Friday (Dec 26th) : HBJ Cap Says, “Nifty will be directionless, looking for global clue for further move, but weakness will continue on Friday too”.

Our calls on Wed turned out to be correct and as per that traders must have taken or held SHORT position in Nifty and most of them will be with some notional profit too.

The Nifty broke the support of 2,920 in Wednesday’s trade and closed at 2,916 as F&O traders were indecisive ahead of the quarterly earnings due next month.

The volume on the F&O segment was unusually low on expiry day as bulls were cautious ahead of the Christmas holiday and hence unwound their long positions. Bears seemed to have rolled over their short positions as the Bloomberg data suggested that sellers were active in the Nifty futures and key index futures.

HBJ Capital’s Views for Friday:-

1. We expected Nifty to get support at 2,900 and one should take fresh SHORT position only when Nifty falls below 2900 and stays there for at least whole day. Those who are holding SHORT on Nifty as per our last reco should continue to hold.
2. Since the market has reacted largely on account of profit-booking by bull operators, there might be some possibility that Nifty bounce back to 3,100-3,150 levels in the near future. Only when Nifty moves above 3100 level, we can see further upside until then SHORT sellers need not worry. The recent selling largely has been because of the unwinding of long positions & if global situation remain weak then traders will start building fresh SHORT with more conviction.
3. Again at 2840, Nifty has good support. There should be some good resistance for the up move at 3130-40 levels. But if the index crosses 3250, we can see 4000 on the index by March-April. The first week of January might see some New Year allocations which would be seen as a positive. A second stimulus package by the government would also buoy the markets.
4. If we haven’t broken above 3100 levels in the last 3-4 days & drift down to 2900 then 2700 is not too far away either. Going forward we might see some kind of short build-up in the first week of January depending on market movements in the intervening period.

-Sandeep Jain, Associate, HBJ Capital

[PS: Next week, I will be going abroad for "HBJ Cap's Investors Meet 2008", hence our technical analyst JK will be looking after postings on market updates.]

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