Market Update for 07/06/2012
Nifty Hourly Chart
What a rally!!
It was a mad bull rush and Nifty was surprisingly up by 133 points. All sectors are in green , however, market was led by capital goods,Banks,metals,auto and power sector.But as usual we the retail traders missed a major part of the rally.
4955 was the expected target but market was too strong and so this level was breached but Nifty is unable to close above 5000. Tomorrow's trading session is very important and we need to see whether Nifty closes above 5023 which is the previous peak. Given the strong global cues, we may think that it must be easy for Nifty to close above 5023. But trading is not as obvious as it appears.
If Nifty sustains above 5023 then we can expect 5070 which is 200 DMA. Nifty looks overbought in hourly chart and also it is near to previous peak. Short position in Nifty can be considered only if it trades and sustains below 4955. Otherwise taking a short position could be potential suicide.
Nifty Daily Chart
Once again Nifty has closed above 20 DMA and MACD,Stochastics are positive. Nifty has come out of the narrow range 4800-4955. If Nifty closes above 4923 Nifty short strangle should be squared off. After a single day rally of 133 points Nifty may consolidate for a while but tomorrow's trading session will give answer to many questions.
Traders should not think that 'we missed the rally'.Because it is practically difficult to catch every rally . We will get one more opportunity if Nifty closes above 5070.
Hindalco Daily Chart
Hindalco has closed above Rs.119.40 which is 23.6% retracement. Now it is expected to move towards Rs.128-135. Hindalco has also breached 20 DMA Rs.114 and 50 DMA Rs.119 and looking bullish from short term to medium term point of view. If Hindalco closes below Rs.109 exit the position.
Open Positions
| Scrip | Type | Qty | Price | CMP | P/L |
| Nifty 5000 CE | Short | 50 | 78.85 | 96.6 | -887 |
| Nifty 4800 PE | Short | 50 | 86.6 | 54.5 | 1605 |
| Hindalco | Long | 300 | 120.5 | 120.45 | -15 |
Today's Trades
| Scrip | Type | Qty | Buy Price | Sell Price | P/L |
| Bank Nifty Fut | Sell | 25 | 9428 | 9599 | 4275 |
| Bank Nifty 9400 PE | Sell | 25 | 269 | 199 | -1750 |
| BPCL | Sell | 120 | 700.5 | -960 | |
| Nifty Fut | Sell | 50 | 4936 | 4926 | -500 |
* Trade in BPCL was a learning experience for me. I thought to share with you. We entered BPCL long at Rs.708.50 and the expected target was Rs.725-735. It made a high of Rs.720 and started sliding even when the market was breaking every resistance. Moral of the story is buy those sectors/shares which move in line with the market.
Nifty Short Term Trend (1 to 2 weeks)
One of the readers of this blog has sent a mail . He says that the short term view is confusing . Because while explaining hourly and daily chart it is said that trend is up and in this column it is said to be down!!.
All I can say is in this column I am using higher time frame. When the time frame is high traders will achieve higher accuracy, higher targets and lesser number of trades. The disadvantage is wide stop loss (so the loss will be high) and time lag is high.
| Nifty Short Term Trend | Down |
| Targets | 4780-4680 |
| Reversal if closes above | 5090 |
HNI Column
In HNI column we will recommend buying individual stocks with short term to medium term point of view. This can be used by those traders whose trading capital is more than 5 lakh.
Our short term pick is Hindalco .
| Recommended Price | 120.5 |
| Quantity | 2000 |
| Investment | 241000 |
| Hindalco 120 put option | |
| Recommended Price | 4.5 |
| Quantity (Lot size 2000) | 1 lot |
| Investment | 9000 |
| Total Investment | 250000 |
| Stop Loss (if closes below) | 109 |
| Upper Breakeven | 124.95 |
| Max Loss(Rs per share) | 4.95 |
| Maximum Profit above | 124.95 |
Thought For the day
Look at the sky. We are not alone. The whole universe is friendly to us and conspires only to give the best to those who dream and work - Dr. APJ Abdul Kalam
