WEEKLY REPORT ON NIFTY BY kadiyali - 18.07.09 (Saturday)

WEEK GONE BY

Nifty entered the week with highly bearish sentiments, having closed last week 4004 with a weekly loss of 400 points, its biggest weekly fall in 2009. However it found support at 3918 on the very first trading day of the week on Monday, posted 3 centuries of daily gains on 14th, 15th & 17th, to close the week at 4374, up 370 points, its second biggest weekly gains of the year. The low of the week was 3918 on Monday  & 4390 was the high of the week touched on Friday.

WEEK AHEAD

The entire last week, Nifty rode the uptrend on the back of Q1 results expectations, positive global trends & positive news regarding GOI disinvestment of listed PSUs. Market will also slowly realise the positives of the Budget, having discounted the negatives of the Budget in the earlier fall of nifty from 4480 to 3920. So the uptrend is likely to continue for the ensuing week, though in a smaller range. Nifty is now all set to surpass the pre budget intraday high of 4480 recorded on 6th July as Target 1, and may even look towards its Target 2 of 4693 being the intraday high of 12th June. However 4500 is going to be a major hurdle, but also remember the fact that if nifty pierces through the same, 4700 can come in just two trading days thereafter.

Nifty is likely to trade rangebound during the next week, trading above & below its last week close of 4374 alternatively, and finally ending the week in positive with modest gains. Trading range for the week will be 4250 - 4500. 

TRADING STRATEGY FOR THE WEEK

1. If you are holding long, continue to ride on the longs till nifty surpasses 4450. Unload the longs nearer to 4500.

2. If you are holding shorts, nifty may give you a chance to cover the shorts at the best level in the week nearer to 4250.

3. Nifty puts of the strike rate of 4000 & below are likely to be on the losing side in this expiry, and loss booking  in this week nearer to 4250 may prove prudent.

STOCK RECOMMENDATIONS

I had recommended to buy 6 shares last week namely Aban (668), Satyam (73), Atlanta (70), Suzlon (82), Provogue (40) & 3i Infotech (63), and all these shares were availble on Monday morning at rates below their last week LTP given in the brackets. All these shares have now given appreciation of 20-30% in a week, and I now suggest to sell these shares one by one during this week' s uptrend, and stay in cash, to  remain prepared for next recommendations.

OPTION RECOMMENDATIONS

Last week I had recommended to buy nifty call 4200CE below 40, and on Monday morning, it did fall well below 40. Many members of this blog have bought the same at 32, 34 etc. This call option pierced through the roof last week, and even went well beyond 200, giving an appreciation of more than 400%.

My option recommendation for this week is calls & puts of the strike rate of 4400. Watch the premium of both 4400CE & 4400PE very closely during all 5 trading days of next week. Both these options closed this week at LTP of 105.

1. If 4400CE falls below 60, BUY it for a Target of 150.

2. If 4400PE falls below 40, BUY it for a Target of 100.

Whichever  of (1) & (2) happens first, you have to go in for that one, and if & when you achive the target of the same, you will get the other one out of the profits of the first one sale.

Note: I always insist on buying of options (calls & puts) out of the profits earned in NF trading calls, and buying of options out of one's capital is strictly not recommended.