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Despite giving up some of its gains the Dow
managed to close 150 points up at 10159. The S&P
500 finished 14 points higher at 1071 and the
Nasdaq gained 25 points to end the day at 2151.
Latin America, especially, Argentina and Brazil
were very buoyant to close 2.1% and 2.48%
respectively; Mexico, however, was much more
muted with a small gain of 0.5% over the last
close.
Asia, sans Singapore, is trading in the green
anywhere between 0.18% (South Korea) and 1.42%
(Taiwan) as we write this Market Outlook early
this morning. Singapore is marginally down.
Our man, the SGX February Nifty contract, is
almost jubilant—it is trading at 4847 up by 59
points with moderately good volumes. Great
portent really! Of course, it should sustain at
these levels until we open here.
Today, there are a few levels for the spot Nifty
to watch out for. If we trade above 4842 and
stay there then so much the better for the
bulls: it signals that, at least, in the
short-term they seem to have wrested the
initiative. To put a blunt message across we
should not be trading on short side in Nifty
today if the index manages to stay above this
level: ignore this warning to your peril, rather
try and put the bear in you to hibernation so
long as the Nifty maintains above 4842.
Now, there is a second level to watch out for
even if the Nifty does not remain that strong to
stay above 4842; such a level is 4811, frankly
speaking, I would be very wary of trading on the
short side unless the Nifty really breaks this
level of 4811.
On the higher side of 4842, resistance is there
between 4875 and 4884, and thereafter at 4893.
Problem resurfaces once the Nifty falls off the
cliff of 4811 and starts grinding down; starting
from this level to 4780 would be the area where
you may take a small position on the downside
with strict stop-losses placed above the index
reclaiming 4811 decisively once again. Below
4780, we are likely to see bears putting fresh
pressure on the market with renewed strength.
However, support is likely at 4755 and 4734.
This level of 4734 is a major support for the
index for the day. Only when the Nifty falls
below 4734 and stays there expect bears having a
field day. However, the probability of such an
event shaping up is much lower as of now.
One thing that continues to haunt and puts this
current rally as a suspect one is the Nifty
Put-Call Ratio (PCR), even after yesterday’s
trading the PCR stands at 1.00 for Feb 2010 and
1.03 for March 2010 series. It should move up
else the whole rally would be in the nature of a
short covering rally, which, by definition,
would be short-lived.
Rajat K. Bose |
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All prices relate to the NSE, unless otherwise mentioned. |
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Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there. |
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Book, at least, part profits when the prices reach their targets; if you continue to hold on to positions then use trailing stops to lock in your profits. |
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Don't chase a stock, if you are unable to buy a stock because it hits circuit levels on successive days, don't buy that. |
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The analyst and his clients may or may not have positions in the securities mentioned above. |
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Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these
recommendations. |
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