Consolidation Expected in Nifty Futures Next week, Range Trading Strategy for October Series, Markets are still in Downtrend

Nifty futures had tested its previous bottom of 4720 level but this time the markets were unable to break below that level and just after touching 4725 level we have seen a bounce back towards 4900 level. Even global markets were looking supportive last week, as there were lots of positive surprises coming from European Central Bank (ECB) and US Unemployment data that was released last Friday. ECB has not lowered the interest rates but it has started to purchase bonds, that will support European banks. Even Non Farming Payroll (NFP) has registered good amount of employment, hence boosting some confidence on US economy. These are some of the positive triggers in short term, but still these events are not enough for markets to change its trend. Therefore the overall trend still remains down and as we know the range, Traders can use 5170 level as resistance and can go short in nifty futures near 5170 level for targets as 5000 and then 4900. Also if nifty futures trades at 4750 level then traders can open some long (Buy) positions for targets as 4900 and then 5000. Technical indicators will be giving a lag in signal so this levels must play important role in trading for next week. Most of the large cap stocks have seen a smart pullback from the lower levels. Some banking stocks were good example of this pullback, ICICI bank has gained about 6% on Fridays trading session. Another stock that came into our buying area is Chambal Fertilizer, the stock has closed just above 88 (Strong support level) and this time we may see some smart pull back in this stock towards 97 level. So CHAMBLFER is good to accumulate at current level. In short term indian markets will be tracking the global markets and some important news events. Nifty options open interest data suggests us 5200 level is possible top for near term, also 4700 put option has highest open interest suggests possible bottom in near term. Stock that was in news last week was State Bank of India (SBI) downgrade by Moody’s. Which was responsible for strong selling in SBIN stock, also SBIN futures were suggesting fresh short position build up.

Nifty Futures Recommendation: Buy near 4750 level for targets as 4900 and then 5000 levels, stop loss for this position below 4680. OR Go short in nifty futures near 5170 level for targets as 5000 and then 4900, stop loss for this position must be just above 5230.