What is Open Interest, Max Pain and Put Call ratio

Dear Traders, 

Open Interest, MaxPain and Put Call ratio are some of the most misunderstood topics amongst beginner/amateur traders; below is our attempt to simplify these concepts for you: 

1. What do you mean by Open Interest (OI) in futures and options? 

Futures and options are contracts and similar to any other contract it is a contract between a buyer and a seller. Buyer is bullish (expecting the market to go up) and seller is bearish (expecting it to go down). Only when there is trade between a buyer and seller, a contract opens and all such open contracts are together called as open interest. So if I have bought 1 lot of Nifty expecting it to go up and you have sold 1 lot expecting it to go down, that makes it 1 open contract and hence the open interest of 1. 
Typically every derivative contract will have its own OI, Nifty August futures will have its own OI and September futures will have its own. Similarly, OI will be different for calls and puts of various strikes. 

2. What would you infer if someone said “Nifty futures went down with a huge addition of OI?” 

OI will go up when more people start participating or existing people start adding positions. According to the OI theory, typically when a market is going in a particular direction and there is a huge addition in OI, this means there is more conviction in the move.
So if the market is falling and there is a huge addition in OI, this would mean that the existing short positions which are making profits are adding more and hence the fall could be bigger. But understand that this is only theory and may or may not work like this in reality. 

3. What would you infer if someone said “OI on Nifty 5600 calls went up significantly?” 

While trading options, the money required to buy options is much lesser than what is required to write (sell first). So typically the people who write options are people having access to higher capital and hence the logic is that they are more proficient traders. 
I guess it is important to also understand why retail traders typically buy options and institutions sell them?
Retail traders are always looking at buying options because technically you have chances of making unlimited profits with investments of small premiums, very similar to how lottery tickets work. What a retail trader forgets to look at is the fact that the odds of winning are much lower than when you are writing options. Yes when you write/sell options the profit is limited and is probably just a fraction of the margin that is blocked for writing, but the odds of winning go up significantly.
Assume that Nifty is at 5550 and A buys the 5500 call at Rs. 100 as he is bullish and B who is bearish and expects the Nifty to be lower sells it at Rs. 100.
Since A is buying Rs. 5000 (50 x 100) is debited from his trading account and since B is writing options (around Rs 25000 is blocked as margin). A can make unlimited profits from his Rs 5000, but B can make a maximum of Rs 5000 from the Rs 25000 invested. But check out the odds and see which side you want to be on.
For A to win at Expiry: Only if Nifty is over 5600 (5500 + 100 invested into the call option)
For B to win at Expiry: Nifty stays where it is, Nifty goes below 5500 and Nifty goes up but stays below

MARKETS FOR THURSDAY 29TH AUGUST

NIFTY EVEN THOUGH MADE A LOW OF 5119 TO BOUNCE AND CLOSE THE DAY NEAR THE HIGHEST POINT OF THE DAY IN THE FORM OF ANOTHER BULLISH HAMMER THAT TOO A GREEN HAMMER, SUCH MOVEMENTS JUST BEFORE THE EXPIRY DAY MAY BE A BULL TRAP TO PULL NIFTY DOWN ON EXPIRY DAY MORNING . IN ANY CASE AS LONG AS SPOT NIFTY SUSTAINS BELOW 5353 & DOES NOT CLOSE AT LEAST A 30 MINUTE CANDLE ABOVE IT EVERY UPWARD DEAD CAT BOUNCE IS A SHORTING OPPORTUNITY. THE ZONE BETWEEN SPOT NIFTY LEVELS OF 5353 TO 5373 IS HIGHLY CRITICAL FOR THE BULLS AND BEARS TO SURVIVE. SO A RISE NEARER TO THIS ZONE OTHER THAN THE MOST UNLIKELY GAP UP CAN SEE A TOOTH & NAIL FIGHT BETWEEN THE BULLS AND BEARS TO CONQUER THIS CRITICAL ZONE OF 5353 TO 5373. A SLIDE TO SUSTAIN BELOW 5212 MAY CALL IT THE END GAME FOR THE BULLS THAT MAY SEE ANOTHER LOW BELOW WEDNESDAY’S LOWS OF 5119 SPOT.

BEING EXPIRY DAY, NO TRADE IS BEST TRADE. HOWEVER IF SOME ONE IS JUST ITCHING TO TRADE THEN BUY AN AUGUST CALL IF 5200 ON DECLINES TOWARDS IT AND A PUT OF 5300 ON RISE TOWARDS IT TO HOLD BOTH & HAVE THE FUN. OR ONE MAY AT START BUT A CALL & PUT AND ENJOY THE TRADING FUN TILL END. NIFTY FUTURES ON SUSTAINING ABOVE 5260 TO 5277 LOOKS STRONG TOWARDS 5300 oe even higher EXPIRY CLOSING & BELOW 5190 TO 5185 TURNS WEAK TOWARDS A 5100 OR 5150 EXPIRY CLOSING.( FENCE SITTERS MAY PREFER A 5200 OR 5252 EXPIRY). BESIDE THE CONTINUOUS ADVERSE NEWS TO PULL THE MARKETS DOWN, THE EXPIRY DAY SEEMS TO BE LUCKY FOR THE BULLS, MORE SO BULLISH THE DAY AFTER THE EXPIRY DAY.

MARKETS FOR WEDNESDAY 28TH AUGUST

THE MOMENT NIFTY BREACHED 5377 BLOOD BATH RESUMED & EVEN THE BULLS CONVERTED THEMSELVES AS BEARS TO SHORT THE MARKETS. A FALL AND CLOSE BELOW LAST WEEKS LOW OF 5254 LOOKS TO BE A CERTAINTY AND NIFTY IS ALL SET TO TEST SUB 5000 LEVELS BEFORE THE DEVASTATING MONTH OF AUGUST ENDS. TRADERS MAY DO WELL TO LOOK FOR AN INTRADAY RISE TO ADD TO THEIR SHORT POSITIONS AND PUTS OF SEPTEMBER. EVERY RISE MAY BE USED TO RUTHLESSLY SHORT FUTURES AND BUY PUTS. FOR FUTURE TRADERS INITIAL SUPPORT IS AROUND 5262 TO 5252. IN CASE THIS ZONE IS BREACHED BY CLOSER OF A 30 MINUTE CANDLE OR MOST PROBABLY A GAP DOWN THEN NIFTY FUTURE MAY SLIDE TOWARDS 5200 OR LOWER LEVELS. SO FAR AS RESISTANCE OR HIGHER SIDE IS CONCERNED IT IS NOT AT ALL WORTH KNOWING ANYTHING ABOUT THE HIGHER SIDE TILL THE EXPIRY DAY. DUMP EQUITY ON MINOR RISE & ACCUMULATE COMMODITY ON DECLINES.

MARKETS FOR TUESDAY 27TH AUGUST

NIFTY MADE A HIGHER HIGH , HIGHER LOW BUT A  MILDLY LOWER CLOSING COMPARED TO FRIDAY’S CLOSING. THE FUTURES PRICE RUNNING WITH A DISCOUNT TO THE SPOT PRICE IS A SIGN OF ENCOURAGEMENT FOR THE BULLS  TO SEE FURTHER PULLING UP OF NIFTY FUTURES AROUND THE EXPIRY TIME. BUYING THE DECLINES  MAY REWARD THE TRADERS AS TUESDAY MAY SEE INITIAL FALL FOLLOWED BY RISE  IN NIFTY.

 FOR INTRADAY TRADING OF NIFTY FUTURES  ON TUESDAY A SLIDE BELOW MONDAY’S LOWS OF 5440 MAY SEE FURTHER WEAKNESS TOWARDS 5424 FOLLOWED BY 5404 & THEN EVEN 5400 MAY BE BREACHED TO TEST 5380 TO 5370 FUTURE LEVELS. SIMILARLY ON THE HIGHER SIDE  INITIAL FALL TOWARDS 5380 TO 5370 CAN SEE GOOD INTRADAY BUYING TO LIFT NIFTY FUTURES ABOVE 5400 LEVELS AGAIN. HOWEVER NIFTY FUTURE NEEDS TO BREACH AND SUSTAIN ABOVE 5477 TO 5488 IN ORDER TO MOVE UP FURTHER TO BREACH 5500 AGAIN.

MARKETS FOR MONDAY 26TH AUGUST

NIFTY SPOT SAW ITS 5TH CONSECUTIVE WEEK OF LOWER CLOSINGS AFTER MAKING A LOW OF 5254 TO CLOSE IN THE FORM OF A WEEKLY HAMMER GIVING THE BULLS SOME SIGH OF RELIEF AT LEAST THAT THE FEARFUL DOWN SWING HAS EITHER ENDED OR ABOUT TO END. CLOSURE OF SPOT NIFTY IN THE FORM OF A WEEKLY HAMMER ABOVE THE LOWER BOLLINGER BAND, 200 WEEK SMA , 200 WEEK EMA & ALSO ABOVE THE WEEKLY SUPPORT LINE AFTER BREACHING EACH OF THESE DURING THIS SINGLE  WEEK AS CAN BE SEEN IN THE WEEKLY CHART ABOVE TECHNICALLY INDICATES THAT THE DOWN SWING MIGHT BE OVER. HIGHLY OVERSOLD CONDITION OF DAILY INDICATORS AND SOME OF THE WEEKLY INDICATORS  TILT THE BALANCE IN FAVOR OF THE BULLS THAT ENCOURAGES TRADERS TO BUY THE DECLINES  & HOLD THE POSITIONS AS LONG AS SPOT NIFTY DOES NOT BREACH THE WEEKLY LOW OF 5254 , IN CASE IT IS BREACHED THEN ONE MAY AGAIN TURN HIGHLY BEARISH TO RUTHLESSLY SHORT THE MARKETS TO SEE SUB 5000 LEVELS.

A CLOSURE OF AN HOURLY CANDLE BELOW THE SPOT NIFTY LEVEL OF 5377 OR MORE IMPORTANTLY BELOW 5353 WILL BE THE EARLY SIGNAL FOR THE  BULLS TO BE CAUTIOUS ON THEIR FRESH LONG POSITIONS & TO THE BEARS TO RESUME SHORTING AGAIN. SIMILARLY ON THE HIGHER SIDE A DECISIVE BREACH OF 5505 SPOT MAY BE THE INITIAL INDICATION THAT THE BULLS ARE GATHERING MOMENTUM TOWARDS MUCH HIGHER LEVELS ALTHOUGH THE BULLS NEED TO BREACH EACH OF THE RESISTANCE LEVELS OF 5600, 5757  TO 5775 & FINALLY CLOSE ABOVE  SPOT NIFTY LEVEL OF  5808 TO CONFIDENTLY SAY THAT THE DOWN SIDE CORRECTION IS OVER TO RIDE HAPPILY DURING THE MARKET FRIENDLY MONTH OF SEPTEMBER FOR MUCH HIGHER LEVELS TOWARDS THE  23RD JULY SWING HIGH OF 6061 SPOT. A FAILURE TO BREACH ANY OF THESE RESISTANCE LEVELS WILL SEE BIG FALLS TO ENCOURAGE THE BEARS TO INDULGE IN SHORTING RAMPAGE.

IN ADDITION TO THE WEEKLY CHART ABOVE, THE DAILY CHARTS TOO LOOK PROMISING FOR THE BULLS. THE MONSTROUS BEARISH ENGULFING CANDLE OF 21ST AUGUST HAS ALMOST GOT NEUTRALIZED  BY THE TWO DAYS OF BULLISH REVERSAL CANDLES SPECIALLY THE CANDLE OF 22ND AUGUST THAT WAS ALMOST A BULLISH PIERCING LINE HAVING OPENED GAP DOWN  AND BREACHING THE LOW OF 21ST CANDLE, BUT TO RISE AND CLOSE ABOVE THE MID POINT OF BEARISH ENGULFING CANDLE OF 21ST AUGUST. BULLISH DIVERGENCES IN SLOW STOCHASTIC, MACD & MANY THER DAILY INDICATORS POINT TOWARDS THE CONTINUATION OF UP MOVE GENERATED ON THURSDAY 21ST AUGUST. HOWEVER EVEN AN INTRADAY SLIDE TO CLOSE AN HOURLY CANDLE OR EVEN A 30 MINUTE CANDLE BELOW EITHER OF 5377 OR BELOW 5353 SPOT MAY POINT TOWARDS MORE DECLINES AFTER THE SO CALLED DEAD CAT BOUNCE.

FOR INTRADAY TRADING OF NIFTY FUTURES ON MONDAY 26TH AUGUST, EVEN TOUGH THE TECHNICALS POINT TOWARDS MUCH HIGHER LEVELS, BUT EXPECT NIFTY TO BE PULLED DOWN INITIALLY OR AFTER A MILD RISE TO ADD TO THE BULL TRAP GENERATED ON END FRIDAY BY HAVING CLOSED NIFTY FUTURE AROUND 5464 VERY NEAR THE HIGH OF THE DAY OF 5468. INITIAL SUPPORT FOR NIFTY FUTURES MAY BE EXPECTED AROUND 5450 BELOW WHICH 5430 TO 5423 IS A CRITICAL SUPPORT ZONE TO ATTRACT THE BEARS TO PULL THE FUTURES DOWN TOWARDS 5412 FOR  A FIERCE BATTLE WITH THE BULLS  HERE, THAT MAY DECIDE WHETHER TO SLIDE TOWARDS SUB 5400 LEVELS TO TEST 5392 TO 5377 FOR A BOUNCE UPWARDS  AFTER THIS LEVEL  OR TO SLIDE DOWN FURTHER TOWARDS 5370 OR EVEN 5353 FUTURE LEVELS.

SIMILARLY ON THE HIGHER SIDE, IN CASE MARKETS FOLLOW THE RIGHT TECHNICALS (WHICH VERY RARELY HAPPENS IN INDIAN MARKETS) THEN EXPECT ANOTHER GAP UP ON MONDAY TO STRAIGHT OPEN ABOVE THE CRITICAL LEVEL OF  5488 THAT WAS THE HIGH OF 21ST AUGUST & THEN MOVE UP FURTHER  TO TEST HIGHER LEVELS OF 5500, 5520 & 5550 . A GOOD GAP UP OPENING AND SUSTAINING ABOVE 5500 CAN GUIDE NIFTY FUTURES TOWARDS MUCH HIGHER LEVELS NOT ONLY BY THE FLATTERY OF SHORT COVERING BUT ALSO THROUGH GENUINE BUYING THAT CAN SET THE BASE FOR A GOOD EXPIRY CLOSING TOWARDS 5600 OR HIGHER LEVELS TO NOT ONLY  BID ADIEU TO THE MARKET DROWNING MONTH OF AUGUST  BUT  ALSO WELCOME THE MARKET FRIENDLY MONTH OF SEPTEMBER FROM EARLY NEXT WEEK  STARTING  2ND SEPTEMBER ONWARDS.

MARKETS FOR FRIDAY 23RD AUGUST

NIFTY AFTER MAKING A LOW OF 5252 DISPLAYED A REMARKABLE DEAD CAT BOUNCE WHICH MAY SPILL OVER TO FRIDAY ALSO BUT BE SURE NIFTY WILL BE PULLED DOWN TOWARDS 5300 LEVELS BEFORE THE BIG BOUNCE COMES OR IT MAY BE THE INITIAL BOUNCE FOLLOWED BY THE DECLINE THAT MAY BE TERMINATED WITH ANOTHER BOUNCE TO END THE WEEK ON A MUCH BETTER NOTE. IN ANY CASE ONLY A DECISIVE BREACH AND SUSTAINING ABOVE SPOT NIFTY LEVEL OF  5502 OR FUTURE NIFTY LEVEL OF 5488 CAN SEE MASSIVE SHORT COVERING FOR MUCH HIGHER LEVELS. A FAILURE TO BREACH 5488 FUTURE & 5505 SPOT WILL SIGNAL THE BEARS TO INDULGE IN MONSTROUS SHORTING AGAIN TOWARDS 5000 NIFTY LEVELS.

FOR FRIDAY NIFTY FUTURE FINDS INITIAL RESISTANCE AROUND 5445 FOLLOWED BY 5466 & THEN 5488 TO 5495 FUTURE LEVELS. SIMILARLY A BULL TRAP GENERATED ON THURSDAY END MAY SEE NIFTY SLIDING TO FIND INITIAL SUPPORT AROUND 5370 FOLLOWED BY 5350 & THEN 5323  SUSTAINING BELOW WHICH SUB 5300 IS A CERTAINTY TO RETEST 22ND AUGUST LOWS OF 5252 BEFORE A GOOD BOUNCE.

MARKETS FOR THURSDAY 22ND AUGUST

JUST CLOSE YOUR EYES & SHORT THE MARKETS, AS LEVELS ARE NO MORE IMPORTANT & THAT ONE MUST SHORT IS MORE IMPORTANT. LOOK FOR A GOD-SENT OPPORTUNITY LIKE WEDNESDAY WHEN NIFTY WAS  TAKEN UP ABOVE 5454 INTO THE TRAPPING ZONE TOWARDS 5500, BUT ALL THOSE WHO KNEW THE ART OF SHORTING MINTED MONEY.

A BEARISH ENGULFING HAS BEEN FORMED ON WEDNESDAY & ONE SHOULD NOT TAKE CHANCES WITH THE BEARISH ENGULFING CANDLES BY PLANNING LONG TILL SUCH TIME THE HIGH OF THE ENGULFING AT 5005 IS BREACHED. SO, SHORT & ONLY SHORT NOTHING ELSE IS REQUIRED & LEVELS ARE NOT IMPORTANT ALTHOUGH YOUNG & DYNAMIC TRADERS MAY LOOK FOR AN INTRADAY BOUNCE TO INITIATE SHORTS FOR GOOD GAINS

MARKETS FOR WEDNESDAY 21ST AUGUST

NIFTY ON TUESDAY OPENED WITH A GAP DOWN AND IN THE 1ST 30 MINUTES IT MADE A LOW OF 5307. HOWEVER MARKET LIFTING NEWS, PROFIT BOOKING & END OF THE DEVASTATING FULL MOON CYCLE THAT HAD STARTED FROM 23RD JULY HIGH OF 6093 SAW THE MARKETS MAKING SUBSTANTIAL RECOVERY TO ENTER THE OPENING GAP ABOVE 5346 TO MAKE A DAY HIGH OF 5417 TO FINALLY CLOSE THE DAY AT 5401 STILL BELOW MONDAY’S CLOSING OF 5414 SPOT. ALTHOUGH SOME MORE RECOVERY MAY BE EXPECTED BUT ONE SHOULD ALSO EXPECT TUESDAYS LOWS OF 5307 WILL BE TRIED BY THE BEARS AGAIN THAT OFFERS GREAT OPPORTUNITY FOR INTRADAY TRADERS TO SHORT ON RISE TOWARDS THE CRITICAL LEVEL OF 5454 OR EVEN ABOVE IT. SPOT NIFTY LEVELS OF 5417 TO 5421 & THEN 5445 TO 5454 ARE CRITICAL RESISTANCES.


FOR INTRADAY TRADING OF NIFTY FUTURES ON WEDNESDAY, IT IS REASONABLE TO EXPECT TUESDAY’S LOWS OR ITS NEAR LEVELS TO BE RETESTED BY NIFTY TO ENCOURAGE INTRADAY BUYERS TO BUY THE DECLINES TOWARDS IT FOR A GOOD BOUNCE TO CONTEST THE BEARS WHO WILL TRY THEIR LEVEL BEST TO MOVE DOWN TOWARDS TUESDAYS LOWS OF 5306 FUTURE LEVELS. IN CASE THERE IS NO GAP UP OPENING THEN FUTURE ZONE OF 5414 TO 5420 IS THE FIRST RESISTANCE ZONE SUSTAINING ABOVE WHICH ONE MAY SEE WEAK BEARS COVERING THEIR SHORTS TO PROPEL FUTURES UPWARDS. IN CASE 5435 TO 5440 FUTURE LEVEL IS BREACHED THEN ONE SHOULD BE REASONABLY SURE TO SEE BULLS PUSHING A LITTLE HARDER TO SEE NIFTY FUTURE TESTING 5464 TO 5475 ZONE TO BRING BACK THE BEARS AGAIN TO CHASE THE BULLS AWAY.

HOWEVER WITH A BIGGER GAP UP OPENING, THINGS MAY LOOK BETTER FOR THE BULLS AS MOST OF THE WEAKER BEARS MAY START TO SHIVER TO COVER THEIR SHORTS EARLY. ON THE LOWER SIDE NIFTY FUTURE FINDS INITIAL SUPPORT AROUND 5353 BELOW WHICH BEARS WILL DOMINATE THE SCENE TO PULL NIFTY FUTURES DOWN TOWARDS 5335 FOLLOWED BY 5303 THAT MAY SEE BULLS CHARGING IN AGAIN TO SEND THE BEARS TO LOOK FOR COVER.

MARKETS FOR TUESDAY 20TH AUGUST

NIFTY HAS BREACHED 5454 AND HAS CLOSED BELOW IT AROUND 5400. HOLD ALL SHORT POSITIONS & PUTS AND USE EVERY INTRADAY RISE TO SHORT & SHORT ONLY BY HAVING A STOP LOSS ABOVE 5454. GOING LONG SHOULD ONLY BE THOUGHT IN CASE NIFTY SPOT CLOSES A 30 MINUTE CANDLE ABOVE 5454, TILL THEN EVERY RISE TOWARDS IT OR EVEN HIGHER LEVELS ARE GREAT SHORTING OPPORTUNITIES. TRADERS ITCHING TO BUY CAN SATISFY THEIR BUYING DESIRE BY BUYING 5400 OR 5300 PUTS ON ANY INTRADAY RISE FOR GREAT GAINS.

MARKETS FOR MONDAY 19TH AUGUST

NIFTY WHICH HAD SHOWN EARLY SIGNS OF RECOVERY FROM PREVIOUS THURSDAY OF 8TH AUGUST, SAW THE ENTIRE 4 DAYS OF GAINS GETTING WIPED OFF ON A SINGLE DAY ON FRIDAY 16TH AUGUST. THE MONSTROUS SLIDE OF FRIDAY 16TH AUGUST FROM ITS PREVIOUS DAY 14TH AUGUST CLOSING OF 5742 SPOT TO A FRIDAY 16TH AUGUST LOW OF 5496 TO CLOSE AT 5507 SPOT, REMINDED ONE OF THE SIMILAR FALLS WHICH ONE HAD OBSERVED DURING THE BEAR MARKET OF 2008. WELL, THE BULLS STILL HAVE NOTHING TO WORRY AT ALL AS LONG AS SPOT NIFTY DOES NOT SLIDE FURTHER TO BREACH & CLOSE BELOW THE LOWER PARALLEL CHANNEL SUPPORT LINE AS CAN BE SEEN IN THE DAILY CHART OF SPOT NIFTY ABOVE. AS THE SINGLE DAY FALL OF NEARLY 250 NIFTY & 800 SENSEX POINTS WAS BASED ON A CONFUSING & MARKET DROWNING NEWS EVENT, A COUNTER NEWS EVENT CAN ALWAYS SEE THE BEARS GETTING BADLY TRAPPED FROM AROUND THE CRITICAL SUPPORT LINE BETWEEN 5496, 5486 TO 5454 SPOT NIFTY LEVELS. HOWEVER A FURTHER SLIDE TO CLOSE BELOW THE CRITICAL SPOT NIFTY LEVEL OF 5454 WILL SEE EVERYONE TURNING BEARISH TO PULL NIFTY DOWN TOWARDS SUB 5000 LEVELS IN QUICK TIME.

TECHNICALLY, THE SINGLE DAY FALL OF SPOT NIFTY ON FRIDAY 16TH AUGUST TO MAKE A LOW OF 5496 TO CLOSE AT 5508 BELOW ITS FOUR PREVIOUS DAY’S LOWS OF 5510 WHICH WAS THE LOW OF 8TH AUGUST FROM WHERE 4 DAYS OF RISE HAD OCCURRED IS A DISTINCT SIGN OF MEGA BEARISHNESS. THE CANDLE OF 14TH AUGUST WAS A 7TH NRB CANDLE AROUND THE RESISTANCES OF CLUSTER OF 20, 50 & 200 DAYS EMA. HENCE THE BREACH OF THIS LOW OF THE 7TH NRB CANDLE AT 5690 AROUND THE DAILY PIVOT ITSELF COULD HAVE PULLED NIFTY DOWN IRRESPECTIVE OF THE ADVERSE NEWS EVENT FROM RBI. WELL THE COUNTER NEWS AFTER THE FALL MAY SEE THE MARKET MOVING UP ALTHOUGH AS OF NOW IT SEEMS THE BLACK FRIDAY’S FALL HAS BROKEN THE BACK BONE OF NIFTY & THE LAST FEW DEATH PREVENTING BREATHS STILL LEFT WITH INDIAN MARKETS WILL SEE ITS END ONCE SPOT NIFTY CLOSES BELOW 5454. THE ONLY SAVIOR FOR NIFTY MAY BE THE COUNTER STATEMENT BY THE GOVT.

FOR THE COMING WEEK ENDING 23 AUGUST, SPOT NIFTY HAS INITIAL RESISTANCE AROUND THE LEVELS 5570 , 5595 & 5606 LEVELS EACH OF WHICH MAY BE TOUGH TO CROSS DURING ACTUAL TRADING & NEEDS SOME MANIPULATED GAP UPS TO OUT-RIGHTLY BREACH ALL THE THREE TILL 5606 IN ONE GO . IN CASE NIFTY SPOT MANAGES TO BREACH AND SUSTAIN ABOVE 5606 THAN IT MAY SEND SHIVERS TO SWING SHORTERS & INTRADAY OR SHORT TERM BEARS TO INITIATE EARLY ACTION OF COVERING THEIR SHORTS. THE NEXT HURDLE THAT MAY PROJECT A STIFF RESISTANCE IS THE CRITICAL SPOT LEVEL OF 5757. A DECISIVE BREACH & SUSTAINING ABOVE 5757 MAY BE THE INITIAL INDICATION THAT THE CORRECTION IS OVER TO TRIGGER MASSIVE SHORT COVERING TO MOVE UP & BREACH 5808 TO 5858 SPOT LEVELS ABOVE THE CLUSTER OF 20, 50 & 200 DAY EMAS TO RESUME THE BULL RUN. EACH OF THESE RESISTANCES RIGHT FROM THE INITIAL ONE AT 5570 TILL 5858 WILL ENCOURAGE TRADERS TO INITIATE SHORT POSITIONS BY HAVING STOP LOSSES SOME POINTS ABOVE EACH OF THESE RESISTANCES TO REVERSE FOR GOING LONG.

SIMILARLY ON THE LOWER SIDE, A BREACH OF FRIDAY’S LOWS OF 5496 SPOT WILL ENCOURAGE SHORTES TO INCREASE THEIR SHORT POSITIONS TO SEE DOWN SIDE LEVELS OF 5486, 5477 & 5454 IN QUICK TIME. BELOW THE LEVEL OF 5454 SPOT NIFTY WILL INDUCE MEGA SHORTS TO SEE 5252 FOLLOWED BY 5000 LEVELS TO THREATEN 2ND WAVE LOW OF 4531 DURING THE DEVASTATING MONTH OF OCTOBER. SO, THE SITUATION IS SUCH THAT UNLESS THERE ARE MARKET LIFTING ACTION BY THE GOVT DURING THE COMING WEEK, ONE SHOULD BE MENTALLY PREPARED TO SEE 5000 BEING TESTED BEFORE THE START OF OCTOBER MONTH. USUALLY THE DEVASTATING MONTHS OF MAY, AUGUST & OCTOBER BESIDES OFFERING GREAT MOTIVATION TO THE YOUNG AND DYNAMIC TRADERS TO LEARN THE ART OF SHORTING, THESE MONTHS ALSO INCREASE THE BANK BALANCES SEASONED SHORTERS BY MANY FOLDS.

FOR INTRADAY TRADING OF NIFTY FUTURES ON MONDAY 19TH AUGUST, NIFTY FUTURE HAS TO SUSTAIN ABOVE 5540 TO 5550 IN ORDER TO INDUCE SOME SHORT COVERING TO PROPEL THE FUTURE TOWARDS 5566 ABOVE WHICH 5590 IS A DISTINCT POSSIBILITY. SUSTAINING ABOVE 5590 TO 5606 OR 5610 FUTURE LEVELS WILL INDUCE THE BEARS TO PRESS THE PANIC BUTTON TO COVER THEIR SHORTS. A RESOUNDING ANNOUNCEMENT BY THE GOVT TO NEGATE WHAT WAS ANNOUNCED TO PULL THE MARKETS DOWN ON FRIDAY CAN SEE A BIG GAP UP OPENING FOLLOWED BY MASSIVE SHORT COVERING TO PROPEL NIFTY FUTURES TOWARDS MUCH HIGHER LEVELS. AS THE EARLY AUGUST MEGA PREMIUM OF NIFTY FUTURES TO SPOT HAS BEEN COMPLETELY NULLIFIED, SLIGHTEST AMOUNT OF GOOD NEWS WILL LIFT NIFTY FUTURES UP TO REGENERATE THE PREMIUM. SIMILARLY ON THE LOWER SIDE, A DECISIVE BREACH OF FRIDAY’S LOWS OF 5494 CAN SEE THE ONSET OF FRESH BEARISHNESS AND BELOW 5474 NIFTY CAN CRASH TOWARDS 5454 FOLLOWED BY 5424 FUTURE LEVELS IN LIGHTENING SPEED TO STRAIGHT AIM FOR 5252 FOLLOWED BY SUB 5000 IN NEXT FEW DAYS.

MARKETS FOR TUESDAY 13TH AUGUST

 NIFTY AFTER THE BULLISH ENGULFING OF THURSDAY, CLOSED  MONDAY WITH A DOJI CANDLE THAT MAY GIVE ENOUGH AMMUNITION IN THE HANDS OF BEARS TO SHORT THE MARKETS IN CASE NIFTY SPOT FAILS TO BREACH  MONDAY’S DOJI HIGH OF 5644  LEVELS. SIMILARLY A DECISIVE BREACH OF THE SAME DOJI LOW OF 5555 SPOT MAY CONVERT THE BULLS INTO BEARS TO PULL NIFTY FURTHER DOWN. WELL FULL ADVANTAGE OF THIS DOJI GAME WILL BE TAKEN BY SGX PLOTTERS TO PULL SGX NIFTY DOWN INITIALLY TO TRIGGER A BEARISH SENTIMENT AT THE START BUT ONLY TO PULL NIFTY UP AGAIN UPWARDS TO BREACH & RETEST MONDAY’S HIGHS.

SO MONDAY’S  LAST SESSION PULL DOWN OF NIFTY MAY CONTINUE ON TUESDAY ALSO TO BE FOLLOWED BY A PULL UP TOWARDS MONDAYS HIGHS IN CASE THE HIGH IS NOT TESTED INITIALLY. ALTHOUGH 13TH AUGUST LOOKS TO BE A DISASTROUS DATE  YET THE TECHNICALS DO NOT LOOK  THAT DANGEROUS FOR THE MARKETS. AT THE WORST CASE ANOTHER DOJI OR MILD FLAT DAY MAY BE SEEN FOR TUESDAY ENCOURAGING ONE TO PLAY INTRADAY BY SHORTING  THE RISE TOWARDS 5665 SPOT  AND BUYING THE SLIDE IF AT ALL IT COMES TOWARDS 5550 SPOT.

NIFTY FUTURES WILL GAIN STRENGTH IN CASE IT IS ALLOWED TO BREACH & SUSTAIN ABOVE 5636  & THEN ABOVE 5650 TO EYE FOR THE 5670 FUTURE LEVELS. SIMILARLY ON THE LOWER SIDE , NIFTY FUTURES MAY TURN WEAK BELOW 5580 O TEST 5565 FOLLOWED BY 5550 TO 5545 FUTURE ZONE

MARKETS FOR WEDNESDAY 07

AUGUST NIFTY SPOT HAS BREACHED THE 24TH JUNE SWING LOW OF 5566 BY MAKING A LOW OF 5521 AND HAS ALSO CLOSED AT 5542 BELOW THE SWING LOW F 5566 SPOT. NOW ONE SHOULD BE REASONABLY SURE TO SEE ANOTHER DAY OR TWO OF FALLS TO TEST 10TH APRIL SWING LOW OF 5477 & A DECISIVE CLOSE BELOW IT WILL SPELL THE END GAME FOR THE BULLS THAT MAY DRIVE DOWN SPOT NIFTY TOWARDS SUB 5200 LEVELS DURING THE MARKET DROWNING MONTH OF AUGUST ITSELF. SO KEEP A STOP LOSS ABOVE THE SPOT NIFTY LEVEL OF 5762 WHICH IS THE HIGH OF THE INSIDE BAR SET UP FORMED BY PRICE ACTION OF 2ND & 5TH AUGUST. SAFE TRADERS MAY EVEN KEEP STOP LOSS ABOVE THE 7TH NRB CANDLE OF 5TH AUGUST AT 5721 AND USE EVERY RISE TOWARDS 5700 OR EVEN TOWARDS 5656 SPOT LEVELS TO TRADE SHORT & HOLD THE SHORTS TILL STOPPED OUT.

WHENEVER NIFTY FUTURE ENJOYS A GOOD PREMIUM TO SPOT NIFTY, NIFTY WILL CONTINUE TO FALL TILL SUCH TIME THE PREMIUM IS CONVERTED IN TO A DISCOUNT. PRESENTLY FOR LAST 10 DAYS SINCE JULY EXPIRY, NIFTY AUGUST FUTURES ENJOYS THE HEAVY PREMIUM TO THE SPOT & SEE HOW  BOTH THE INDICES CONTINUE TO SLIDE. THE GOLDEN CROSS BETWEEN 50 DMA & 200 DMA HAS BEEN TRIGGERED AROUND THE CRITICAL LEVEL OF 5848 & UNLESS THERE IS IMMEDIATE ACTION BY THE BULLS TO LIFT THE MARKETS UP, THERE IS EVERY POSSIBILITY OF NIFTY BREACHING 5477, 5225 TO SLIDE FURTHER TO BREACH 5000 MARK EVEN DURING THE MARKET FRIENDLY MONTH OF SEPTEMBER.

MARKETS FOR TUESDAY 06 AUGUST

NIFTY AFTER 8 DAYS OF CONSECUTIVE FALLS GOT A RESPITE AS BEARS ALLOWED THE BULLS  TO MAKE A HIGHER LOW AT 5661 COMPARED TO THE LOW OF  5649 MADE ON FRIDAY. HOWEVER THE HIGH MADE ON MONDAY AT 5721 WAS MUCH LOWER THAN THE PREVIOUS HIGH OF 5761 OF FRIDAY, BUT  THE ONLY CONSOLATION FOR THE BULLS BEING THEY COULD MANAGE A MILDER HIGHER  CLOSING AT 5685 COMPARED TO THE LOWER CLOSING OF 5678 ON FRIDAY. THIS MINISCULE HIGHER CLOSING OF 7 POINTS HAS INFUSED A LOT OF SPIRITS AMONGST THE BULLS TO AIM FOR SOME MORE HIGHER LEVELS IN NEXT FEW DAYS BUT ONLY TO GIVE UP THE ENTIRE GAINS TO THE BEARS IN A SINGLE DAY AFTER A FEW DAYS.

AS LONG AS SPOT NIFTY SUSTAINS BELOW 5808 IT WILL CONTINUE TO REMAIN WEAK DURING THE CURRENT WEEK AND FOR TUESDAY AS LONG AS SPOT NIFTY SUSTAINS BELOW 5720 & FAILS TO CLOSE A 30 MINUTE CANDLE ABOVE 5720, EVERY INTRADAY RISE OF SPOT NIFTY WILL MEET WILL RUTHLESS SHORTING. A CLOSURE OF A 30 MINUTE CANDLE ABOVE 5720 SPOT WILL TRIGGER MASSIVE SHORT COVERING TO PROPEL SPOT NIFTY TOWARDS MUCH HIGHER LEVELS. ON A FLAT TO MILDER  SESSION ON TUESDAY, IN CASE OF A RISE OF SPOT NIFTY TOWARDS 5720 CAN BE USED TO TRADE SHORT WITH A SPOT LOSS ABOVE THIS  LEVEL OF 5720 TO 5730 TO REVERSE FOR LONGS.

FOR INTRADAY TRADING OF NIFTY FUTURES ON TUESDAY, NIFTY FUTURES WHICH HAD CLOSED 5720 NEEDS TO BREACH AND SUSTAIN ABOVE 5762  BY HAVING A 30 MINUTE CANDLE CLOSE ABOVE IT TO MOVE UP TOWARDS MUCH HIGHER LEVELS ALTHOUGH A BREACH OF 5740 TO 5745 FUTURE ZONE MAY SEE INITIAL BOUT OF SHORT COVERING.  SUSTAINING ABOVE 5762 CAN SEE NIFTY FUTURE MOVING UP TOWARDS THE NEXT LEVEL OF 5777 TO 5780 FOLLOWED BY 5790 OR EVEN 5800 LEVELS. HOWEVER A FAILURE TO BREACH AND SUSTAIN ABOVE 5762 OR EVEN INITIAL ZONE OF 5740 TO 5745 MAY SEE MASSIVE SHORTING ACTION BY INTRADAY TRADERS  TO SEE NIFTY FUTURES SLIDING TOWARDS 5705 INITIALLY FOLLOWED BY THE CRITICAL 5695 TO 5690 ZONE. A DECISIVE SLIDE BELOW 5690 MAY SEE  5680 FOLLOWED BY EVEN 5665 TO 5660 FUTURE ZONE .

MARKETS FOR MONDAY 05 AUGUST

NIFTY PRESENTLY IS UNDER THE GRIP OF POWERFUL BEARS AND EVERY INTRADAY RISE MAY SEE RUTHLESS SHORTING AS LONG AS SPOT NIFTY CONTINUES TO TRADE BELOW 5808. A CLOSE ABOVE 5808 CAN ONLY BRING SOME HOPES FOR THE BULLS THAT PERHAPS THE  DOWN SWING HAS TEMPORARILY HALTED IF NOT ENTIRELY.

WITH THE WEEKLY TECHNICAL INDICATORS STILL LOOKING WEAK,  THE OVERSOLD LOOKING DAILY INDICATORS MAY BOW DOWN TO THE WEEKLY INDICATORS WHICH MAY RESULT IN  CONTINUATION OF THE DOWN SWING AFTER A DAY OR TWO OF MILD OR FLAT DAYS & IN CASE SPOT NIFTY BREACHES  & MORE IMPORTANTLY CLOSES BELOW  24TH JUNE LOWS OF 5566 THEN BE ABSOLUTELY SURE THAT NIFTY SPOT NOT ONLY WILL TEST BUT ALSO WILL BREACH 10TH APRIL LOWS OF 5477 FOR MUCH BIGGER DOWN SIDE LEVEL DURING THE MARKET DROWNING MONTH OF AUGUST. THE NEW MOON CYCLE STARTING FROM 6TH AUGUST WILL GIVE A CLEAR HINT AS TO WHICH WAY INDIAN MARKETS WILL MOVE EVEN THOUGH WEEKLY TECHNICAL INDICATORS CLEARLY POINT TOWARDS A BIGGER SLIDE. FOR GOING UP , NIFTY SPOT MUST BREACH AND CLOSE ABOVE 5808 ON ANY OF THE COMING DAYS & FOR BIGGER SLIDE SPOT NIFTY MUST BREACH AND CLOSE BELOW 5566.

FOR INTRADAY TRADING OF NIFTY FUTURES ON MONDAY 5TH AUGUST, ONE SHOULD EXPECT A RETRACEMENT BOUNCE AFTER 8TH CONSECUTIVE DAYS OF FALLS. NIFTY FUTURES WHICH HAD CLOSED AT 5700 ON FRIDAYS NEEDS TO SUSTAIN ABOVE FRIDAY’S LOWS OF 5680 TO 5675 FUTURE ZONE IN ORDER TO SURVIVE ANOTHER DAY OF BEAR ONSLAUGHT. IF NIFTY FUTURES FAILS TO SUSTAIN ABOVE 5675 THEN IT CAN SLIDE TOWARDS  5660 FOLLOWED BY 5640 TO EVEN THREATEN 5600 IN A DAY OR TWO. SIMILARLY ON THE HIGHER SIDE A GOOD GAP UP OPENING BUT MAINTAINING THE GAP & SUSTAINING ABOVE IT CAN SEE NIFTY FUTURES MOVING UP TOWARDS  5725  FOLLOWED BY 5740 ABOVE WHICH EVEN 5760 FUTURE LEVELS ARE POSSIBLE. IN CASE OF BIGGER UP MOVE THE INITIAL GAP UP OPENING HAS TO BE ABOVE 5725 AND NIFTY FUTURES MUST SUSTAIN ABOVE IT TO EVEN SEE HIGHER LEVELS OF  5775 TO 5790 LEVELS TO BE WELCOMED BY THE NEW MOON STARTING FROM TUESDAY 6TH AUGUST.