Share Market Today

Nov 22 2011 Market Today

2011-11-22T20:35:00.001-08:00

Nov 22^nd is the first day in the last ten days where we haven’t seen a new low. That itself looks like a big achievement. Market took a breather from the relentless selling. This pause in down trend came even though US markets close down by 2.5% on Nov 21^st. Also, yesterday market’s intraday low was 5764.

	NIFTY
Date	OPEN	HIGH	LOW	CLOSE
21-Nov	4873	4873	4764.8	4778
22-Nov	4794	4854	4782	4812

When market touched intraday high of 4854 yesterday, it looked as if market is ready for the sharp (V-shaped) reversal. But market couldn’t sustain the momentum. However, market may still go up in the near term for following reasons.

· Short covering. This week being the expiry week, bears who are sitting on profit would start booking the profit which could lead to short covering rally.

· Oversold conditions. Oscillators such as stochastics are in the oversold zone.

· Market is close to the previous support level of 4700 -4750. This level got tested four times in the last 12 months. So, it can be considered as a strong support zone. So, we can hope market will defend this support zone.

How do we know market is headed in the upward direction?

First, market should see a higher high – it should go above 4873 during intraday trade and stay above 4782. Then we can consider that it started upward trajectory. If the market goes below last two days low of 4764, then we can conclude that the short term trend will continue for few more days. However, the key level to watch out for is 4700. If NIFTY breaches 4700 then run for the cover.

High Risk Options Strategy on Expiry Day

2011-09-28T21:23:00.000-07:00

As of now, NIFTY is taking support at 4905. Typically day's range has been around 80 - 100 for the past few days. So, market could test the resistance level for the day at 4995. Following is the strategy to take advantage of that scenario.

BUY 1000 NIFTY SEP 5000 CE at 2.25

After buying, immediately place following sell orders

1) SELL 250 NIFTY SEP 5000 CE at 4.50
2) SELL 250 NIFTY SEP 5000 CE at 9.95
3) SELL 250 NIFTY SEP 5000 CE at 15.45
4) SELL 250 NIFTY SEP 500 CE at 19.95

Maximum loss Rs. 2250
Maximum profit Rs 10212

Share Market Volatility - How to Deal With It?

2011-09-28T07:39:00.000-07:00

Aug 22 2011 Share Market Today

During this year, 2011 Jan – Aug 2001, market has been trading in the range of 5170 – 6100 with a downward bias.

During past few weeks, global markets experienced two major events – S&P downgrade of US sovereign rating and fear of Europe contagion with Italy getting added to PIGS (Portugal, Ireland, Greece, and Spain) economic problems. Also, QE2 has come to an end in the US. These factors pushed all global markets down. Some bearish analysts have attributed this to market pricing in the recession.

This led to Indian markets breaking the trading range. In the past two days, markets lost 4% and went below 4800 before closing at 4845 on Friday. Now this is significant for following reasons:

· Market has breached the key support area of 5150 – 5200, which was tested multiple times this year, has been broken decisively.

· Also, the uptrend that has been in force since Aug 2009 has been broken signaling that down trend that started after reaching the high of 6330 in 2010 November has gained strength

Due to these technical factors combined with weak global scenario, the probability that markets entering a prolonged bear market has increased.

The key market levels that we need to watch out for are:

1. NIFTY 4750, which if it is broken, could lead to market testing 4200 levels.

2. NIFTY 5200, if broken on upside, signals the end of the down trend and the market will turn bullish

Following are the possible scenarios going forward:

Scenario 1: Markets could go up to 5050 – 5150 and resume further down slide with increased vigor

Probability: High

Rationale: Global headwinds – First, US market getting into recession as current government and congress fail to take steps to stimulate the economy. Second, European leadership fails to find satisfactory solution to Europe union fiscal problems.

Scenario 2: Markets could go up to 5050 – 5150 and continue to climb up.

Probability: Medium

Rationale: Technical – NIFTY 4750 is a strong support area and market could bounce from the current levels. Macro economic factors: First, US market slows down and markets feel it wouldn’t get into recession based jobs data, housing data, and manufacturing data in the next two weeks point to improved economy. Second, Federal Reserve and Ben Bernanke could come out with aggressive monetary policy to shore up the stock market with QE3 or some other policy decision this Friday.

Scenario 3: Markets get into sideways consolidation

Probability: Low

Rationale: Markets may not find clear signals either from the data or policy decisions to take a decisive direction.We anticipate markets to remain volatile for next few weeks and it will take some time to determine which of these scenarios is going to pan out…

Strategy:

1) Equity Portfolio:

a. Deploy the cash in the portfolio to increase equity exposure i.e., buy stocks as long as the market is below 5050.

b. When market recovers to 5050 -5150 levels, re-balance the portfolio by

i. Reducing exposure to interest rates sensitive sectors such as Banks, Capital Goods and export dependent sectors such as IT

ii. Increase exposure to defensive sectors such as Oil and Gas, FMCG, and Pharma sectors. Also, we reduce exposure to Midcap stocks.

2) Collar Strategy: We wait for the markets to pull up a bit, to 5000 – 5150, and then sell NIFTY Call Options and use the premium collected to buy put options. If the market falls, the put options will increase in value and we use the gains to buy stocks. If the markets do not fall as anticipated, the current portfolio will gain in value and offset the potential lose in selling call options. Also, we use stop loss mechanism to mitigate the potential hit on short calls.

Also, if the market goes below, 4700, reduce equity exposure by 50% and use the cash to buy stocks at lower levels, continue with this strategy as long as the markets are in down trend. The major benefit of this strategy is, we continue to buy more shares at lower prices, and the portfolio will lose relatively smaller value compared to the market.

If the markets continue with the sideways consolidation, even then we will continue with this strategy.

3) Reverse Spread Strategy: In this strategy, sell Call options at lower strike price and use the premium collected to buy more options at higher strike price. For example, we will sell 5200 Call options and buy 1.5 times more 5300 call options. If the market continues to climb up sharply, then this strategy will lead to profits. We employ this strategy only if the markets show strength and trade above 5200 level.

These strategies will allow us to take advantage of the volatility and enhance portfolio returns in the long run.

September 28 2011 - Share Market Today

2011-09-28T07:10:00.000-07:00

Today is one of those trend less days. After gaining almost 136 points yesterday, NIFTY gave up 25 points in a lackluster trade. The Nifty witnessed an intraday movement of about 87.60 points. The closing index was 0.51 % down as compared to the previous closing index. However, shares advanced decline ratio is 438 to 1034.

Indian Share Market Short-term trend is UP

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NIFTY opened at 5005.5 and couldn’t touch that level today. From price action point of view, market did went up higher than yesterday’s high and days low was higher than yesterday’s low. So, we can say the short-term uptrend is still intact. Though, I would have liked it to close higher than yesterday’s close price.

This short-term up trend could continue for few more days as the stochastics turned up from the oversold zone. And MACD signal is confirming this as well. Important levels to watch out are: 4900 on the downside and 5000. If market were able to cross above 5000, it could move up to 5050 and 5100. On the downside, it could find supports at 4870 and 4820.

On the sector front, IT, Pharma, FMCG sectors performed better with average gain of 0.7% and Banking sector dragged the index down. Banking sector was down by 1.12%.

It appears that 4750 – 5200 is the NIFTY range for few more weeks.

¨

Top Five S&P CNX Nifty Shares Gainers / Losers Today:

*Gainers*	*Close Price*	*Prev. Close*	*% Change*	*Losers*	*Close Price*	*Prev. Close*	*% Change*
HCLTECH	407.00	393.35	3.47	RELCAPITAL	368.95	394.80	-6.55
DLF	224.45	217.95	2.98	RELINFRA	410.10	430.35	-4.71
GAIL	423.60	412.90	2.59	JPASSOCIAT	70.00	73.45	-4.70
RANBAXY	493.80	484.40	1.94	RPOWER	79.50	82.05	-3.11
ITC	197.10	193.45	1.89	RCOM	78.50	81.00	-3.09

Eurpean markets are also taking a breather today and are flat after 4- 5% gain yesterday. US markets seems to be in uptrend as well. Hopefully, we will test the 5200 level soon!