Its wait and watch situation for Indian Stock Market.

Indian shares close slightly lower amid positive Asian indices on profit-taking. Investors cashed out of Friday's rally, most of them are still uncertain about the health of the global financial system. The market opened in positive territory, tracking rallies in other Asian indices, after the Bush administration's proposal on Sunday to buy bad mortgage debt worth about $700 billion in an effort to thaw U.S. credit markets.

``The Nifty started with positive mood, taking cues from the global market. However, the euphoria was not sustained. In the late trades the intensity of selling got increased. The overall volume was also on the lower side. Lack of fresh triggers kept sentiment subdued. The announcement that Reliance Industries’ D6 block has started production of oil also failed to excite traders.

National Stock Exchange's 50-share Nifty slipped 0.52 per cent to close at 4223.05 while Nifty futures provisionally ended at 7 points premium. The contract price fell 1 per cent while open interest added 41 lakh shares. Rising open interest coupled with narrowing premium indicates build up of shorts positions.

It seems pull back during last two/three trading session were merely on the back of short covering. Little fresh buying was observed in the market in last couple of sessions, raising question over the sustainability of the current rally. Market had moved over 11 per cent in last three trading sessions and hence profit booking set in at higher levels. Our market has been outperforming other global indices.

Oil prices spiked more than $11 a barrel Monday as anxiety over the government's $700 billion bailout plan battered the dollar and touched off frenzied buying of safe-haven investments including crude.

Investors await details of the government's plan to buy $700 billion in banks' mortgage debt. Investors are relieved that federal authorities are taking action to relieve the nation's banks of their toxic assets. But Wall Street is not sure yet how successful the plan will be in unfreezing credit markets, which many businesses depend on to fund day-to-day operations, and for propping up the still-weak housing market.

Strategy for Tuesday.
>>>>Those who bought Nifty 4300 Call Option on monday should remain stay invested. Pls don't average down. Any positive news from Congress on $700bn bailout package can move Nifty up by 4-5%.

>>>>>We would not suggest fresh buying of any Call or Put Options, it would be better to wait and watch until details of the government's plan to buy $700 billion in banks' mortgage debt is clear. In case of any positive news one can see sustained rally for 2-3 days or more else sell off.

-HBJ Capital Team