"TRADING IDEA FOR THURSDAY (08.07.2010)"

The benchmark Nifty yesterday  opened in RED and traded in the negative territory throughout the day. After opening at 5293, Nifty continuously fell and make a low of 5233. At the end of the day it closed at 5241.10. It had a net loss of 47.95 points or 0.91% over the previous day’s close. Specifically, Oil & Gas and Metal sectors lead to the decline.

The daily chart of Nifty is showing that it has been moving into the falling channel for last couple of trading sessions. So the immediate support and resistance are decided by the lower and upper trend line of the channel i.e. 5210 and 5370 respectively. If Nifty breaches 5370, an upward rally may carry it to 5500 in the short term. However, if Nifty breaks 5210, short term trend will be negative and it may go down to 5100.

On an intra-day basis Nifty has a support at 5210 and is likely to face stiff resistance near 5280. If it breaks 5210 on the down side, it may go down further to 5175 and then 5140. However, if Nifty is able to sustain above 5280, it may test the level of 5305 and then 5330.

Recommendation from some different Brokers:

Fairwealth Securities:

Sell Reliance Industries (RIL)  below Rs 1,041 for target of Rs 1,030-1,020 with stop loss of Rs 1,052.

Buy Bharti Airtel  above Rs 280 for target of Rs 286-290 with stop loss of Rs 275.

Buy Aban Offshore  above Rs 855 for target of Rs 865-880 with stop loss of Rs 844.

Sharekhan recommends `Buy` on Provogue India with target of Rs 95 as against CMP of Rs 60.

Emkay says Eicher Motors stock is fairly valued unless the company is able to execute its hard work of last two years. There exists a strong upside potential.

Kotak Securities recommends `Reduce` on Voltas with target of Rs 200 as against CMP of Rs 203.

FOR TODAY:

Nifty future has traded for the last five days inside the range of the bar/candle made on 30th June, 2010 . The high and low of the range was at 5323 and 5225. As the future is trading inside the 100 point range and has shown no indication on the next direction without any major events or global cues, positional traders may wait for the market to resolve the issue before taking any big positions. The market may witness smart recovery today as global markets closed substantially higher yesterday with DOW gaining around 275 points and the NASDAQ 65 points.

The Nifty option markets seem to be indicating a positive resolution for the time being. It is seen that the lower strike options are trading richer ( costly ) than the higher strikes. This means that there is great demand for lower strike puts and the sellers are asking for comparatively higher prices. However, the market may become more stock specific as the earnings season starts to kick in from the next week.

TRADE SMARTLY; TRADE SAFELY WITH STOPLOSS.