TOUGH TASK AHEAD

Dear Investors

The most awaited and discussed RBI Policy was out with a ‘Rude shocks’, in spells, to Bears and Bulls, causing ‘Collateral Damage’

Nifty after a stable opening remained subdued till ‘Rate Hike’ effect pushed ‘Bears’ for cover to reach Nifty at 5800.

But

The Haunting remarks regarding, Inflation, Liquidity, GDP and Industrial growth took away the effect of ‘Expected’ 25bps rate hike, causing hard landing for BULLS. ‘The remarks regarding ‘Economic’ situation pushed BULLS to the corner causing panic fall to levels of 5680.

 Nifty never recovered from ‘Inflammatory Shock’, additional fuel was added by HUL results .Nifty closed the day near low of the day, 5687

What Next

Nifty closed below 5700 yet again on the 25th after an extremely volatile session that saw over 100 points of trade both ways. The big question is, what next.

The answer is ‘VOLATILITY’

Being an expiry day, possibility of a ‘Battle Field’ effect for day traders and speculators

Is the likely outcome

Sensible traders are advised to ‘Keep Away’ from markets, book profits, and cover shorts

And wait on side lines watching the game.

Bargain hunting is advisable if the prices collapse to the desired levels for bulls below the support level @ 5600. And carry till Nifty remains above 5523. While BEARS’ can create shorts if the Nifty zooms to the resistance level of 5800/5820 to be covered at 5880 and above

Long term investors should not indulge in any bottom fishing till definite trend emerges. Expiry day is not the day for ‘INVESTMENT BUY’

So keep your eyes on screen and hands on pocket

Expected Range

5770/5800/5843 on upper end

5603/5580/5523 on lower end

Watch for moments in the ‘Beaten’ down sectors like Banking, Auto but not REALITY (as there is still some pain left)

Technical View

As the most of Fundamental and Financial’ news flow is coming to an end , markets are likely to move ‘Technically’ till ‘Budget’

PIVOT FOR NIFTY: 5722

R1 (First resistance level) is @ 5765

R2 (Second resistance level) is @ 5843

R3 (Third resistance level) is @ 5886

Significance

High on 25th was at 5801, which was nearer to R2 (5791) for the day indicating ‘BULLS’ were able to push Nifty near 5800. But R2(5843) for today seems to be an uphill task for traders.R3 is most important resistance  level where there might be lot of supply and addition of fresh ‘Shorts’. Long traders should keep R3 as profit booking level.

S1 (First support level) is @ 5644

S2 (Second support level) is @ 5601

S3 (Third support level) is @5523

Significance

Low (5680) on 25^th was just below the S1 (5708) for the day indicating a strong support at 5700

Market should hold S2 (5601) on closing basis, which is nearer to 200DMA, if taken out

Then S3 (will be the turning point for the market trend.

VXI (Volatility Index)

Volatility will be the ‘Key Trend’ for the day.

VXI closed at 20.78 on 25^th after touching low of 18.93 after touching high level of 21.10

PIVOT FOR TODAY IS @ 20.71

DMAs (Day moving average)

5DMA@5706
20DMA@5866

50DMA@5909
200DMA@5619

Significance

Nifty has to move above 5DMA (5706)  to maintain upward trend alive

While any move above 50DMA (5909) will be strong positive for bulls

200DMA (5619) is ‘The’ support for the ‘Bulls’ to remain in market.

CONCLUSION

Book profits at all higher levels. Do not keep longs open if Nifty breaks 200 DMA

(5619)

If lower levels at 5620 are sustained do create longs with a stop at 5580/5543.

STOCK SPECIFIC

No stock specific calls for the day.

Thanks

Dr. Vasant Bele

These are personal views, take your investment decisions after consulting expert.