Thursday, December 23, 2010

Update for 23rd December 2010

      Nifty Future Finding it Tough to Hold on to Gains ?

As expected, Nifty Futures opened higher at 6025 and within a short time of trading, it went above the 6030 reference point. It seemed that Nifty futures may trade higher in the process of testing the highs. However, the markets seemed to be stalling just above the 6030 mark, with lack of enthusiasm to trade higher indicated by  low volumes.  After spending almost an hour above the 6030 mark, the Nifty contracts traded below the 6030 mark. Till around the 1.30 PM mark, trading remained inside a narrow range just below the 6030 level . However, when the European markets opened and later traded mildly in to the negative territory, Nifty future too started to trade lower. The market heavy weight stock, Reliance seemed to be leading the ensuing fall on the back of news related to some cost escalation in the gas production business. Banking sector also seemed to be making losses for the day. Nifty futures recorded a low of 5977 in the mid afternoon mini sell off. However, the selling stopped before the futures pierced the previous day's low of 5970. The contracts recovered some of the losses and closed for the day at 6012.

     Nifty Futures - Intra-day Chart    

Nifty Futures  - Daily Chart 

Wednesday's trading has not made much difference to the technical position of the market. The market outlook still remains in the sideways to the mildly positive mode. Traders may still use the previously indicated reference levels which still remain valid for the time being. However, readers may please go through the previous post in which this author had pointed out certain negative factors which might reduce the return expectations of the FIIs from the emerging markets as whole and especially from India.  

Nifty Option Scene   

The Put Call Ratio ( PCR ) of Nifty December series Nifty options increased to 1.36 times as on Wednesday. Some additions to the December Put option open interest  ( OI ) were seen at the 5900, 6000 and 6100 strikes. Similarly, some additions of December Call options OI were seen at the 6000 and 6100 strikes. The highest OI positions in the Call and Put options remain at the 6100 and 5800 strikes respectively.  The second highest levels of December Call and Put options open interest stand at the 6000 and 5700 strikes. These OI positions might be indicating  a range bound market between the 5800 to 6100 strikes.   

Nifty Trailing Fundamentals

The trailing Price Earnings Ratio  ( PE Ratio ), Price to Book Value ( PB Ratio ) and Dividend Yield ( DY Ratio ) of the Nifty Index  were at 23.88,  3.7 and  1.04  respectively as on   22nd December 2010. ( More information and a long term analysis on Nifty historical valuation are available from the "Nifty Fundas" page ).  

Latest Ultimate Momentum Signal

The updated Momentum Signal spreadsheet showing the latest signal values of the current month Nifty future and the Nifty index is given below :

Momentum Signal has fallen to the +50 levels as on the end of Wednesday's close. Readers may please take note that the Momentum Signal system has a tendency to indicate whipsaw trades in range bound markets. This fact has already been  pointed out in various previous posts as well as in the Risk Factors
Projected Momentum Signal Close Values

The projected levels of Momentum Signal values applicable to various ranges of closing values of the current month Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  23rd December, 2010, are given in the following table. All readers are requested to take note that the table below is just a ready reckoner for the next day's Momentum Signal values and the figures are not intended to be interpreted as any targets for the Nifty futures or indices shown therein.

Please click on the table to enlarge. For more info on the above table,  please click here.

Readers are requested to go through the Risk Factors, Risk Analysis, Position Limits and FAQs pages to gain a reasonable understanding of the trading system. Please do post your  comments and suggestions on how new  posts can be made more useful.
Cheers and Prosperous Investing and Trading !!!

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