WEEKLY REPORT ON NIFTY BY kadiyali - 08.08.09 (Saturday)

WEEK GONE BY

Though Nifty traded above 4700 for the first 4 days of the week, it could not secure a close above its strong resistance of 4725 on any of these days, and finally ended up closing the week near week's low of  at 4481, down 155 points.  It traded the week in the range of 4463 to 4731. The high of the week was 4731 touched on Tuesday and the low of the week was 4463 recorded on Friday. The fact that nifty touched 4723, 4731, 4717 & 4718 on the first 4 days but was confronted with huge supply around this level should not be ignored during the next few days.

WEEK AHEAD

As Nifty failed to secure a close above its strong resistance of 4725 the whole of this week, bears undoubtedly received an upper hand & brought down nifty by more than 200 points in two days. Now bears will make nifty Sell On Rise till 4725 is taken out by the bulls on a closing basis.

Nifty is likely to trade RANGEBOUND for the next week consolidating in  a small range of 150 points. Trading range for the week is likely to be 4500-4650. However, nifty will post a positive close for the week.

STRATEGY FOR THE WEEK

1. If you are long, it is undoubtedly the time to reduce the load,  booking profits on every rise.

2. If you are short, hold on to the same & start adding puts when  nifty starts trading above 4650.

STOCK RECOMMENDATIONS

In my last Weekly Report, I had suggested liquidation of stocks in order to take advantage of an expected deep correction to 3900-4300 levels. With the unexpected fall this week itself, the nifty range for the remaining period of August looks to be 4400-4700, with the chances of breaching the lower band more than the upper band, due to monsoon deficiency & fall in Chinese market. So book your profits in the portfolio so as to have a cash balance of at least 50% of the Portfolio size.

OPTION RECOMMENDATIONS

1.In my last Weekly Report, I had recommended 4900CE below 65 for a target of 135, and to convert the profits into 4500PE. Though this call option gave some good intraday gains for first 3 days, the target did not materialise, and the call option is now at CMP of 25. It is now recommended to get out of this option nearer to buy price OR hedge the same with 4500PE below 100.

2. Watch the premium of SAIL puts 160PA (LTP 5.70). BUY SAIL 160PA below 4 for a target of 10.

IMPORTANT (Announcement by Priya Suresh, Manager, Fiftypointsaday)

We at fiftypointsaday had announced last week starting of an exclusive blog for option trading, which will be open for members only on an invitation.  The blog named KADIYALI OPTIONS will start on 12.08.09, and we have already received a good response for the membership. Only a few slots are available now, and all those who enroll for membership before 31.08.09 will get the Early Bird advantage. Those who are interested may contact by email to fiftypointsaday@rediffmail.com early.