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In all likelihood, we would see the market going
up today. The range between 4827 and 4838 would
be quite crucial for the Nifty today. If it
manages to stay above this range for most of the
in today’s trading and the index closes above
this range then a journey to 4900+ levels is
highly probable. On the downside, today, the
level of 4734 matters a great deal. Unless this
level is broken, bears would not be able to push
the index down again in their relentless pursuit
of hammering it down.
Going further, on the upside, the range between
4888 and 4915 would be a major supply zone now,
just as the range between 4930 and 4950 acted
between Jan 28 and Feb 04 earlier this year.
The rally, on Thursday, was surely prompted by
short-covering for sure; however, that does not
mean that this rally can’t continue. The fact
that February Nifty call options with strike
prices of 4700, 4800, 4900 and 5000 have shed
open interest (OI) with the 4900 strike
cornering the lion share OI reduction and
February Nifty Put options of 4600, 4700, 4800
and 4900 have added OI in good quantities
clearly suggest that option writers are
expecting a surge in the market.
The reduction in call option OI and addition of
put option OI points to a highly probable
short-term upswing. This is also evidenced by
the fall of Nifty ViX (Volatility Index) by 5.5%
on last Thursday. This only corroborates the
probability of the upswing getting at least
little more traction in the short-term.
Whether the short-term swing would continue in
its journey upwards would be made clear if the
Index manages to get past 4888 – 4915 range
decisively or not. If it does so then we would
have to project further higher levels.
While the probability of going up is higher, as
of now, the bears would once again dominate the
scene if they are able to push the Nifty down
below 4730 in any of these days. That would be
the end of all hopes of the bulls taking the
market up even in the short-term; this market
from a medium term perspective has decisively
weakened. This remains a fact despite such
bright prospects of a short-term rally.
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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