This is a follow up to our earlier post,Hattrick for "Sell in May and Go Away!" . As suggested, Nifty remained range bound, meeting both the ends of the Channel. Although we always echoed a more bearish tone, those who were short on NIFTY would have had a good momentum play of nearly 100points, coupled with some high NIFTY premiums and Implied Volatility levels. Also, we had already projected a RBI CRR cut possibility and as we approach the policy meet on June 12th, we hear of lot of voices on the street, echoing the same sentiment. A Repo cut possibility may not be ruled out, however, the chances of a 50bps CRR cut, weigh higher.

On the basis of the action packed month for the NIFTY, we would still maintain our bearish view on the NIFTY, with an extended falls to 4715 levels with a close below 4815-4825 levels (as we see a trend-line coming in to picture). On the upper end the NIFTY movement would be limited to 4900-4925 levels.However, I would refrain from initiating of any short positions at this juncture.

 Here`s why :



We cannot ignore any surprises on the possibilities of  a domestic rate cut or probable announcement of QE3. But, the movement in case of such news inflow, would be quick and may not give enough time to the bargain hunters to build a portfolio! Thus, those wish to bottom pick, have a good opportunity!!!


Commodities :

Gold played in the range set for the week, however the weekend move was a complete surprise, which saw a single largest gain of 4%. We expect XAU/USD to cap its rally to around 1630, where the chart meets strong weekly resistance, and movc above it would extend gains up to 1680 levels. A weekly close above 1635 would beat the bearish gold trend.But for the moment we expect it to consolidate around 1602 - 1610 levels for the week.



 So, as Asia joins the world-wide retreat, will Sensex buck this trend???


Happy Investing!!!