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Our reco on Tue worked well and you must have booked profit from Nifty LONG positions when it was 4% up in the early trade; at the same time as per our suggestion below 2700 you must have taken Nifty SHORT position too. Pls refer the link for detailed mail sent to paid subscribers on Tue.
It was a disappointing session of trade as the benchmark indices closed sharply lower due to weak European cues as well as negative US markets futures. It had looked like the session would be good for the entire day following a smart rally in the US markets on Monday but the rally got fizzled out in second half of session. Midcap and small cap stocks also tumbled.
Profit booking in late trade on weak cues from European markets pushed Indian stocks lower Tuesday. Nifty closed 2 per cent down at 2654, led by a sell-off in oil & gas, capital goods, realty and banking stocks. Nifty November futures provisionally ended at a discount of 11 points to spot, with the premium trimming from 9 points on Monday.
Investors are directionless about the markets. Given the trading pattern, markets are likely to come under pressure in coming days. With the F&O expiry near, markets are likely to remain highly volatile. At current levels I will advise players to hold their Nifty shorts keeping a stop loss at 2700.
At current levels we expect Nifty will face tough resistance at 2800 level while on downside we might test the October low. This is a traders market and I will advise investors to stay out until the volatility subsides. Mid to long term trend still looks bearish, so on rallies one can buy December puts at lower levels.
HBJ Capital’s View for Wednesday:-
On Tuesday markets opened on higher note following the rally in US and Asian markets but started to slide from the highs on the concerns that more financial institutions may need similar financial aids and also due to the fact that in spite of the various measures adopted by the world governments, the financial distress in global economies remain a truth.
Further the negatively trading US index futures and the European markets were sending negative cues to our markets and finally our market closed down at 2,654 losing near to 2%. As expected, the Nifty on Tuesday faced resistance at 2,800 and then declined below the support level of 2,700 on account of profit-booking in index heavyweights.
Indian markets are expected to open gap-down around 1-2% and it will continue to fall further; as of now % of rollover is lower & we have not see major short covering too. It means traders might leave their SHORT position and let them expire which will cause further fall in the market.
Strategies for Traders:-
- Based on the strategy suggested, you must have booked profit from Nifty LONG/CALL position; hence I would assume none of you have any LONG position now.
- We suggested you to take Nifty SHORT position below 2700 and We think you might have such position; in case if you have taken Nifty SHORT then just forget it and go for sleep at least for next 2 days; market continue to fall.
- If Nifty opens flat (+/-1%) then take a fresh SHORT position with stop loss of 2700 & just hold it for next two days. Pls do not take any LONG position now unless RBI comes out with rate cut.
Sandeep Jain , Associate, HBJ Capital.