NIFTY FUTURE WEEKLY
The week saw Nifty Future make a range of 442 points (High of 5557 & Low of 5115), probably the biggest range in past many weeks. This week Nifty Future also saw a break down from the trend line and closed decisively below it at 5211.
While many reasons are emerging for further downside, the leading one being - downgrade of US credit rating by one notch from AAA by S&P. To the best of my knowledge, the downgrade was announced after the US markets closed and hence the effect of the same is not reflected in their closing prices.
The well known author Nassim Taleb may have considered this as one of "The Black Swan" events. Just as many of us may not have even known that US had a credit rating of AAA, very few would know the implications of the same. This can only lead to chaos in the markets, particularly ours which has to not only deal with our own local problems but also have to face the onslaught of FII selling.
All this can take Nifty Future down to 4770 (38.2%) and thereafter to 4300(50%) over time. As shown on the attached chart, last weeks' triangle breakout has a target of 4250. Hence at this stage, I would put my bets on expecting Nifty Future making 4300 in the coming weeks.
Those who had the wisdom to buy 5000 Puts have a very good chance to thrive in the chaso that is likely next week. The levels given above are only indicative at this stage and unlikely to be reached next week itself, hence profti booking in 5000 Puts at every decline, will be a prudent thing to do.
Have a nice weekend & Keep Learning!
Ketan Asher.
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