Indian Markets Volatile - Nifty Levels to Watch

There is a saying among market participants  " Sell in May and Go Away" . Historically month of May has been a difficult month  for investors. In this month markets generally trend lower.

It is believed that in this month big players like Fund Managers go on summer vacation. This could be one reason for apprehension that month of May will not be profitable for investors.

Here mark my word "Investors", Yes this market adage may be true for investors, but for traders every month is an opportunity.

As traders in Stock Futures, what can we expect in May 2016? To find an answer to this question, let us analyse various probable situations. In this post we will discuss possible Nifty movements.



Situation # 1  Nifty moves higher from current market price (CMP)

• For Nifty to move higher, it has to close above 8000. That will be the first sign.
• If Nifty closes above 8000 in 2/3 days, then we can expect 8400 as target.
• But if Nifty takes more time to reach 8000, then target will get restricted to 8100

 Situation # 2  Nifty moves sideways from current market price (CMP)

• If Nifty has to move sideways, the range would be between 8100 and 7700.
• Sign for sideways movement will appear when from a sudden bounce from CMP, Nifty drops with same ferocity to 7700.
• From 7700, Nifty then takes longer time to reach back to 8100/8000. In such a situation, Nifty will finally move up if it takes support from 100 day SMA (Simple Moving Average).
• But Nifty will go down if Nifty does not take support from 100 day SMA

Situation # 3  Nifty moves lower from current market price (CMP)

• For move down, first sign will be if Nifty fails to close above 7950.
• Nifty then closes below 7700.
• Final signal for bear market to be established, Nifty has to close below 7500.

Take notice, trade safely!

Yen Rise Markets Tumble - Will There be Recovery?

Boooooooooom! It felt like one has been blown to smithereens. That was what Bank of Japan did to markets around the globe. But even Central Bank of Japan did not know markets will be smashed by their innocuous looking decision.

Bank of Japan yesterday took a decision of keeping the deposit rate unchanged at -1%.. Nothing disastrous should have happened since these rates were continuing since Feb 2016 and markets were used to it. Then why did global markets sell off so ferociously?

You must catch the details in this column : Japan Unsettles Global Markets - Havoc Spreads

Frankly speaking I did not foresee such devastating reaction to Bank of Japan decision to keep rates unchanged.  On the contrary I had expected Nifty to do very well in trade yesterday. Fed had not been hawkish and I did not think Bank of Japan did anything wrong to upset market. Our own local conditions had no fresh negative news to rattle Indian markets.

So in my last post I was very certain that Nifty will get past 8000 with ease, and may even reach 8100. How horribly wrong I was!

Yesterday Nifty lost massive 132 points and closed at 7847, doing exactly the opposite of what I had predicted

Today also indications from global markets are not good :-

• Dow closed down by 210 points.
• Asian markets are in negative territory
• Global oil is slightly down
• SGX Nifty is down by 37 points.
• Gold is up which does not bode well for equities

Call-to-Action

In my post Markets May Laze - Look Out For 8000 in Nifty , I had given buy call for two banking scrips of May Futures and same were bought as given below:-

1. SBI May Fut bought at 199. Target 206. Yesterday it closed at 192.2
2. Bankbaroda May Fut bought at 160.5. Target 166. Yesterday it closed at 160.8

Bank of India Apr Futures was rolled over to May Futures. It was bought at 98 and revised target given was 99/100. Yesterday it closed at 96.3

Markets Poised to Perform Well on Expiry Day

Today is expiry day for April derivatives contracts. Indian markets should do well because of following positive news flow :-

• US Fed kept its rates unchanged.
• Dow closed up by 51 points.
• Bank of Japan has kept it's interest rates unchanged.
• Asian markets are mostly in green
• Global oil is up
• SGX Nifty is up by 32 points (Update at 9AM : SGX Nifty has suddenly turned negative by 16 points)

Yesterday headline for my morning post was "Markets May Laze - Look Out For 8000 in Nifty". Indian markets did laze around in yesterday's trade. Nifty low was 7941 and high was 7991, merely 50 points of intraday variation.

Market Direction
Today Nifty should do well and cross 7800 with ease. I wouldn't be surprised if Nifty touches 8100.

Call-to-Action

Yesterday in my morning post Markets May Laze - Look Out For 8000 in Nifty , I had given buy call for two banking scrips of May Futures and same were bought as given below:-

1. SBI May Fut bought at 199. Target 206
2. Bankbaroda May Fut bought at 160.5. Target 166

Bank of India Apr Futures buy position is held with us. This needs to be squared off today by all means, since it is expiry day. Take following action in trade today :-

Bankindia Apr Fut to be sold at 99/100. It was bought at 98 and initial target given was 120.
Update : Roll over Bankindia Apr Futures to May Futures.

Markets May Laze - Look Out For 8000 In Nifty

Yesterday in morning post I had remarked the following in this post :

"We need a positive close today for Nifty to close at 8000 in this expiry on Thursday."

Nifty had taken support near its support zone of 7800 as was suggested by me.Nifty closed up 107 points at 7962 yesterday. Will we then see Nifty reach 8000 in trade today as predicted? That will be an interesting thing to watch for in Nifty today.




Today Nifty should open down. As of publishing this post :

• SGX Nifty is slightly up by 10 points
• Asian markets are mixed
• Oil in global market is up
• Dow had closed mildly by 13 points

Market Direction
Nifty should open flat today. It will be difficult trade in Nifty since there will be volatility for reasons given below:-

• Tomorrow is expiry day for April derivatives contracts in Indian markets.
• Bank of Japan will give its monetary policy tomorrow.
• US Fed will come out with it's own monetary stance on rate hike today

Call-to-Action

Buy following banking scrips of May Futures:-

1. SBI May Fut buy at 199/200. Target 206
2. Bankbaroda May Fut buy at 160/161. Target 166

Bank of India Apr Futures buy position is held with us. This needs to be squared off by all means, since tomorrow there is expiry of April contracts. Take following action in trade today :-

Bankindia Apr Fut to be sold at 99/100. It was bought at 98 and initial target given was 120.

Markets Soar Majestically - Did You Profit From It?

Nifty whizzed past 7900 as if it was no resistance at all. It speared through resistance of 7900 like knife through butter. Nifty ended 107 points up at 7962 in today's session.

In morning before markets opened, I gave a call for action in post titled "Markets Look Robust - Keep on Long Side".

Hope you heeded my advice to remain on buy side. Such a post title was specifically meant for those who were short in market. Today in trade, shorts got squeezed and bears hurried to cover their shorts.

Yesterday we had bought two bank scrips in May Futures as per my recommendations. Check this post.

Both buy positions of May Futures were listed in morning post for selling, with modified targets. Targets  given in this morning post were met in trade today.

 Let us calculate profit generated from these 2 May Futures contracts.

May Futures Contracts Bought on 25 Apr 2016, Sold Today ( Check post here )

Albk May Fut                    :  Lot size= 6000, BP = 58, SP = 60.5. 
                                               Holding Period = 01 trading session
                                               Profit = (60.5-58=2.5) X 6000 = Rs 15,000/-
                                               Capital invested for 1 lot = Rs 59,000/-
                                               Return on Investment ( in 01 day) = 25% 

Bankbaroda May Fut       :  Lot size= 3100, BP = 159, SP = 162.5. 

                                                 Holding Period = 01 trading session

                                              Profit = (162.5-159=3.5) X 3100 = Rs 11,500/-

                                               Capital invested for 1 lot = Rs 98,500/-

                                              Return on Investment ( in 01 day) = 11.5% 

Consider This Carefully Again

Realize the astounding power of  Stock Futures Trading in generating wealth. Do not keep yourself away from futures trading for any reason. Dump your inhibitions and jump on the bandwagon!!

 I will guide you from very basics, provided you seek my help. Feel free to air your opinion or seek  clarification through 'comments' section at bottom of the post.