some buying coming in while Automobile Sector tripped on the back of poor results from Maruti and increase in loyalty payment to the parent company by 81% on y-o-y basis. Hero Honda too falled by 8% expecting the similar movement of funds to the parent company.

Provisional Data released by exchanges indicate subdued picture. Domestic Institutional Investors sold heavily during the day. They sold equities worth 700 Crores while Foreign Institutional Investors bought equities worth 120 Crores. Tomorrow's RBI policy is likely to be hawkish which is putting pressure on the markets.

Technically Nifty is likely to face some resistance @ 5450 level and then @ 5470 level tomorrow. If RBI doesn't act more hawkish than expected, then we may see some upward movement in the market. In such case, one may sell Nifty in 5460-5470 range with stop-loss @ 5487 and stop-loss @ 5420.

On the contrary if RBI policy comes more hawkish than expected, then we may see Nifty heading to 5350. In such case, one may buy Nifty @ 5340-5350 range with stop-loss @ 5325 and target price of 5380.

Among the stocks, one may continue to accumulate NMDC in 258-260 range with stop-loss @ 245 and target price @ 290.

Wishing you a great trading day tomorrow!!

Indian equity markets in a range, caution advised - 22nd July 2010

Indian Equity Markets had a good session on Wednesday, following the positive global sentiments. The markets had a gap up opening and remained in green consistently throughout the day. Almost every sector remained positive, more noticably Real-estate and IT. Mid-cap space too did pretty well. Nifty Volatility Index (VIX) declined by more than 1% on the back of consistency shown by the markets.

Provisional data released by exchanges gave somewhat mixed picture. In the Capital Market segment, Foreign Institutional Investors were net buyers by around 300 Crores while in the Derivatives segment, some major buying was seen in Options segment by around 4000 Crores. US markets have opened in red on the back of Bernanke speech on US economy. Also, the results season has not started on the optimistic note hence putting more pressure on the indices.

On the basis of these events, we might see a gap-down opening tomorrow morning in Asian bourses. Nifty has an intermediate support @ 5350 and resistance at 5430-5440. In case the Nifty trades in 5350-5360 range tomorrow, one may buy Nifty with target price of 5375 and Stop-loss of 5335. On the other side, if Nifty reaches its resistance range of 5425-5435, one may sell Nifty with stop-loss of 5455 and target price of 5410.

Wishing you a great trading day tomorrow!!

Indian markets looking weak at the higher levels, correction likely before expiry - 21 July 2010

Indian Equity Markets had a lousy session on Tuesday as markets traded within a small range throughout the day. In fact, it has been more than a week since markets have been trading within a narrow range. After trading in a positive territory in the early part of the day, the markets gave up its gains and finally ending the day down by quarter of a percent.

Almost all the sectors were in red, albeit not more than 1%. Financial Services sector declined the maximum. The correction was due after surging continously for last two weeks in the banking stocks. Construction stocks had a good run - DLF, Unitech, Sobha Developers, HCC etc have gained somewhere between 2-4%.

Provisional data released by exchanges indicates somewhat subdued picture. Foreign Institutional Investors have bought shares worth 250 Crores but in the derivatives segment, they have been net sellers in the index segment.

US markets have gained by 0.5% last night, more on the back of technical rally. It opened weak after IBM and Goldman Sachs reported disappointing results, but gradually recovered and finally closing in the green. As the rally is purely technical in nature, we might see Asian Indices having a flattish-to-negative opening in the early part of the trade.

For Nifty, we might see some support coming @ 5345-5350 levels. If these levels are breached, we might see Nifty heading to 5300 levels where it is widely speculated to find a strong support level. Though my personal view is that in case Nifty now reaches 5300 level, it is likely to breach it as there has been massive shorting of Nifty 5300 and 5200 Strikes by the traders and we might see covering of some of these short positions which could pull down the index further. On the upside, Nifty has mild resistance @ 5390-5400. The major resistance stands @ 5435-5450 levels. If this is too breached, then Nifty may head to 5535 levels. Traders are advised to go long on Nifty today in 5340-5345 range with stop-loss @ 5325 and target price of 5360.

Wishing you a great trading day today!!!

Indian stock markets managed to hold, but outperformance may not last long - 20th July 2010

Indian Equity Markets had a good trading session on Monday. Despite the meltdown in US markets on Friday, Asian indices including India managed to hold back their levels steadily and finally closing the day flat. Among the sectors, Consumer Goods and Industrial Manufacturing sectors declined the maximum while Financial Services and Construction sectors gained during the day.

Provisional data released by exchanges gave a mixed look. In the Capital Market segment, FIIs were among the net buyers by around 150 Crores while in the derivatives segment, they were net sellers in both futures and Options segment.

Technically Nifty is able to hold on to 5300 levels pretty comfortably and looked like a strong support. But with global markets looking weak, we may see a strong retest of these levels. If Nifty breaches these levels, then we may see markets heading towards 5150 and then 5070 levels. On the upside, 5440-5460 levels and then, 5530-5540 levels are likely to provide the major resistance.

So far, we have been able to outperform the global indices, but from now on we advise some caution to the investors. One should use short term rallies to book profits and keep themselves in cash by atleast 30%. One may also hedge the positions by buying Nifty Puts for Strike Prices 5200 / 5300 of August series.

Wishing you a great trading day tomorrow!!

Indian equities in midst of growth story and global slowdown, caution recommended - 19th July 2010

Indian Equity Markets on Friday had a volatile session on the back of flat US markets on Thursday and no major cues from the domestic markets as well. TCS announced its results on Friday morning, which have exceeded analysts' expectations. The stock in turn, went up by more than 7% and pushed almost every stock in Information Technology space.

The financial results have been so far satisfactory. Some decline is expected on sequential basis, and hence any positive suprise is taken with charm on the Dalal Street. Though companies in commodities space likely to feel more heat, as withdrawal of stimulus phase-wise will keep pressure on demand and hence, on the growth of these companies.

Provisional data released by exchanges on Friday have been good. Foreign Institutional Investors were net buyers by around 650 Crores while Domestic Institutions have been net sellers by around 300 Crores. In the derivatives segment, FIIs have been buying continiously in the futures segment but also writing Lower Strike Price Puts and Higher Strike Prices Calls. This indicates that FIIs see limited movement on the downside as well as on the upside from the current levels.

Technically, Nifty is likely to find some support in 5280-5320 range. The next strong support stands @ 5200-5230 range for the markets. If this level is broken, the next support is seen @ 5060-5080 range. On the upside, the major resistance is seen @ 5430-5460 range. If this resistance is broken on closing basis, then Nifty will find next resistance @ 5530-5550 range.

Stock-specific, Tata Motors-M&M pair trade has finally reached its target. Tata Motors hit its target price of 815 and closed @ 830. This pair trade strategy gave the profits of 52000 Rs. Tata Power too hit its target price of 1340, giving the profits of 6200 Rs per lot.

For the coming week, Cement stocks story can be retained. One may buy India Cements and Ultratech Cements around the current levels. For India Cements, one may keep Stop loss @ 99 and for Ultratech cements, one may keep Stop-loss @ 810. Tomorrow, one may sell Nifty if it rebounds from 5310-5330 levels @ 5340 with target price of 5280 and stop-loss of 5390.

Wishing you very best of luck for the coming week!!

Volatility increases as Indian equity markets near to resistance zone - 15th July 2010

Indian Equity Markets had a voltile session on Wednesday. On the back of positive US markets, Nifty opened higher but found 18000 / 5450 levels in Sensex / Nifty as tough resistance to break. Finally, markets lost the strength and corrected by about quarter of a percent. Among the sectors, Banking stocks did well while IT continues to lose its strength. Technically IT looks in an over-sold range and we might see some short covering coming in this sector.

Provisional data released by exchanges gave some positive indications. Depite the correction, Foreign Institutional Investors (FIIs) remained net buyers by around 500 Crores. In the derivatives segment, FIIs opened some short positions on the upper levels which indicates that resistance levels mentioned above is likely to be a tough nut to crack.

US markets have opened flattish on the back of disappointing retail sales figures. US markets likely to stay flat or trade with a negative bias. Technially, Nifty is also likely to find some support in 5280-5320 range while it may find some tough resistance in 5430-5450 range. The traders may wait before any clear signal emerges.

All the stocks recommendations remained intact. Technically, NMDC looks pretty strong in 255-265 range and can go up to 290-300 in the short term. Similarly, Max India has also given a positive breakthrough and can go upto 175 in the near term.

Wishing you a great trading day tomorrow!!

Liquidity and Positive Global sentiments pushing Indian Equity markets up - 14th July 2010

As discussed, Indian equity Markets had a good trading session. After trading in a negative range during the earlier part of the day, the markets bounced back after Europe opened strong. Finally, benchmark indices able to breakthrough key resistance levels and closed the day up around 0.5%.

Among the sectors, Metals and Constructions have gained during the day, while Information Technology and Telecom sectors traded in red during the day. Infosys Results have been disappointing which put pressure on IT stocks.

Provisional data released by exchanges have been good. Foreign Institutional Investors (FIIs) made net purchases of about 800 Crores while Domestic Institutions were net sellers by around 600 Crores. In the derivatives segment too, no major cues have been derived.

US markets have opened in a positive zone which should help Indian markets open in a positive zone tomorrow morning. The markets can find strong resistance in 5440-5450 range. One may sell Nifty in this range with stop-loss @5465 and target price @ 5415. Technically as suggested, Tata Power remained in strong trading zone of 1310-1320. Those who have taken this position can place target price @ 1340 and stop-loss at 1297.

Max India which was suggested 23 June @ 163 today made strong gains and now trading @ 167. The target price can be maintained @ 175 for this position.

Wishing you a great trading day tomorrow!!

Infosys going to blow Q1 earnings season tomorrow - 13th July 2010

Indian Stock Markets had a decent trading session on Monday, on the back of global positive cues and after-effects of IMF upgrade of India's GDP figures. Among the sectors, Banks and IT did well, while Oil & Gas and Telecom sectors looked weak.

From tomorrow, Q1 season is going to start with Infosys results, but IT stocks have already seen appreciation in last 2 weeks and hence tomorrow we might see some profit booking coming in these stocks. Similarly, Banking stocks have also seen decent uptick in last one week and hence, chances of some profit booking coming in these stocks.

Provisional data released by exchanges indicates net buying from Foreign Institutional Investors (FIIs) while DIIs made net sell of about 300 Crores. In the derivatives segment too, FIIs made net purchases of about 1000 Crores.

Technically, Nifty reached its target levels of 5380 comfortably during early trading session. The next resistance level is seen @ 5430-5445. One may sell Nifty 5430-5440 range with target levels of 5380 and stop-loss of 5465. In Stock-specific recommedation, one may buy Tata Power in 1310-1315 range with stop-loss @ 1297 and target price of 1340. 

Wishing you a great trading day ahead!!!

Indian Equity markets entering into Q1 results season, stock specific action likely- 12th July2010

As discussed, Indian Stock Markets finally made a positive breakthrough on Thursday session, taking markets above psycological levels of 5325, though closing the day below 5300 @ 5296. It was a good trading session overall for the markets.

Commodities stocks like Sterlite, Tata Steel along with Construction stocks like DLF, Unitech did well while Cements stocks continue to lag behind. Though technically, Cements stocks should make an intermediate base around the current levels and hence, can be a good pick.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) made a net purchase of 900 Crores while Domestic Institutions were net sellers by around 300 Crores. In the derivatives segment, FIIs have again been net buyers in the futures side, though Options didn't give a clear trend. Though the kind of put writing we have seen, it seems 5200 seems a strong support for this expiry.

Another positive factor which has been playing over the markets has been monsoon. Monsoon season, this time has been pretty good and should help inflation to cool down a bit. Though, most of the inflation seems on the demand side, as manufacturing index is also on an uptick. Hence, the rate hike seems imminent in July 29 policy meet.

Technically, Nifty crossed its upper breakthrough level of 5325 and hence, is likely to go up to 5390 in the near term. The stop-loss is pegged at 5270. Amongst the stocks, cement stocks can be accumulated for short term uptick. One may buy Ultratech Cements and Indian Cements according to the levels given in yesterday's post.

Wishing you a great trading day ahead!!!

Indian equity markets making a breakthrough, likely to go up atleast 2% - 09th July 2010

As discussed, Indian Stock Markets finally made a positive breakthrough on Thursday session, taking markets above psycological levels of 5325, though closing the day below 5300 @ 5296. It was a good trading session overall for the markets.

Commodities stocks like Sterlite, Tata Steel along with Construction stocks like DLF, Unitech did well while Cements stocks continue to lag behind. Though technically, Cements stocks should make an intermediate base around the current levels and hence, can be a good pick.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) made a net purchase of 900 Crores while Domestic Institutions were net sellers by around 300 Crores. In the derivatives segment, FIIs have again been net buyers in the futures side, though Options didn't give a clear trend. Though the kind of put writing we have seen, it seems 5200 seems a strong support for this expiry.

Another positive factor which has been playing over the markets has been monsoon. Monsoon season, this time has been pretty good and should help inflation to cool down a bit. Though, most of the inflation seems on the demand side, as manufacturing index is also on an uptick. Hence, the rate hike seems imminent in July 29 policy meet.

Technically, Nifty crossed its upper breakthrough level of 5325 and hence, is likely to go up to 5390 in the near term. The stop-loss is pegged at 5270. Amongst the stocks, cement stocks can be accumulated for short term uptick. One may buy Ultratech Cements and Indian Cements according to the levels given in yesterday's post.

Wishing you a great trading day ahead!!!

Cement stocks likely to make rebound, Indian stock markets may trade in a range - 08th July 2010

Indian Equity Markets had a weak trading session on Wednesday, on account of negative global cues. All sectors, except Telecom were decline, more notably Energy. Heavyweight Stocks like ONGC, Reliance Industries, and Hindalco declined.

Provisional data released by exchanges indicate net selling by 50 Crores in the Capital Market segment, while Domestic Institutional Investors have been net buyers by around 350 Crores. In the derivatives segment, futures have shown some net selling but there has been some buying coming in Options segment. This buying may be on account of covering of short positions on Put side or buying of Call, which is yet not clear. The trend in next 2 days will give clear picture about the same.

Dow Jones has opened strong today on account of better Q2 prospects for financial companies. As discussed, Dow Jones can go upto 10080 in the near term which should aid the Indian stock markets as well. Technically too, Nifty is still trading within a range and no clear trend is yet seen. As discussed earlier as well, the breakout will be decided if Nifty crosses 5320 on the upside or 5155 on the downside. Two stocks that looked strong are Ultratech Cements and India Cements. Cement stocks have been on decline for last few months and seems like making a base around the current levels.

One may buy Ultratech Cements in 855-865 range with 810 as stop-loss and 920 as target price. For India Cements, one may buy the stock @ current levels of 107-109 with stop-loss of 98 and target price of 120.

Wishing you a great trading day tomorrow!!!

Indian stock markets approaching Q1 results season, look positive bias with caution - 07th July2010

Indian Equity Markets finally had a traders' session on Tuesday. After a lacklustre session on Monday, the markets gained by more than 1% today. The markets initially opened flat and gradually gained momentum taking cues from European markets and Dow Jones futures trading in Europe.

Among the sectors, Metals and Information Technology sectors did well. Stocks like Hindalco, Jindal Steel, TCS and Infosys have gained by more than 1.5%. Cement stocks though remained in negative territory. The supply glut is pulling the cement prices down and hence, putting pressure on Net Profit Margins of cement companies.

Provisional data released by exchanges gave encouraging cues. Foreign Institutional Investors (FII) have been net buyers by around 300 Crores. In the derivatives segment too, FIIs have covered some of the short positions created earlier.

Nifty @ 5200 seems a decent support in the near short term. Technically, Dow Jones too look in short-covering mode and likely to go up till 10070 at-least in the short term where it has a key resistance. The next resistance level stands at 10300, breaking which will confirm intermediate bullish trend. Here in India, the traders need to be cautious as markets have already been over-valued. One may only go long if Nifty stays above 5320 on hourly basis tomorrow, with stop-loss of 5270 and target price of 5400.

Options traders can sell Nifty 5500 Call above 35 with stop-loss of 50 and target price of "0". Alternatively, one may go int bear spread buying 5500 Put and selling 5400 Put once Nifty approaches 5450, though it's still a bit far.

All stock strategies suggested earlier have been intact. Wishing you a great trading day tomorrow!!!

After a dull day, action likely to resume in Indian equity markets - 06th July2010

Yesterday was among those days, when a trader just simply can go for a nice outing or long drive in monsoon rains and come back with no change in the indices. The markets remained stagnant within 0.5% range throughout the day closing the day almost flat. The volumes were absymally low due to 'Bharat Band" effect. All the sectoral indices remain flat, except Industrial and Capital Goods sector that saw some decline in stocks like BHEL, L&T and Siemens.

Provisional data released by exchanges indicate net selling by Foreign Institutional Investors (FII) by around 250 Crores while Domestic Institutions too made selling by around 50 Crores. In the derivatives segment too, FIIs activity were largely muted with no major change.

US was closed yesterday on account of Independence Day. Europe closed flat, but Asian markets opened weak today morning due to strengthening of Yen against Euro and uncertainity on European economy persists.

On account of it, we may see a negative opening in Indian Equity markets today. The direction for the markets are still unclear and hence, we recommend no triggers beyond 5155 on the downside and 5320 on the upside. If Nifty able to breach 5155 on the downside, then we may sell Nifty with a stop-loss of 5215 and target of 5080, whilst if Nifty able to break 5320 on the upside, then we may see the upside levels of 5400 and stop-loss of 5270. The stock recommendations made earlier remained intact as markets failed to move in either of the directions.

Wishing you a great trading day!! Let's hope markets display its usual volatile characteristic today.

Indian equity Markets hanging equally balanced between Bulls and Bears - 04th Juy2010

Indian Equity markets had a flattish session on Friday. After remaining in a positive zone in the first half, markets lost the momentum and dragged down to its lows of the day, finally closing around 0.25%. The sector that looked really weak was cement where all major stocks like ACC, Jaipakash and Ambuja Cements fell down.

RBI Rate Hike, albeit happened post market timings will have an impact on the markets tomorrow morning. The banking and automobile stocks are likely to face some resistance tomorrow morning while IT and Pharma stocks might regain some buying.

The outlook for this month looks quite challenging. The markets are likely to face strong headwinds at the upper levels while it may find some support coming in lower levels due to strong funds inflow coming from overseas. Hence, we are likely to see a range bound market during the current month.

For coming few days, the outlook seems unclear as markets are equally balanced between bulls and bears. Hence one is advised to sell Nifty only if it breaches 5155 on the lower side with stop-loss of 5215 and target levels of 5080. On the upside, one may buy Nifty above 5320 with stop-loss of 5270 and target price of 5400.

Just as a statistical note, for all the stratgies recommended in June, our Booked P/L comes at 35000 Rs which has been good. For open positions, P/L has been around 20000 Rs.

Wishing you a great trading day tomorrow!!

Global Cues to drive Indian Equity markets, closer to support zone - 02nd July 2010

Following the global peers, Indian Stock Markets had a weak trading session on Thursday with benchmark indices Nifty and Sensex fell by around 1% each. All the sectors have closed in the red, with metals, automobiles and construction sectors taking the maximum brunt.

Provisional data released by exchanges indicate a dismal picture. Foreign Institutional Investors have been net sellers by around 200 Crores during today's trading. In the derivatives segment, there has been massive selling seen in the Index and Stocks Futures segment, while some Put writing is also seen happening in 5200 and 5100 Nifty Puts.

Now the big question arises where are our markets head to now?? Technically, a lot depends upon Dow Jones. Dow Jones has found some support at 9650 from where it has rebounded strongly till now. If 9650 gets broken decisively, then we might see next support coming at 9200 only. In this scenario, Nifty @ 4800 looks imminent.

Alternatively, if Dow Jones able to regain strength from here, we might see it heading towards 10100. In this case, Nifty can head towards 5400 again, albeit it is doutbful that it will sustain at those levels because the kind of Call writing is seen at those levels indicate that those levels will give tough resistance.

Traders may take a Bull spread strategy by buying Nifty 5200 Call and Selling 5300 Call when Nifty comes in the range of 5200-5215. TCS Sell strategy has hit its target price today and gave a profit of 16000 Rs per lot.

The other strattegies remain intact, including pair trade strategy of M&M-Tata Motors... Its been 18 days. Wow!!!

Wishing you a great trading day tomorrow!!

Indian Equity Markets osciallating in a range, breakout unlikely - 01st July 2010

Warren Buffet has once rightly said "The equity markets have the power to remain irrational till the time you remain solvent.". Fundamentally, things have not been good - high inflation (causing negative real growth rate), increasing NPAs, weak global factors, stimulus inhlated growth and yet the equity doctors say "All Izzz Well".

There has been too much talk about Indian economy being resiliant to uncertain global factors due to domestic demand but one must forget that it gives a hedge not the license to grow. But the way markets have been moving indicate that Indian economy, alng with few other Asian economies are ready to supercede the global situation. This growth related bubble is dangerous to ride and one might stuck in a situation like what happened in 2008.

Anyways coming back to today';s market, Indian equity markets had a miraclaous run after a gap down opening, due to weak Dow Jones closing below 10000 mark. Finally markets got some support from European markets and finally closing the day 1% up.

Metal and IT Stocks declined but Oil and FMCG stocks gained during the day. Provisional data released by exchanges gave positive bias for markets as Foreign Institutional Investors emerged out as net buyers by around 500 Crores while Domestic Institutions came out as net sellers by around 115 Crores. In the derivatives segment, we have seen no major change happening in futures segment, but in options we have seen some major put writing happening for Nifty 5000 and 5100 Puts.

Technically too, Nifty has made a strong support of 5180-5210 range which will be a difficult level to break in the coming days for bears. The strong resistance for the markets is seen in 5380-5410 range. Thus traders are advised to remain on sidelines till we get close to any of these levels. If markets rise on Thursday, then traders can sell Nifty above 5370 with stop-loss of 5410 and target of 5270. On the downside, one is advised to go long only if Nifty drifts down to 5230 levels with target levels of 5300 and stop-loss of 5170.

Among the stocks, Gujarat Flourchemicals and NMDC remained flat while TCS further declined. One is advised to book profits in TCS if it comes down to 735-740 levels. M&M-Tata Motors recommendation still remains intact... Wow 17 days now... Too much frustuating...

Wishing you a great trading day tomorrow!!!

Global cues may trigger a sell-off in Indian Equities, caution required - 30th June 2010

Indian Equity markets had a tough session on Tuesday as it failed to capitalize on the gains made during Monday. Almost every sector fell, the maximum hit is taken by Metal stocks that have fallen between 3-4%. Similarly Infrastructure and Financial stocks fell in the range of 2-3%.

Provisional data released by exchanges indicate bearishness as both Foreign Institutional Investors and Domestic Institutions have been net sellers by 200 and 150 crores respectively. In the derivatives segment too, FIIs have been net sellers by around 2000 Crores in the Index and Stocks futures. In the Options segment as well, FIIs have been net buyers. The call writing of 5300 and 5400 Nifty Strike Prices was also seen which indicate bearish trend.

US markets have opened deep in the red due to Chinese growth and bad data on consumer confidence. It has again gone down below 10000 mark which indicates that it is likely to correct further too. 9840 level should provide key support. If Dow Jones breaks this level, we might see the index heading towards 9200 level.

Technically, Nifty has broken down its key support level of 5280 and closed at 5250. The next strong support level is seen around 5125-5145 levels. Once it breaks then the next support level comes at 5040-5060. On the upside, one may continue to face some resistance in 5360-5390 range.

For tomorrow, Nifty might have a gap down opening around 5160-5180 if Dow Jones closes below 10000. One may sell Nifty futures around 5200-5210 range with stop-loss at 5230 and target levels of 5160. If Dow Jones recovers and close above 10000 then we might see Nifty taking support @ 5200 levels. In such circumstances, one may buy Nifty in 5200-5205 range with stop-loss of 5180 and target levels of 5235.

Among the stocks, TCS sell strategy seems to do well. It is trading below the recommended price of 767. Gujarat Flourochemicals and Max India have declined though still trading above the recommended price. Tata Motors-M&M strategy is still intact... Wow 16 days now...

Wishing you a great trading day tomorrow!!!

Indian Stock Markets likely to make yet another attempt to breach key resistance levels - 29th June 2010

Indian Stock Markets had a good run on Monday as stocks rallied to wipe out all the losses incurred on Friday. Though on the way up, it has hit the stop-loss levels on "Short Sell" strategy recommended for the day.

Among the sectors, Oil and Gas and Auto sectors did well. Reliance, ONGC were up by more than 1.5% while Tata Motors also made decent gains of more than 2% on the bourses. Though Maruti and Hero Honda ended the day in the negative territory.

Provisional data by FIIs indicate strong buying from Foreign Institutional Investors as they notched up stocks worth 800 Crores during the day. In the derivatives segment, FIIs didn't give major indication as they didn't notched up major buying / selling in the futures segment.

Among the stocks, buy recommendations on both Gujarat Flourochemicals and Max India did well. Tata Motors-M&M pair trade strategy is still active. It has more than 15 days since i have made this recommendation, strangely it is still active. TCS sell strategy seems OK as we are still making profits as of now.

US has made into positive territory in the initial trades and seems likely that it will remain in green during the day. If that happens, we might again see decent gains coming into Indian equities tomorrow. No recommendation for Nifty for tomorrow as markets are currently trading in a no-trend territory.

Wishing you a great trading day tomorrow!!!

Global Cues tough, Indian Euphoria High - 27th June 2010

As predicted, Indian Stock Markets slid on Friday on the backdrop of negative global cues. Technically too, Indian equity markets are in strong resistance zone and it will take a while before we may see another attempt to break the final wall of resistance.

The global cues during the weekend aren't too good. Three US based banks have been closed / taken over. There have been concerns on the possible impact of Yuan appreciation on Chinese economy. Stocks in Gulf have closed lower on renewed apprehension on global recovery.

Provisional data released by exchanges on Friday gave a subdued picture. Foreign Institutional Investors have been net sellers by around 250 Crores in the Capital Market segment. In Derivatives segment too, FIIs have been net sellers by more than 1000 Crores in the Index and stock futures segments.

All these factors indicate that the coming week might be volatile. We may see a negative to flattish opening on Indian bourses on Monday morning. The traders may adopt "Sell on Rise" strategy on Monday and sell in the range of 5280-5290 with stop-loss @ 5320 and target price of 5225.

Stock-specific one may buy Tulip Telecom in 845-850 range for target price of 920 and stop-loss price of 810. Technically the stock has entered into its support range of 840-860 and with corporate action for Split coming on 6th July, we might see a spurt in the stock anytime soon.

Another stock that traders may fancy is Hero Honda. The stock has a strong resistance zone of 2060-2090. One may sell the stock in this range with target price of 1920 and stop-loss price of 2125.

The pair-trade strategy for M&M and Tata Motors is still open. TCS Sell strategy is now in profit after languishing in losses for initial few days. Overall things working fine for us :)

Wishing you a great trading day tomorrow!!!

Indian Stock Markets likely to correct amidst tough global cues and strong resistance zone - 24th June 2010

As predicted, Indian Stock Markets had a volatile session throughout the day. The markets opened weak marginally on the backdrop of weak closing in US bourses and then, remained in negative territory throughout the day. The last one hour saw some buying coming into the Indian markets and markets finally closed the day 0.5% up.

Provisional data released by exchanges indicate consistent buying from Foreign Institutional Investors (FIIs) who have bought stocks worth 250 Crores. Whilst on the other side, Domestic Institutional Investors were net sellers by 800 Crores. In the derivatives segment, FIIs remained cautious with no major buying / selling seen in Futures segment.

US has opened in Red on the backdrop of bad Housing sales numbers. If US closed in red, then we might see some pressure coming into Indian markets tomorrow morning. Since tomorrow is an expiry day, hence we might not see major impact of global cues on Indian markets.

The traders can adopt "Sell on Rise" strategy tomorrow. In a scenario, Nifty has a gap down opening then we might see some support coming in 5290-5300 range. One may sell in 5305-5310 range with stop-loss at 5325 and target of 5280. On the other side if Nifty has a flattish opening, one may sell Nifty in 5340-5350 range with target levels of 5315-5320 levels and stop-loss of 5365.

Today was not a good day for our strategy. Nifty hit its stop-loss and so do Maruti, but this is a part of traders' life and hence failures and success are nothing but two sides of the same coin. Two stocks that look good technically at the moment are Max India and NMDC.

Max India can be bought in 160-163 range with stop-loss of 147 and target price of 175. NMDC can be bought in 255-260 range with stop-loss at 245 and target price of 290. NMDC has corrected quite a bit in last few months and seems a good stock to buy at the moment.

Wishing you a great trading day tomorrow!!!

Indian markets likely to trade within a range, volatility may increase near to expiry -23rd June 2010

Indian Equity Markets gave up some of its early week gains as renewed concerns on European financial system surfaced and downgrading by Fitch of Spanish banks also put further pressure on Asian markets. European markets also opened in red in the afternoon which put further pressure on the Indian stock markets. Finally, Indian benchmark indices closed in red by around 0.8%.

Provisional data though, gave somewhat different picture. Foreign Institutional Investors came out as net buyers by around 800 Crores while Domestic Institutional Investors were net sellers by around 200 Crores. In the derivatives market, the volumes generated by FIIs were tremendous (around double of usual day's trading) and were net sellers in index and stock futures segment by around 800 Crores. Thus it seems that FIIs have been hedging their stocks portfolio by taking a reverse position in the derivatives market.

Dow Jones closed down 1.5% overnight on renewed concerns about housing sales dropped by 2% m-o-m which was more than expected. Also S&P downgrading of BNP Paribas bank also put pressure on US stock markets. The weak closing in US will ensure weak opening for Asian markets when they open today morning.

Nifty is likely to open below 5300 today. One may adopt "Sell on Rise" strategy for today's trading and sell Nifty around 5300 mark (5290-5300) with strict stop-loss of 5320 and target levels of 5255. As it's an expiry week, hence one is advised to follow target levels and stop-loss levels strictly. The traders who have taken sell positions yesterday, may book profits in the gap down opening.

Amongst the stocks, Maruti and TCS have already been recommended for Sell. The short to medium term investors may buy Gujarat Flourochemicals. It's an INOX group company with interests in flouro chemicals and renewable source of energy. The company also trades in Carbon credits. One may enter into this stock in 150-155 range with stop-loss maintained at 140 and target price of 170-175.

Wishing you a great trading day today!!!

Chinese intruded into bear territory, retailiation likely - 22nd June 2010

Chinese have the bad habit to play the spoilsport. Indian benchmark indices were sitting amidst the strong resistance zone and set to go correct a bit, but just a statement regarding their currency and vhroommmm... Markets broke all the resistance zones at one go.

Though it didn't hurt us much. Nifty hit the stop-loss right on the opening tick giving us the loss of 3300 Rs per lot. But Kotak Bank-SBI pair trade strategy proved to be a jackpot for us where it gave us profit of 23000 Rs per pair. Tata Motors-M&M strategy is not giving us much profit at the moment.

Anyways, lets come back to Indian Equity markets. Chinese assurance of Yuan appreciation against dollar was welcomed by the equity markets worldwide. Hang Seng closed 3% up, Indian equity markets went up by 1.72%, Europe is up 1% and Dow Jones has also opened 1% up.

Provisional data released by exchanges also gives a positive impression. Foreign Institutional Investors have emerged as net buyers by 1500 Crores. In the derivatives segment too, FIIs have been net buyers in Index and Stocks Futures.

Technically too, Indian stock markets have crossed a major hurdle and now 5280-5300 act as a strong support level for Nifty. Further down, 5190 acts as a major support level. On the upside, Nifty now is likely to face strong resistance in 5380-5440 range. It is likely probability that Indian markets may ovecome this hurdle slowly and steadily and hence, traders may fancy chances to sell Nifty around 5400 levels with stop-loss of 5440 and target price of 5310.

Among stocks, one may sell Maruti futures in 1375-1380 range with a stop-loss of 1410 and target price of 1330.

Wishing you a great trading day tomorrow!!!

Indian economy in jinx - IIP gives optimism but inflation brings concern - 21st June 2010

After continouos rise for seven consecutive trading sessions, Indian equity markets took breather on Friday, closing down around 0.20%. After a lacklustre May where FIIs pumped out around 12000 Crores, it has been good month so far. FIIs have put in back around 3000 Crores back into the Indian markets. With European zone showing some stability we might expect some more inflows coming into the Indian Equity markets.

Though the current levels might not encourage the foreign institutions to put new money into the markets. Hence we might see some range bound markets for a while now. There are few more concerns that might discourage buying at the current levels. Another one is RBI Monetary policy review due for 27th June. With Inflation figures above 10% for three consecutive months, we might see some tightening done by the central bank before / on the policy review meet. Slow down in Europe is likely to impact Information Technology stocks which have major weightage in both Sensex and Nifty Indices. Any tightening by RBI will also increase the funding costs for the companies and hence might lower down the profit margins for various companies.

Technically too, Nifty is standing at strong resistance levels. Existing short traders can continue to hold the position till Nifty breaches 5310 levels with target level of 5190.

TCS sell strategy is giving losses of around 2%. M&M-Tata Motors pair trade strategy has done well on Friday as M&M went down by 3% while Tata Motors remain flat. Currently it is giving a profit of 8000 Rs per pair. Kotak Bank and SBI pair trade strategy is in profit overall by around 20000 Rs per pair, albeit there is not much change on Friday.

I am not adding more recommendations as we already have three open positions lying. Nifty is likely to show volatility due to expiry week and hence, we must follow the stop-loss and target levels strictly.

Wishing you a great expiry week!!!!

Buying from FII driving markets up, time to remain cautious - 18th June 2010

Indian Equity Markets had a good session on Thursday. The trading was laregly muted and flattish, till the late afternoon brought a suprise upward rally. The markets finally closed the day up around 1% each.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) have been net buyers by around 500 Crores while Domestic Institutional Investors have been net sellers by around 350 Crores. In the derivatives segment, FIIs have been net buyers by around 300 Crores in futures segment. In the Options segment, we have seen some kind of Call writing happening in the 5300 and 5400 Calls by FIIs.

US markets have opened weak and trading in the negative territory. Gold is trading higher at the moment which indicates that institutions have been hedging their equity and currency related risk by buying Gold in the international markets.

Technically, Nifty is in strong resistance zone of 5280-5310. If Nifty breaches this level successfully then we might see Nifty heading to 5370. On the other side, Nifty has strong support at 5170-5190. Hence, traders are advised to carry foward their short positions in Nifty with target levels of 5190 and Stop loss of 5310.

Recommendation to Sell TCS is giving loss by around 1%. Kotak Bank-SBI pair trade strategy has performed well today as Kotak Bank registered the gains of 1% while SBI fell by 0.5%. Tata Motors-M&M pair trade strategy has done well today, but is in overall losses.

No new recommendation for now as we have already 3 open strategies lying open. Wishing you a great trading day tomorrow!!!

Indian Equity Markets seem sitting on June Expiry High, likely to go down - 16th June 2010

As on expected lines, Indian stock markets had a volatile session on Wednesday. The markets moved within a range of 1% throughout the day. After a gap up opening of about 0.5% on the back of bullish cues from US markets, the markets immediately retreated to flattish levels and remained hovered within a range. Finally, it closed with gains of 0.2%.

Provisional data though gives bullish undertone. Foreign Institutional Investors have been net buyers by around 800 Crores while Domestic Institutional Investors have been net sellers by around 170 Crores. In the derivatives segment too, FIIs have been net buyers by around 1300 Crores in Futures segment, some kind of Call writing and Put buying was also seen in Nifty Options. Overall it seems that FIIs have been hedging their positions perfectly at the moment and waiting for a particular trend to emerge.

Technically as suggested yesterday, Nifty 5250-5260 range gave an opportunity to adopt "Sell on Rise" strategy. It is likely that Nifty may go down till 5170-5190 range. Stop-loss for the same can be maintained at 5310.

Stock-specific our recommendation to sell TCS is giving us losses at the moment, though stop-loss is still far away. SBI and Kotak Bank pair trade strategy is still intact. M&M and Tata Motors pair trade strategy is giving losses at the moment.

Wishing you a great trading day tomorrow!!

Indian Stock Markets in strong resistance zone, likely to see some correction - 16th June 2010

Indian Equity Markets went through a consolidation phase on Tuesday as markets moved in a narrow range of 1% throughout the day. The markets remained in a negative zone in first half of the day, but as Europe opens and showed some strength, Indian equity markets too picked up and finally closing the day, up around 0.5% up.

Provisional data released by exchange is encouraging. Foreign Institutional Investors (FIIs) have been net buyers by around 500 Crores while Domestic Investors have been net sellers by around 350 Crores. Derivatives data on the other side indicates some kind of profit booking happening around the current levels.

Technically, Nifty 200 Day moving average and 90 Day Moving average is at 5090 and 5135 levels and chances do exist that we may retrace to 5170-5190 levels in the coming days. Hence, traders are advised to adopt "Sell on Rise" strategy. One may sell Nifty in 5250-5260 range with target price of 5180-5190 and stop-loss of 5310.

Stock-specific TCS has come down. our pair-trade strategy of Kotak Bank-SBI and M&M-Tata Motors remain intact and doing well.

Dow Jones has opened in green which may help Indian markets have a gap up opening and hence, give us chance of "sell futures" as suggested above.

Wishing you a great trading day tomorrow!!

Indian Equity Markets in bullish mood, but in the middle of resistance zone - 15th June 2010

Indian Equity Markets had a faboulous start of the week. The benchmark indices Nifty and Sensex had a gap up opening in the morning and capitalized on the gains throughout the day. It finally closed the day up by 1.50%. Target levels suggested by us on Nifty last week has reached its target level of 5200.

Provisional data by exchanges data is encouraging for the day. Foreign Institutional Investors (FIIs) were net buyers by around 400 Crores in Capital Market segment, while in derivatives segment, FIIs were net buyers by around 500 Crores in the futures segment.

Dow Jones has also opened in a positive territory on encouraging data from Europe. Asian markets are likely to take Europe data encouraging and we may see another gap up opening tomorrow. Though Nifty is now in a resistance zone and tomorrow's gap up opening can be seen as a perfect opportunity to take "Sell on Rise" strategy. The traders can sell Nifty at 5240-5260 levels with target price of 5175 and stop-loss can be maintained at 5310.

Our pair trade strategies for Kotak Bank and SBI is giving good gains at the moment, though, it has not reached its concluded levels. The other pair trade strategy for Tata Motors and M&M has not performed, but I am quite hopeful that M&M can see correction coming in soon.

Wishing you a great trading day tomorrow!!!

Nifty may consolidate at current levels, short term outlook bullish - 13th June 2010

The last week has been good for Indian Stock Markets where markets have gained almost 1%. It has been third consecutive weekly gains for the markets which will give confidence to the bulls. BSE Sensex has closed above the psycological levels of 17000 which will provide good technical support to the Indian markets.

Provisional data for Friday indicate net buying from Foreign Institutional Investors (FIIs) in tune of Rs. 800 crores. In Derivatives segment too, FIIs have been net buyers in Index and Stock Futures by around 1500 Crores which will further give heart to bulls and sleepless night to bears.

Technically, Nifty is able to breach 5100 levels comfortably on Friday and hence now, 5070-5100 now acts as a strong support zone. Its the fourth time in last 3 months that Nifty has breached this level. Last three times, it breached this zone and then again went down. On Friday as well, we have seen some selling coming in 5150 levels but Nifty is still able to hold 5100 levels.

Traders who are planning to take fresh positions in Nifty may buy Nifty futures in 5100-5110 levels with stop-loss @ 5140 and Stop-loss at 5180. Though the opportunity has equal risk and reward but the risk seems less in trading perspective as Nifty has breached 5060 levels on strong volumes and hence coming back down to these levels seem unlikely during the short term.

We have yet another pair-trade strategy for you. Mahindra & Mahindra has been doing pretty well and has gained more than 15% since stock-split two months back and now likely to face strong resistance. On the other side, Tata Motors has declined by around 5% in last 3 months. Hence, one may can now sell 2 lots of M&M and buy 1 lot of Tata Motors with an anticipation that gap between them now likely to reduce. One may take this position at the current levels and come out of the position in the following cases:

• Tata Motors reaches 815 on the upside / goes below 715 on the downside.
• M&M reaches 650 on the upside / goes below 565 on the downside.

Wishing you a great trading week ahead!!!

Indian Stock Markets sailing towards 1 month high, likely to face resistance - 11th June 2010

Indian equity markets had a good run on Thursday supported by good economic data from various Asian economies and technical support coming in Euro currency against other currencies. The day started flat for the Asian markets due to weak US markets on Wednesday. As day progressed, equity markets worldwide picked up after announcements of strong economic data from Japan and China. Indian benchmark indices - Sensex and Nifty finally closed the day with the gains of 1.5%.
Provisional data released by exchanges indicate net buying from Foreign Institutional Investors (FIIs) by around 200 Crores while Domestic Institutional Investors made net sell of 100 Crores. Derivatives data indicate buying coming into Index Calls and futures which forms a base of 5000 for the markets, atleast for this expiry.
Technically Nifty is able to give a breakout from resistance zone of 5060-5080, though it is quite close to that zone. If Nifty manages to stay above this level tomorrow then we could see markets heading to 5180 levels for sure.
Dow Jones is currently trading 1.5% up and chances are bright that we might see a gap up opening tomorrow. Traders who are willing to take fresh positions are advised to wait and resort to "Sell on rise" strategy at around 5180-5190 levels with target price of 5100 and stop-loss of 5250. On the contrary if Nifty goes below 5060, one may buy Nifty with target price of 5180 and stop-loss can be placed at 4985. Traders who already hold a long position can place the stop-loss at 5020.
Stock-specific Cipla and Maruti have touched their target prices of 330 and 1330 respectively. Information Technology stocks are looking weak and hence, one is advised to sell TCS on tomorrow's rise. One may sell TCS at 765 with a target price of 720 and stop-loss of 805.
Wishing you a great trading day tomorrow!!

Nifty in narrow range - support 4960 resistance 5060 - 10th June 2010

Indian Stock Markets had a lacklustre session on Wednesday as markets failed to retain the gains made in the first half of the trading session and finally closing the day almost flat. Nifty which made the high of 5050 during mid session closed the day at 5000, virtualy giving up all the gains.

Provisional data indicate net selling by Foreign Institutional Investors (FIIs) by around 250 Crores while Domestic Institutional Investors made net purchases of Rs. 150 Crores. In the derivatives segment, FIIs seem to cover up few short positions as they made net purchases by around 500 Crores in the Index and Stock Futures segment.

Overnight Dow Jones has closed in negative territory, as probe in BP Oil Spill starts. It seems Dow Jones weak closing might not impact the Indian equity markets much, but technically, markets are looking to trade in a narrow range between 4950-5080 range. 200 day moving average stands at 5000 which brings support while 30 day moving average stands at 5050 which brings resistance. Awesome Oscillator too is giving a breakout only above 5060.

Thus, traders who plan to take fresh positions may wait for a while. In case Nifty breaks 5080 on the upside, one may take buy position in the markets with a target of 5200 and stop-loss of 5020. Similarly, if Nifty breaks 4940 on the downside, one may take sell position in Nifty with target price of 4750-4800 and Stop-loss of 5005.

Our pair trade strategy of Kotak-SBI is still giving us gains. One may retain this position and only come out on the levels as discussed earlier. Cipla is still hovering close to its target price of 330.

Wishing you a great trading day today!!

Nifty hold support levels but concerns remain strong - 09th June 2010

As discussed in the yesterday's post, Indian Stock Markets had a tough trading session today, finally closing the day down by around 1%. Nifty found good support in the range discussed yesterday (between 4960-4980) and closed the day @ 4987. This particular suppot range is quite critical for the Indian markets as it will confirm the higher-highs and higher-lows trend built after the last correction to 4800.

Provisional data released by exchanges indicate selling by Foreign Institutional Investors by around 200 Crores. In the derivatives segment too, FIIs have been net sellers of Index and Stock Futures. In the Options segment, FIIs have been net buyers. The Put prices for Nifty indicate some buying coming in there, hence indicating further downside.

US has finally come in green after Bernake's positive comments on US economy, currently trading up around half-a-percent. It is critical that Dow Jones finds some support at around current levels, else we might see another round of steep correction in the markets which may take Dow Jones down to 9200-9300 levels.

Technically, Nifty is also trading in a support zone of 4940-4980. If Nifty breaches 4940 on the downside then we might see some some sharp selling coming into Indian markets which may take it to 4750-4800 levels. Whilst if it finds some support around the current levels, then we might see some resistance coming in 5060-5100 range.

The traders who have taken long position today can continue to hold it till Nifty breaches 4935 on the downside. The target on the upside can be placed at 5100 where it might face some strong resistance.

Kotak Bank- SBI pair trade strategy has given up some of its gains today, but still in positive zone. One may continue to hold the position till the levels breached. These levels have been discussed in Friday's post.

Wishing you a great trading day tomorrow!!!

Nifty back to support zone - 08th June 2010

As everyone expected, equities worldwide tumbled on Monday, fearing that Europe crisis could lead to double-dip in the equities market. The equities in Asia fell in the range of 2-4%, the commodities and financial stocks bearing the maximum brunt, LME is at eight months low.

The timings of European crisis were worse for Europe and US. Just when things were slowly building up and various economic indicators started giving positive signals, the European crisis occurred which has taken back up all the gains that US / European markets have made in this year.

Indian stocks, though has been doing pretty good, is likely to face another test of FII outflow. Though I have a feeling that we might not repeat the crash in 2008 as we have been able to show resilliance and tremendous comeback during the previous crash. Hence, any major correction can be taken as good opportunity to buy stocks.

Provisional data released by exchanges yesterday have been dismal by all means. Both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have been net sellers in Capital Market by around 400 and 200 Crores respectively. In Derivatives segment, FIIs have been net sellers of more than 1500 Crores in Index futures which agains gives negative cues to the markets.

US markets overnight have closed 1% down, now close to 9800 levels and hence, we may once again see a gap-down opening today morning in Indian markets. Technically, Nifty is likely to face good support at 4960-4980 range, where one may buy the Index futures. The stop-loss can be maintained if Nifty goes below 4920 while target price can be maintained at 5100. Dow Jones is also now in its support zone of 9600-9800 and if it makes any intermediate recovery from these levels would surely help Indian stock markets in recovering some of their losses.

The pair-trade recommended yesterday (Kotak Buy and SBI Sell) has given some wonderful results. In the midst of negative bias, Kotak Bank has closed positive yesterday while SBI has fallen by 2.5%. One may retain the strategy and come out on the levels mentioned in the yesterday's post.

Wishing you a great trading day today!!!

Equities set for another roller-coaster ride - 06th June 2010

Friday has brought mixed news for Indian Stock Markets. Whilst on one side, Indian benchmark indices were able to close above strong psycological levels while on the other side US markets crash (Dow Jones below 10000 is really scary) on the back of employment data and Hungary crisis has brought worries of another meltdown.
Technically, Nifty has been making higher lows and higher highs after May crash to 4800 and this trend is breached only if Nifty closes below 4960. Another support level for Nifty stands at 5050-5070 range. If Nifty is able to close tomorrow around these levels, then there will be a strong chance that Nifty can again revive its upward journey which may take Nifty to 5200.
Hence the traders are advised to buy Nifty futures if it trades around 4995-5005 range on a gap down opening with stop-loss of 4950 and target price of 5170. On the other side, if Nifty goes below 4930, one may sell Nifty futures with stop-loss of 5010 and target price of 4830.
After Maruti-Hero Honda successul pair strategy, another one for you. One may buy Kotak Bank futures and sell SBI futures tomorrow morning. One may book profit / loss in this strategy in the following circumstances:

• SBI goes above 2420 or goes below 2220.
• Kotak Bank goes above 800 or goes below 695.

Wishing you a great trading day tomorrow!!!

Outlook still cautious on equities amidst short term reversal - 04th June 2010

Indian Stock Markets had a good day on Thursday, clocking the gains of 2%. Thursday were one of the days when markets didn't show any signs of weakness and right from the opening bell till closing, traded strongly.

In yesterday's post, we discussed that there is high probability that Nifty can break its crucial resistance zone of 5060-5090. Nifty broke this zone and closed the day at 5110. Meanwhile, it has also breached the target level of 5115 discussed yesterday.

Provisional data provided by exchange gives a positive sign. Foreign Institutional Investors have been net buyers by around 500 Crores Rs while DIIs too joined the party by making net purchases of around 100 Crores. In Derivatives segment too, FIIs have made net purchases of approx 2000 Crores in Index futures, which indicates some kind of support formation @ 5000-5050 levels.

US markets closed flat overnight and we might see flattish kind of opening on Indian bourses. On the upside, Nifty is likely to face some resistance in 5030-5050 range, albeit any correction coming in these levels can be used to take buy position in Nifty. One may take buy position in Nifty June Futures @ 5060-5080 levels with target price of 5180 and stop-loss can be maintained at 5005. Stock-specific, one may book profits in Maruti in 1320-1330 range.

Wishing you a great trading day today!!

Renewed attempt to break crucial resistance zone, but fundamental concerns remain strong - 02nd June 2010

Indian Stock Markets had a volatile trading session today as it gyrated violently within a range. Throughout the day, Nifty traded in a range of 4950-4995. Only during the last half-an-hour, the market broken loose the range on the upside and closed the day at 5019, up by 1%.

Among the sectors, Telecom sector had a good day, with various experts talked about consolidation happening in the sector soon. Also, RCOM renegotiation with MTN flared the stock and it closed the day up 11%. Auto sector also did well after monthly sales report indicate decent growth trend in sales - best ever for Hero Honda and Maruti Suzuki.

Technically, the stock is managed to float above 200 day moving average but it is still trading below 30 days and 90 days simple moving average, which indicates bearish trend for the short term. Awesome Osciallator indicator is also giving a bearish signal. Provisional data released by exchanges give subdued picture as FIIs remain net sellers by 165 crores while DIIs have been net buyers by the same amount.

Though the encouraging sign is that Nifty is again closing in to the crucial resistance zone of 5060-5090. With US markets opened up on decent note (up 1%), chances of re-testing of 5060-5090 resistance zone is high. If it happens, then this will be its third attempt in last 2 weeks and probability of breaking this zone is higher this time. Thus, one may buy Nifty futures if it manages to break 5055 on the upside with stop loss of 4990 and target price of 5115. On the flip side, one may sell Nifty if it falls back to 4950 levels, with target of 4860 and stop-loss of 5015.

Stock specific, one may sell Hero Honda in 2005-2020 range with target price of 1850 and stop-loss of 2060. Technical indicators are giving strong buy signals but psycological levels of 2000 and strong correction from those levels 2 months back can give some heart to the traders. Cipla recommendation still remains intact.

Wishing you a great trading day tomorrow!!!

Will next move bring surprise or panic in Indian Stock Markets - Wait and Watch - 2nd June 2010

Indian Stock Markets did just what was feared. After having a gap down opening, Nifty tried to consolidate in 5030-5050 range, but weak opening in European markets triggered the alarm button and markets slid down steeply. Finally, it closed the day @ 4970 - a fall of 116 points.

The provisional data released by exchanges also give a dismal picture. Foreign Institutional Investors have been net sellers by around 550 crores while Domestic Institutions have been net buyers by around 200 Crores. In derivatives segment too, FIIs have been net sellers in futures contracts by around 1400 Crores. This data indicates growing concern among global investors on valuation front and whether the given growth trajectory is likely to be maintained in future or not.

Technically too, as we discussed yesterday, were giving negative signals. Now the markets have fallen steeply, one need to be cautious around the current levels as markets may pick any direction. Traders are advised to sell Nifty, if it breaches 4915 on the downside with stop-loss @ 4980 and target price of 4830. On the other side, one may buy Nifty if it breaches 5040 on the upside with stop-loss of 4990 and target price of 5115. Traders are advised not to take any fresh position in 4920-5040 range as markets may consolidate in this range and pick any direction.

Our pair trade of buying Maruti Suzuki and selling Hero Honda futures have given handsome returns today itself. At one point of time, Maruti was trading at 1290 (Buy Price - 1240) while Hero Honda trading at 1935 (Selling Price - 1940) thus giving consolidated returns of 11000 Rs per lot. One may continue to hold this pair trade with trigger prices mentioned in the previous post.

Cipla still seems a good buy at the current levels as it is able to create a base in 312-316 range. It is likely to touch 330 in the near term. One may enter into stock at around current levels with Stop-loss of 314 and target price of 330.

Wishing you a great trading day tomorrow!!!

Indian equity markets in strong resistance zone, fall likely - 01st June 2010

As we discussed yesterday, Indian Stock Markets remained in a range-bound session throughout the day, albeit it closed the day with a positive bias. Provisional data released by exchanges also gave a positive cue as FIIs have been net buyers by around 600 Crores during the day, while DIIs remained almost unbiased with net sell of around 70 Crores.

But traders need to be cautious at the current levels. If we closely analyze the charts for this year, Nifty has has been hovering around 200 days moving average, but trading below 30 days moving average. RSI has also moved above 50 (closing on over-bought zone) and Awesome Oscillator indicator is also giving negative signals.

Cumulatively, traders can adopt "Sell on Rise" for next few trading sessions. One may sell Nifty June Futures in 5060-5080 range with stop-loss maintained at 5115 and target price of 4980.

Stock specific, one may adopt pair trade by buying Maruti Suzuki futures and selling Hero Honda Futures. Maruti Suzuki share, after sliding in last few months, is trying to build base in 1170-1200 range and has bounced back twice from those levels. Hero Honda on the other side has reached strong resistance zone of 1950-2000 range. One may book the profit / loss in the pair trade under the following cases:

1) Maruti touches 1325 on the upside or 1150 on the downside. (Current Market Price - 1240, lot size - 200)

2) Hero Honda touches 1830 on the downside or 2030 on the upside ( Current Market Price - 1940, lot size - 200).

Wishing you a great trading day tomorrow!!!

Indian Stock Markets lack direction as mixture of positive and negative cues emerge - 31st May 2010

Indian Stock Markets had a good trading session on Friday. After taking positive cues from US markets overnight, benchmark indices had a gap up opening. The market consolidate throughout the day then and finally closed the day at the crucial levels. Nifty is sitting right at the top of its crucial resistance level of 5066 where it is likely to face a stiff resistance, especially in the backdrop of weak US markets and downgrading of Spain sovereign debt ratings.

Provisional data though for FIIs have given a positive cue. FIIs after being net sellers for last few days have finally become net buyers on Friday. As per provisional data released by exchanges, FIIs were net buyers by around 400 crores while Domestic Institutional Investors (DII) have been net buyers by around 350 Crores.

Stock specific, commodities space has done really well. Sterlite Industries recommended on 24th May has closed above its target price of 680. Maruti is also looking good and now making a nice support level in 1150-1200 price range.

One thing which is worth mentioning is the discount in Nifty Futures (-30 pts) which is quite significant. Albeit, the provisional data for FIIs indicate a different picture all around as it indicates a net buying of about 900 Crores in Index Futures. Thus, it seems that domestic institutions and traders are bearish about the markets in the near term while FIIs are anticipating rebound in Indian equity markets.

Technically, Nifty is now standing at the crucial resistance range of 5070-5105. We need to have a closer look at the trading range in next 3-4 days. For Nifty June, 4970- 5000 range is a strong support level. Tomorrow markets are likely to open weak and Nifty may have a gap down opening by 1-1.5% which will directly take Nifty to this support zone. In such a scenario, one may buy Nifty June futures with Stop-loss of 4940 and target price of 5040. Similarly on the upside, one may sell Nifty June Futures in the range of 5060-5080 with Stop-loss of 5115 and target price of 4980. Traders are advised not to take any position in the range between 5000-5050 as markets can take either direction in such case.

Options traders may opt for Bull spread by buying 5000 Nifty Call and Selling 5100 Call and 5300 Call. The strategy can give you gains if markets stay above 5000 or will lead to limited / no loss if Nifty stays below 5000. Though in this case one may ensure to square-off the position if Nifty goes above 5360 levels.

Wishing you a great trading day tomorrow!!!

From Support zone, Indian stock markets head to Resistance Zone - 28th May 2010

As cricketing experts say that "T20-T20 match is the game of momentum. The team that picks up the momentum is likely to win the match.". The analogy can be seen in stock markets as well. Two days back when markets were correcting, every expert on TV talked about further downtrend in the market. Various broking houses had suggested further fall of 10-15% in the markets. Now when markets have made a strong comeback, these voices have been toned down and few have now changed their stances, citing robust Indian economy as evergreen excuse :)

Though fundamentally, nothing much has changed for the equity markets. Indian economy will surely feel the heat of a slowdown in European economy. We also need to take care of infation levels which are too high, thus, probaibility of an Interest rate hike is high. The stocks are trading at high valuations which limit the further upside in the markets.

Technically too we are entering into strong resistance zone that starts from 5070 to 5300. In this resistance zone, there are several levels that will be difficult to break and hence, major upside from the current levels will surely be a slow and tedious task for the markets.

US financial markets have closed with 3% upside overnight and this will surely have a hangover effect on the Asian bourses. In India, we might see a gap-up opening after which we might see some consolidation happening in 5030-5070 levels (for Nifty). The first level of resistance can come in 5070-5105 levels. Once this is breached, the next level to watch out for is 5170-5200 which seems a big resistance zone.

Thus traders can adopt "Sell on Rise" strategy till Nifty breaches 5200 levels on the upside. On the downside, Nifty may find a support at 4930-4950. If this level is breached, then we might see markets heading to 4800 levels again.

June series are expected to be volatile as markets may try to find some direction for itself. Those who want to take a bit of risk may sell both Nifty 5100 Call and Nifty 4900 Put. This will give you premium of around 200 Rs. One may keep stop-loss for the strategy at 5325 on the upside and 4690 on the downside. One may book profits in it when combined premium for the strategy reduces to 80 Rs.

Wishing you a great trading day!!!

Is correction over???? - 27th May 2010

The most fascinating thing about financial markets have been the uncertainity. I completed my yesterday's post at around 12:00 A.M IST and Dow Jones at that time was trading 200 points down. By the time Dow closed after two hours (at 2:00 A.M IST), it was almost flat. It has spoilt my strategy built for the day :(

Anyways, bounce back in US markets from below 10000 gave instant shot of bullishness to the world financial markets today. Indian equity markets had a gap up opening today and gained strength during afternoon once Europe too had a gap up opening by around 2-3%. Finally, Indian bourses closed the day up by around 2.5%.

Commodities specific stocks regained some of the lost ground today. SAIL, Hindalco, Sterlite Industries were up 5-7% each while financial stocks like IDFC, and ICICI Bank too had a good day today, gaining around 2-4%.

Today's gain seems more of a short-covering on the backdrop of immense selling seen in the last few days. Provisional data also indicate lack of fresh buying by Foreign Institutional Investors (FII). According to provisional data, FII have been net-sellers by around 200 crores while Domestic Institutional Investors have bought equities worth 70 crores. This data is not encouraging, especially on the day when bourses were up by 2.5%.

Hence, the traders can adopt "Sell-on-rise" strategy, but close to 5000 levels for Nifty. The traders can sell Nifty June futures in 4970-4980 levels with stop-loss of 5070-5080 and target of 4750. Since tomorrow is expiry day, we might see fresh short positions being created, especially during afternoon session. Hence day traders can sell Nifty May around 1:00 P.M (when European markets open) with stop-loss of 1% from those levels.

Among the stocks, one may buy NIIT Technologies @ 182-185 levels with target price of 207 and stop-loss of 168. The stock fundamentally has been quite a performer in last few quarters, clocking Net Profit Margin of 23-25% which is quite good.

I would like to share one note of experience. If there arises a problem that put every country's economy into danger, then we can sit back and relax, because chances are bright that some way out will be found to tackle the same. In 2008 when global economy came into recession, every major country swung into action and took collaborative action to prevent the same and restore the confidence. Now if Europe issue balloons into a global problem, then one may take risk and invest into Indian stocks because chances are bright that some solution will be found... But.. Only if it derails every economy including USA.

As of now, European issue seemed not putting US economy into danger as various data including Employment, Retail Sales, Housing has shown an encouraging trend. Let's see how coming days / months pan out for Europe and rest of the world... Keep an eye on it...

Wishing you a great day tomorrow as It's TIME TO SAY GOOD BYE TO MAY SERIES!!!!

Panic spooked the Indian bourses, though support zone acts as a cushion - 26th May 2010

If Monday was full of enthusiasm on account of Reliance patch up, then Tuesday was just the opposite. Overnight weak closing in US markets triggered a gap down openings for Indian bourses. The weakness persisted throughout the day and accentuated during afternoon when Europe opened about 2-3% down. Finally, the benchmark Indices - Nifty and Sensex closed the day, down by around 3%.

The opening on US markets is not good either. Dow Jones has already breached 10000 mark and is trading around 9900 levels. If this weakeness persisted till closing, then we are likely to see a major gap down opening in the Indian and other Asian markets tomorrow, as 10000 levels for Dow Jones was crucial to maintain.

In our yesterday's discussion, we talked about major fall in Nifty to 4770 if it breaches 4870. We had just seen the exact happening today with Nifty June contract making a day's low of 4765 before briefly rebounding to 4790. Technically though, we are sitting on the broader support band for Nifty between 4600-4800. Tomorrow possible gap down opening may push Nifty down to 4700 levels during early trades, but one must maintain caution and do not attempt to buy / sell Nifty at those levels. One must take 4700 levels on Nifty to evaluate the strength of the market. If Nifty manages to stay afloat 4680-4710 levels with consistent rebounds, then we may Nifty rebounding to 4850 levels. On the contrary if Nifty breaches 4680 and sustains there for half-an-hour or more, then fresh sell positions on Nifty can be taken with stop-loss of 4725 and target price of 4620.

Options traders can sell both Nifty 4700 Call and 4700 Put and buy 4500 Put to hedge the position. This strategy will come into losses if Nifty crosses 5050 levels. This level can be taken as stop-loss for the strategy. On the downside, the maximum profit if Nifty retains between 4700 and 4500.

There are two stocks that really look interesting at the moment are DCHL and NDTV. Both the stocks have corrected quite a bit in last few days and it is likely to give a small rebound in the coming days. DCHL has already entered its strong support zone of 105-120. One may buy this stock with stop-loss of 102 and target price of 140.

NDTV too looked strong at the current levels. The stock has corrected quite a bit in last few days and now likely to see some rebound in the coming days. One may buy this stock in 93-98 Rs range with stop-loss of 86 and target price of 115.

Wishing you a great trading day tomorrow!!! Shaba Kher...

Short covering RIL-ADAG patchup not able to take Indian stock markets up - 25th May 2010

Sunday brought a much suprised good news for Indian economy in a form of patch up stitched between two warring brothers and owners of two major business houses of the country- Reliance Industries and Anil Dhirubhai Ambani Group (ADAG).

Indian stock markets too reacted positively to the development and had a gap-up opening of about 1.5% each. The markets further made their way up and at one time Nifty was trading above 5000 mark which gave hope to the participants of a consolidation around those levels. But with soft opening in European bourses, markets started loosing its ground and finally closing the day at 4943.

The provisional data released by exchanges indicate selling of around 1000 crores by FIIs, though, it is ably supported by a buy of around 1100 crores by Domestic Institutional Investors (DIIs). It should be noted that FIIs have already sold equities worth 11000 crores in the month of May, which should be a concern for the Indian stock markets.

Another positive factor that might have drived the markets up was "Short-covering". The markets have lost almost 7-8% in this month and it was widely expected that some of the short positions in May series will be covered which can help Nifty move beyong 5000 levels. The initial part of the day saw some of the shorts being covered, but Europe soft opening triggered the fresh round of short positions created in the markets. Though, there are certain indications of short covering happening around 4930-4950 range, which should act as mild support for the markets.

US markets have opened up soft and European markets too have been trading in a narrow range. If the trend persists, we might see a flattish kind of opening for the markets. 4870-4890 should act as a good support level for the Nifty. On the upper side, 5030-5050 acts as a strong resistance. For tomorrow, traders should maintain caution and wait on the sidelines till markets take a definite trend.

If Nifty able to breach 4870 levels on the downside, then traders can open short positions with stop-loss of 4925 and target of 4770. Whilst if Nifty goes up and breaches 5030 on the upside, one may sell Nifty with Stop-loss at 5080 and target price of 4925.

No stock-specific recommendations for now. The previous recommendations for Maruti, Sterlite and Cipla remain intact.

Before we close the article, a note of caution. Many a times we try to do bottom fishing especially during times when markets seem weak and suddenly we see markets rebounding and we end up with nothing in our hands. By now we all know that markets are weak. Almost every analyst is giving bolder levels on the downside. JM Financial has even talked about Nifty @ 4100 in the medium term. But the fact remains is "nobody knows it". Hence, it is advised to pick good quality stocks at every correction.

Another piece of statistics before I close the article. In last one year Dow Jones has actually outperformed Sensex by around 10%. Seems strange!!!! Yes... But its true....

Wishing you a great trading day tomorrow!!! Good night...