Software & Finance

Nifty Weekly Forecast From Jan 09, 2012 - Hedge your Long Postions (Expected Trading Range: 4500 - 4847)

Jan 06, 2012 - Nifty closed today at 4754.10 which is about 130 points up (2.81%) from the last week close of 4624.30 on Dec 30, 2011. Nifty was trading between 4,588.05 and 4,794.90 which is about the swing of 206.85 points.


To watch Nifty Index in google finance, visit the following link:

NSE Index in Google Finance

To watch Nifty Index in yahoo finance, visit the following link:

NSE Index in Yahoo Finance

Last Week Analysis - Long term investors started accumulating long positions

Nifty was up by 2.81% in the first trading week of this year 2012.


FYI - France will hold presidential elections on April 22 and May 6, followed by general elections in June.
US will hold presidential elections on Nov 06, 2012.


Some investors strongly belive that Nifty short term correction is coming to end and took long positions. It pushed the market higher. Currently it is not a good idea to go short on Nifty, but it is worth hedging (sell covered call options) your long positions, if you are a long term investor. Go long on Indian T-Bills and INR.

With respect to US long term treasury prices, TLT closed today at 118.73 which a loss of 1.998% for the week compared to last week close of 121.15. US treasury is now too late to short and too early to buy. US treasuries (Ticker: TLT) would bottom near 100 - 103 and TLT upside would be maximum of 125-130.


Note: US Interest Rate Bottom is currently happening, it may test the bottom in the coming weeks.


Last Week Low: 4,588.05
Last Week High: 4,794.90


Nifty technical levels clearly suggest that hedge your long positions now. Because Nifty has got strong resistance level around 4850.


Note: Nifty is risky to short now, even though the next downside target for Nifty below 4500 and 4000. If you are a short term investors and have long positions on Nifty, it is good time to liquidate and keep them as cash. If Nifty started moving below 4500, then gradually accumulate your long positions with a ladder of orders.

If you are conservative investors, hold currency or indian T-Bills. You can take long positions on Nifty between 4000 and 4500. Nifty might experience a double dip in Indian Market along with world market correction in the long term (about 2 years). With double dip, Nifty is expected to touch 2600 levels set on Oct 2008 and Mar 2009. Wait for some more time to get more clues on "double dip on Nifty"


For Speculators and Intraday Players - Options Strip

1. Buy 2X OTM put option and 1X OTM call option - Options Strip.

2. Short Stocks and stop loss orders.

3. Short Stocks with long call options


Note: OTM - means Outside the money.

Technical Indicators

10 days EMA: 4724.28
21 days EMA: 4748.44
50 days EMA: 4846.90
200 days EMA: 5202.31

Next Resistance Levels:

Strong Resistence level at: 5202.31 - 200 days EMA

Strong Resistence level at: 4846.90 - 50 days EMA

Strong Resistence level at: 4748.44 - 21 days EMA

Next Support Levels:

Strong support level at 4718.00 set on Feb 05, 2010

Strong support level at 4639.10 set on Nov 24, 2011

Minor Support level at 4531.15 set on Dec 20, 2011

Strong support level at 4003.90 set on Jul 10, 2009

Strong support level at 2620.10 set on Mar 06, 2009 Will reach here with double dip

Strong support level at 2584.00 set on Oct 24, 2008 Will reach here with double dip

Posted on Jan 07, 2012