On the weekly candle stick chart we found exactly reverse the last week’s candle pattern means long lower shadow with small white body. Psychology behind the pattern indicates that there is good demand at lower level and bulls are very cautious to handle the situation. The bulls are very determined to cross the important resistance level of 15130 (i.e. Island Top) and close above that level, bulls will have upper hand.
Tactics: -
Long term investor should hold their long positions and they can add more stocks in their portfolio. Short term investor cum trader can trade on the long side. Swing trading is now little risky because of high volatility in the opening of the market every day. Traders should keep in mind that failure to sustain at the resistance level of 15100 could spell trouble. The overall strategy for the active traders remains to stay long and book profit on a rally near 15800. For the day traders and short term players banking, power and capital good stocks looks bullish.
Resistance: 14800, 15200.
Support: 14300, 14000.
Future & Option Strategy
As we mentioned above our view in the Nifty future is bullish. So we advise to short term traders to trade positively not even in the Nifty future but also in the momentum stocks like IFCI, RNRL, MRPL, RPL, ESSAROIL, ISPATHIND and PFC with respective stop losses.
We suggest implementing the strategy of “Bull Call Spread Strategy”. One can buy 4400 call of Aug at price of 180 and sell 4700 call at 60. The cost of Nifty comes to 4520.Maximum gain in this strategy is Rs 9000/- while loss in this strategy is Rs 6000/-.
After RBI, Now All Eyes on Fed !!!!
=>>With the Q1 June 2008 earnings season over, the market will now closely watch movement in crude oil prices and global stock markets. A further slide in oil price may boost investor confidence in the short term. On Thursday, 31 July 2008, the front-month US crude oil contracts settled at $124.08, down $2.69 for the day and off sharply from a record above $147 a barrel on 11 July 2008.
=>>The Federal Reserve is scheduled to meet next Tuesday; but despite the dollar's recent strength, the market is pricing in little chance of a quarter-point rate hike.
=>>Investors and traders are keenly watching the International Atomic Energy Agency (IAEA) meet, held on Friday, 1 August 2008 to consider the India-specific safeguards agreement, which will be a key step for the operationalization of the Indo-United States nuclear deal. If the deal moves ahead, it could boost power and capital goods sector stocks.
=>>Stubbornly high inflation still remains a concern. The wholesale price index rose 11.98% in the 12 months to 19 July 2008, above the previous week's reading of 11.89%. The Reserve Bank of India (RBI) hiked repo rate by 50 basis points (bps) and cash reserve ratio (CRR) by 25 bps at its quarterly policy review on 29 July 2008. Repo rate has now reached 9%, a level last seen in October 2000. CRR is also at 9%, for the first time since November 1999.
=>>India's annual monsoon rains from 17 to 23 July were 33% below the long-term average. Rainfall since 1 June 2008 has been 2% below the same average.
=>>Stocks of the public sector units will continue to remain in focus as there are expectations that the government may push forward some economic reforms, which were stalled over the past four years due to opposition from Left parties. Left parities had stalled privatization of state-run firms, pension reforms, and higher foreign limits in insurance and more liberal norms for foreign bank.
=>>However major big-bang push to reforms is unlikely as the government will focus primarily on bringing down inflation ahead of key state polls and parliamentary elections, which are due in May 2009.
Now investor may adopt wait and watch strategy in market till the US Federal Reserve meeting scheduled on Tuesday. The movement in crude and the outcome of the US Fed meeting will decide the near term trend in the market. The market will also take cues from the development in Indo-US nuke deal developments.
Support: 14300, 14000.
Future & Option Strategy
As we mentioned above our view in the Nifty future is bullish. So we advise to short term traders to trade positively not even in the Nifty future but also in the momentum stocks like IFCI, RNRL, MRPL, RPL, ESSAROIL, ISPATHIND and PFC with respective stop losses.
We suggest implementing the strategy of “Bull Call Spread Strategy”. One can buy 4400 call of Aug at price of 180 and sell 4700 call at 60. The cost of Nifty comes to 4520.Maximum gain in this strategy is Rs 9000/- while loss in this strategy is Rs 6000/-.
After RBI, Now All Eyes on Fed !!!!
=>>With the Q1 June 2008 earnings season over, the market will now closely watch movement in crude oil prices and global stock markets. A further slide in oil price may boost investor confidence in the short term. On Thursday, 31 July 2008, the front-month US crude oil contracts settled at $124.08, down $2.69 for the day and off sharply from a record above $147 a barrel on 11 July 2008.
=>>The Federal Reserve is scheduled to meet next Tuesday; but despite the dollar's recent strength, the market is pricing in little chance of a quarter-point rate hike.
=>>Investors and traders are keenly watching the International Atomic Energy Agency (IAEA) meet, held on Friday, 1 August 2008 to consider the India-specific safeguards agreement, which will be a key step for the operationalization of the Indo-United States nuclear deal. If the deal moves ahead, it could boost power and capital goods sector stocks.
=>>Stubbornly high inflation still remains a concern. The wholesale price index rose 11.98% in the 12 months to 19 July 2008, above the previous week's reading of 11.89%. The Reserve Bank of India (RBI) hiked repo rate by 50 basis points (bps) and cash reserve ratio (CRR) by 25 bps at its quarterly policy review on 29 July 2008. Repo rate has now reached 9%, a level last seen in October 2000. CRR is also at 9%, for the first time since November 1999.
=>>India's annual monsoon rains from 17 to 23 July were 33% below the long-term average. Rainfall since 1 June 2008 has been 2% below the same average.
=>>Stocks of the public sector units will continue to remain in focus as there are expectations that the government may push forward some economic reforms, which were stalled over the past four years due to opposition from Left parties. Left parities had stalled privatization of state-run firms, pension reforms, and higher foreign limits in insurance and more liberal norms for foreign bank.
=>>However major big-bang push to reforms is unlikely as the government will focus primarily on bringing down inflation ahead of key state polls and parliamentary elections, which are due in May 2009.
Now investor may adopt wait and watch strategy in market till the US Federal Reserve meeting scheduled on Tuesday. The movement in crude and the outcome of the US Fed meeting will decide the near term trend in the market. The market will also take cues from the development in Indo-US nuke deal developments.
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