SURPRISE RALLY OR TRAP ??

The markets opened on a strong footing, mainly in the backdrop of the resolution passed last night by the German parliament for increasing their contribution to the EFSF. Nifty futures closed the day at 5441, 65 points premium to the spot with a considerable addition in open interest. The rise was mainly led by the banking sector, which covered all its losses and Bank Nifty shed open interest on large volumes, which is a very healthy sign. The overall market breath was extremely positive with 1263 advances to 246 declines. On the options side the PCR increased to 1.08, and the 5500 call added the maximum open interest followed by the, 5300 call, while on the put side 5200 put added the maximum open interest followed by the 5400 put, which shows that the markets are still not clearly out of the woods. FIIs were net buyers to the tune of 727 crores and DIIs were net sellers to the tune of 587 crores. While Nifty managed to close above the crucial mark of 5366 the other technical indicators are still in sell mode. The crucial levels to watch for tomorrow will be 5408 and 5457 on the upside and 5323 and 5290 on the downside. Most of the asian markets closed in the green, while europe and U.S. still trading in the green on the back of mixed data, like rise in consumer confidence and fall in home prices, the markets may open on a  flattish note, taking cue from the quantum of  LTRO to be announced by the ECB very soon as well as the possible domestic political ramifications and RBI's policy in the day's to come.

WHAT LIES AHEAD

The Nifty Future closed at 5338, 57 points premium to the spot nifty. The markets opened with a negative bias and the selling became aggressive as the day progressed, marked by unwinding on the future's side and massive call writing from 5200 to 5600 calls and considerable addition of open interest from 5000 to 5300 puts, which was clearly indicated in the PCR which fell to 1.07. The other highlight of the day was that FII's were net buyers to the tune of 329 crores while the DII's were net sellers to the tune of 629 crores. The spot Nifty closed for the day at a crucial point of 5281 which is just below its 30-day moving average. The next crucial levels to watch out for will be 5216, 5182, 5120.  On the international markets side there are mixed reactions with good U.S. Home sales data , while on the other side German parliament is voting on whether to increase their share to the Greece bailout fund. With no signs of reversal right now, every rise should be used  as a opportunity to short the market, while fresh longs can only be initiated only when there are signs of some amount of consolidation.

Stock Picks

Axis Bank  - Short - 1145, 1165, SL 1186. Target 1083, 1069, 1055

LT -             Short - 1335, 1360 SL 1390. Target 1276, 1251

STOCK PICKS FOR 27.02.2012

Axis Bank -  Short 1220, SL 1250, Target - 1148, 1131, 1110
Larsen Toubro - Short 1370, SL 1395, Target - 1316, 1290
State Bank of India - Short 2253, SL 2273, Target - 2180, 2165, 2126

THE WEEK AHEAD FOR NIFTY

All the targets for NIFTY and AXIS bank, given for the day were achieved. Nifty futures closed the day on 5487, down by roughly 0.93%, but still at 58 points premium to the spot, with considerable increase in volumes and open interest and the PCR moving from 1.62 to 1.57, indicating a shift in trend in the last three days. The huge premium on Nifty futures may not be sustainable and is expected to come down considerably in the days to come. On the options side there was routine profit booking , in all in- the money calls from 5000 to 5300 and considerable shorting in the 5500 and 5600 calls, alongside a considerable build up in open interest in 5200 and 5300 puts, adding credibility to the shorts building up in the system. While the technical indicators have shown a clear shift in trend for the first time in the last three days, on both the daily and weekly charts, but with the  considerable good international news flow, the downside for Nifty may be limited for sometime in the range of 5370 to 5290.

NIFTY MARCH SERIES

The target of 5440 for Nifty February series given on 16.02.2012, was nearly achieved today, with the Feb Series future making a low 5465 before settling for 5483 for the month. The Nifty March series has opened with decent open interest and a premium of 56 points, while on the options side 5600 and 5500 calls added the maximum amount of open interest and the put call ratio improving in favour of calls in the last few days, indicates strength in the market. The technical indicators indicate, that profit booking has taken place at the overhead resistance of 5600. Keeping strict stop loss at 5390 and 5365, one can take long positions in Nifty with the targets of 5526, 5552 & 5570.

On the individual stocks front, Axis Bank has developed a negative trend both on the daily and weekly charts, one can go short at 1240 level with stop loss at 1268 and a target of 1193, 1182, 1170 on the lower side.

NIFTY RANGE FOR THE MONTH

Nifty Future's close of 5552 on 15.02.2012 saw hectic activity on the options side with massive addition of open interest in the 5500 and 5600 puts followed by hectic profit booking  mainly in the 5400 and 5500 calls and also all in the money calls like 5200 and 5300. Which shows the market facing a overhead resistance of 5600 and shorts building in the system. With most of the technical indicators in the over-brought area for quite some time, the key levels to watch on the downside for Nifty, before expiry will be  5440 and 5352.

Fall in savings

Slow down in small savings

One often sees an inverse relation between small savings schemes and bank deposits. The term deposits have been been registering a robust growth, since December 2010 due to successive hikes in interest rates. But at the same time, the pace of growth in small savings schemes has slowed down. This is because the small savings rate are administered rates fixed by the government and have not been changed for almost a decade now. In contrast, bank deposit rates are market determined.