Market Update for 08/06/2012
Nifty Hourly Chart
It was a sustainable breakout. Nifty made a gap up open which was supported be global cues. There was a minor fall in the Nifty and we also noticed that Nifty struggle for a while to breakout above 5023. The breakout was followed by improved momentum and Nifty closed at 5049 up by 52 points.
Today's rally was led by Banks,Auto,Real Estate and Telecom. Reliance Ind was one of the top gainers as AGM was conducted today. But it couldn't continue the rally.
Nifty has finally come out of the trading range and now it is likely to test 5070 which is 200 DMA.
As per hourly chart, if Nifty sustains above 5070, the the next targets will be 5095-5150-5200. Reversal below 4970.
Nifty Daily Chart
Here is an interesting observation in daily chart. Nifty has tested 200 DMA many times. Sometimes it was support, sometimes it was acting as resistance and sometimes Nifty managed to break 200 DMA which was followed by significant rally.
Will it break 200 DMA ? Yes it can. Even though Nifty has bounced back 200+ points from the bottom RSI is not over bought indicating that there is a greater possibility of continuation. But let us not jump in to buy call option. Wait for the breakout and then add/buy new long position with correct hedging technique to protect the capital against any negative surprises.
Chart of the day
Reliance Infrastructure
Reliance Infra was bearish phase from past two months. Now there are signs of reversal. Reliance infra had formed a falling channel pattern and yesterday it came out of the channel and today it closed above 200 DMA. Traders should note that if any index or stock closes above or below 200 DMA is a sign of greater weakness or strength and significant rally can follow the breakout. However this method is not free from 'whipsaw'.
The estimated target for Reliance Infra is Rs.518-548 and reversal is closing below Rs.450 which provides good amount of risk-reward ratio. Always remember that size of the trade should be according to size of the capital.
Open Positions
| Scrip | Type | Qty | Price | CMP | P/L |
| Bank Nifty Fut | Long | 25 | 9737 | 9859 | 3050 |
| Bank Nifty 9700 PE | Long | 25 | 253 | 194 | -1475 |
| Hindalco | Long | 300 | 120.5 | 120 | -150 |
| Jub Food | Long | 65 | 1206 | 1202 | -260 |
Today's Trades
| Scrip | Type | Qty | Buy Price | Sell Price | P/L |
| Bank Nifty Fut | Buy | 25 | 9737 | ||
| Bank Nifty 9700 PE | Buy | 25 | 253 | ||
| Jub Food | Buy | 65 | 1206 | ||
Strategy Update
We had recommended short strangle before a weak when market was direction less. We had short position in 5000 CE as well as 4800 PE. Sum of the premium was Rs.165 today after the breakout we have exited 5000 CE at the rate of Rs.120 and 4800 PE at the rate of Rs.35. Profit excluding all expenses is Rs.500.
Nifty Medium Term View (more than 1 month)
| Nifty Medium Term Trend | Down |
| Targets | 4780-4680 |
| Reversal if closes above | 5090 |
This view is based on higher time frame and different parameters. Traders should not get confused with other updates.
HNI Column
| Recommended Price | 120.5 |
| Recommended Date | 06/06/2012 |
| Quantity | 2000 |
| Investment | 241000 |
| Hindalco 120 put option | |
| Recommended Price | 4.5 |
| Quantity (Lot size 2000) | 1 lot |
| Investment | 9000 |
| Total Investment | 250000 |
| Upper Break even | 124.95 |
| Max Loss(Rs per share) | 4.95 |
| Maximum Profit | Unlimited |
| CMP of Hindalco | 120 |
| CMP of Put Option | 4.65 |
| Unrealised P/L | -700 |
Thought For The Day
" Don't get depressed if everything goes wrong. Don't get over confident if
everything goes fine. Always be in equilibrium position because nothing is
permanent."
