Monday, May 18, 2009

REBUILD YOUR PORTFOLIO

18 May 2009. What an amazing day in market. Indian bourses created history by locking into upper circuit, giving a resounding thumbs up to election results. And why not, why ever not! Election results gave the incumbent UPA Govt clear mandate to rule for another five years.

With euphoria at its peak we need to look at supply zone of Nifty to be fully into cash. Nifty selling will come around the pivot of 4515. This pivot is in the supply zone from 4447 to 4600. So one should begin to convert his portfolio holdings completely into cash around the pivot point.

From the level of 4500 the correction should take Nifty to 3750 where one should look at buying again in tranches. As a retail investor, the process of re-building your portfolio should begin from 3750 Nifty.

Nifty Put Option
On 07 May 2009 I had given recommendation to buy 3400 Nifty Put Option of June contract at a premium of Rs 146. That was when Nifty had closed at 3684. This was to be averaged if Nifty was to reach 4150. Today Nifty opened and closed with upper circuit at 4323 giving no chance to retail participants to enter into trade. Tomorrow one could get opportunity to average the Nifty Put at about Rs 20. If not one could look to buy the Nifty Put around selling zone mentioned above.