Nifty Futures Closed Below Strong Support of 4800 level, What is Next Week Strategy for September Series, Downside Risk has Increased Trade Nifty Options

Nifty futures making the series of lower lows and lower highs suggesting us the down trend for next week, we have seen a very weak closing below 4800 in Friday. So our strategy for next week will be keep adding short positions in nifty futures till it trades below 4960 level on closing basis for targets as 4650 and 4580 levels in next week. On Monday we may see some bounce as US markets were up by more than 4% on last Friday’s trade. Also NSE will launch trading in Dow Jones and S&P 500 index from Monday. This pullback can be treated as good selling opportunity. We are sure that once this bounce happens selling pressure will be pulling the markets down again. The GDP data from United Kingdom and US were in line with expectations and there were no negative surprises, but we must not forget that all bad is still not over. We will advice traders to create short positions below 4960 levels and our stop loss must be placed just above the 4990 level. Trading in nifty futures can increase the risk as there are 2 holidays for markets next week, on 31 August on occasion of ID and on 1 September on occasion of Ganesh Chaturti, so this may increase the risk of the global markets movement. SO only take calculated risks, rather than speculating and loosing money on trades. High risk traders can go long on Nifty 4700 put option near 120 level for targets as 160 and 195, exit this put options if nifty futures closes above the 4844 level. Next week will be very volatile as stocks like State bank of India, ICICI bank, TATA Motors, Tata Steel, HDIL, DLF, SESAGOA, RELIANCE CAPITAL, ABAN and RELIANCE Ind. has made fresh lows, so more selling is expected in these stocks next week, also one should not forget the US NFP (non farming payroll) data that will be released on Friday, this will give further signals for domestic markets.

Our Trading Recommendation:

Weakness has spread to all the markets across the globe due to US economy downgrade. Also Gold has seen some profit booking near the 1918 level last week, we may see the Gold to strengthen further. Nifty futures will also weaken next week below 4800 level. Technically nifty is having resistance at 4840 and 4960 level and support at 4640 and 4586 levels.

Nifty 4700 Put Option Trading strategy:

Buy nifty 4700 put option near 120 level for weekly target 160 and then 195 level. Also place stop loss below 95 level or exit this position if nifty futures trades above 4844 level only on closing basis.

We Expect Nifty Futures trading in range of 4900 and 4600 Next Week.