TURNING POINTS FOR 23.02.2011

NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD

NIFTY FUTURE :

In view of the fall in World markets, all the excitement of a good opening for our markets had vanished even before the opening session, in view of SGX Nifty trading down by about 50 points. Though, Reliance did open with a gap, it gave up most of the gains, in view of rest of the market being weak. Overall a volatile day (High of 5520) with downward bias and one more day below the trend line (in blue) and also the key resistance level of 5555. The good part for the day's trading was that it has not broken the previous day's low and did pullback from the day's low of 5428 and closed the day at 5470.

While the set up for the inverse Head & Shoulder remains intact - at least for today and the hope that it can break tomorrow, remains open. However, we have to also see the impact of weak US markets tomorrow.

For tomorrow, one should go short below 5440 with stop loss of 5485. The fall will accelerate below 5420. On the down side we have support at 5420 - 5380 and finally the 5330 level, where a gap has to be filled. At this level, we have 0.618 level of the correction (5175 and 5589). Moreover, in view of the FNO Settlement on Thursday & Budget on Monday, I expect 5330 level to hold at least for the time being. At the first sign of stability around this level, one can consider going long with stop loss of about 35 points. However, for any reason we close below 5330, it should be considered very weak.

Though market is expected to be weak, one will have to change the view to positive if Nifty Future moves above 5520. Though this looks unlikely after looking at todays movements.

Put Call Ratio of Index Options remained almost unchanged at 1.05 as against 1.06 yesterday.

Please do not trade without STOP LOSS.

With Best Wishes,

Ketan Asher.