Thursday, April 28, 2011

Update for 28th April 2011

   U S Fed Remains Dovish, Easy Money Policy to Continue !

  • The statement issued after the FOMC meet of the U S Federal Reserve signaled the continuation of the easy money policy for the time being and opined that the rising prices of fuel, food and commodities may not lead to higher inflation in the U S.
  • Stock and  commodity  prices may remain buoyant due to continuation of the near zero policy rates by the Federal Reserve.
  • Even though a change in the policy stance may occur later on and hamper the asset price inflation, there is no question of it happening in the immediate future and therefore, no undue volatility in the market due to such changes is seen at present.
  • However on the home front, RBI may be forced to act tougher against the galloping inflation which is running much ahead of all expectations for such a long time.        
   Nifty Futures - Intra-day Chart

   Nifty Futures  - Daily Chart

  • Wednesday's trading has lead to the formation of an inside day candle as the latest candle's range was confined to the previous day's range.
  • Trading mostly remained in the middle of the present day trading range on Wednesday though the Nifty contracts lost 40 points.
  • As Nifty future was confined to a very narrow trading range for the entire  past month and the contract has not yet moved from the previous expiry values, it is not possible to guess the direction to which the next break out may occur. 
  • Traders may remain cautious on the expiry day and expect  stock specific and expiry related wild swings in the market. 
   Nifty Options Scene   

The April series Nifty Options Put Call ratio ( PCR April series ) declined further to 1.08 times on Wednesday. Any decline in the PCR is normally related to the weakness in the market. Massive writing of April series call options was seen at the three strikes at 5900, 5800 and 6000 on Wednesday. Some covering of open Put options was also seen a day before the expiry. The highest open interest barriers are presently placed at the 5700 and 5900 strikes and as such, the expiry could be anywhere between these strikes. The following Option Pain chart also indicate an expiry near the 5800 strike. ( The above is just some informed guess and the market picture may change at any time before the expiry. ) 

Option Pain Chart - Nifty April Series

 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 21.79, 3.70 and  1.07 respectively as on  27th April, 2011.  ( More information and a long term analysis on Nifty historical valuation are available from the "Nifty Fundas" page ).

 Latest Ultimate Momentum Signal 

The Momentum Signal has closed in the neutral territory for the third day in succession.

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 28th April, 2011, 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.
Click on the table above for an enlarged view.

Readers are also requested to go through The Signal, Entries and Exits, Position Limits, Risk Factors, Risk Analysis,  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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