HCL TECH

HCL tech too is a stock which seems to have priced in further growth potential and is a candidate for consolidation moves to materialize. The PE ratios have risen well ahead in expectations of growth. If it's not able to break past the expectations on the earnings growth front, the confidence of the institutional investors that the money supply is going to inflate and create bubbles in already blowing stocks can help it sustain and move further on.

Nifty moving out towards 5400

I think its time for me to eat my own words. As wrote by me in the previous post wherein I quoted that breaking past 5250 looks quiet impossible for Nifty seems to be going wrong. Nifty might break past 5200 and have a go at 5400 wherein lies the 200 days SMA (Simple moving average). The change of attitude is due to the moments in the Dow Industrial average which has just tested the 200 days SMA (Simple moving average). Leaving apart the Hangseng index of the Hongkong, all the other world stock  markets seem to be moving out of the rangebound movements they experienced in last 3 months. But any chance above 5400 seems quiet dim this year. On the other hand its quiet likely that Nifty might still not break past 5200, but it’s the least probable scenario. So then how to trade?

Nifty 5000 PE (Put European) Option quoting at 52/- while Nifty 5400 CE (Call European) quoting at 47/- could be bought in a pair making a cost of around 100/-. If the Nifty hits 5400 in the next 5-7 days, 5400 CE could be sold out at 130 or so, this is because Nifty 5200 CE (Call European) is currently quoting at 139, if Nifty moves up by 200 points, 5400 could be at strike and could be fetching around 130. At that point 5400 CE could be sold off and we could wait for the Nifty to yet again correct by some 200 points and Nifty 5000 PE then could be sold off at around 30/-. The whole deal could fetch you more than 50% returns in just a matter of half a month.

On the other hand if Nifty breaks down by 200 points then it would be ideal to square off Nifty 5000 PE at around 100/- and wait for Nifty to bounce yet again at 5200 so that Nifty 5200 CE could fetch around 25/- the whole deal could yet again fetch 25% returns. Lastly if nothing of this sort happens the premium might drop by some 13-17 Rs in the next 8 days, at which point it would be an exit point with around 20% negative returns.

Nifty November Trade

Nifty closed @ 4750 at the F&O Settlement of the previous month, from that point forwards it has traded below 4750 for 4 days and closed 3 days below it, on the other hand for 5days (excluding today) it has closed above 4750, Nifty has traded in the November F&O from a low of 4538 to an high of 5012, which makes up close to 10% and normally Nifty doesn’t move more than 10-13% in a month, excluding times of high volatility when the difference between the highs and lows for the months accounts to about 30-40% of the value of the Nifty, So one can except a strong resistance close to 5020 for the Nifty in the November settlement, on the other hand the Nifty is currently trading above the 20 days simple moving average which should be considered as bullish, also all the short term averages are place above each other which too is bullish, Also there are only about to 37 days trading left in this year and normally nifty tends to close the year near about high if it has traded for most part near the high, so what to trade, it would be better to buy puts intraday near the 5012 and exit on an intraday dip of 50-70 points, or the trade could be to sell Nifty 5000 CE close to 80 and hedge it with Nifty 5200 CE close to 20 with max gains of 60 and max loss of 140 or the position could be squared of if the Nifty trades above 5052.

Sorry Readers, it seems my expectations as posted in http://niftywhatcanhappen.blogspot.com/2009/02/can-sensex-trade-above-123k-by-mid.html are wrong, 2850 on the Nifty needed to be held for Nifty to move upto 3600 by Mid March, but since 2850 is broken and since Nifty has even broken 2820, Nifty seems to be heading towards 1800 by April end, well there are two options for the Nifty right now either it recovers and trades above 2850 which then could take it upto 3600 by mid March or it trades constantly below 2850 targeting 1800 by April end, the best trade is Buying Nifty March PE 2500 Options till its below 2850 some 3100 Nifty CE for March could be used as a hedge, ratio cud be for every 2 Nifty PE 2500 1 3100 CE cud be bought, While if it breaks above 2850 one 2500 PE could be sold at loss and one 3100 CE could be added, Also if 3600 is to be achieved its has to be done within next 20 – 25 days, including today, if not no chance, while if 1800 is to be achieved 2300 on the Nifty should come by March end, Strong positive or negative movement is likely, substantially low chances of range bound trade.