Tuesday, May 3, 2011

Update for 3rd May 2011



  Market Awaits the RBI Action for Directions

  • Nifty futures lost some 30 points on Monday but just kept itself above the previous swing low of 5700.
  • The contract has recorded losses for the past six trading days, and therefore, is ripe for a short covering rally.
  • However, any such market action would certainly be dependent on the outcome of RBI interest rate action. If the RBI limits the rate hike to just to 25 basis points ( repo and reverse repo rates ), a relief rally can be expected.
  • Such a relief rally may still encounter resistance at around the Monday's high of 5790. 
  • Monday's trading has not yet significantly changed the technical position of the market. For a detailed analysis of various market scenarios, please read the previous post which described the various market scenarios. 
    Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 

 
   Nifty Options Scene   

The May series Nifty Options Put Call ratio ( PCR May series ) deteriorated to a below normal 1.06 times on Monday. The deterioration in the PCR may indicate the slightly negative bias of the market. There were new build up of May series call option open interest in a wide range at the three strikes of 6100, 5900 and 6000.  Some addition of Call OI was seen at the strikes of 5800 and 5700 also. Some minor additions to Put option OI was seen at the strikes of 5500, 5600 and 5300. However, significant covering  of Put options was seen at the 5400 strike.The pattern of OI build up also confirm our analysis about the possibility of a break out from the month old trading range in May.  The highest OI of Nifty calls were at the 6000, 6100 and 5900 strikes. The highest OI of Put options are at 5600, 5700 and 5500 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 21.19, 3.62 and  1.09 respectively as on  2nd May, 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 remained in the negative momentum territory  with a value of -100 as on Monday.
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 3rd May, 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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