NIFTY ANALYSIS REPORT FOR JULY EXPIRY 2011...........15 JULY2011

NIFTY ANALYSIS REPORT FOR JULY EXPIRY 2011

Current Trading Strategy in NIFTY Spot July 11 – Aug 11 Expiry Basis

After analyzing the above 5 days trend chart of NIFTY Spot. The intersection of black lines shows a triangle on slop downwards, it’s clearly indicates that NIFTY Spot is looking bearish on volatile basis. On 12 July 2011 NIFTY Spot was @ 5505 and on 14 July 2011 NIFTY Spot was @ 5650. On 15 July 2011 NIFTY Spot is @ 5574. So Its Clearly shows how volatile it is and ready to touch 5505. On down side NIFTY Spot has strong support @ 5474. If it breaks then will be panic the market.

 

After analyzing the above 6 months trend of NIFTY Spot from Feb 2011 to July 2011, it’s clearly states that NIFTY Spot has strong Resistance @ 5700. If it crosses and holds at this level. Then NIFTY Spot will be bullish but after seeing the chart, intersection of black lines shows there is pressure on upside and looking difficult to cross 5700 in short term. 

After analyzing the above chart of FIIs trading activity in Index Futures including NIFTY Future in July 11 series from 01 July 2011 to 14 July 2011, it’s clear that FIIs have taken short position in 6 days trading session out of 9 trading sessions. The below table shows the following:- 

DATE	NET LONG POSITION	NET SHORT POSITION	NIFTY SPOT LEVEL
	(Rs. In Cr.)	(Rs. In Cr.)
1-Jul-11		-133.7	5627.2
4-Jul-11	731.14		5650
5-Jul-11		-158.1	5632.1
6-Jul-11	10.33		5625.45
7-Jul-11	601.05		5728.95
8-Jul-11		-562.13	5660.65
11-Jul-11		-678.48	5616
12-Jul-11		-645.04	5526.15
13-Jul-11	357.18		5585.45
14-Jul-11		-105.76	5599.8

TOTAL NET SHORT POSITION FROM 01 JULY 2011 TO 14 JULY 2011:- RS. – 2283.21 CR. @ 5610

TOTAL NET LONG POSITION FROM 01 JULY 2011 TO 141 JULY 2011:- RS. 1699.7 CR. @ 5646.47

SO NET SHORT POSITION IS: - RS. – 583.51 CR. @ 5628.

So If NIFTY Crosses 5700 and holds at this level then some positive sessions is to be expected. As per global cues Italy is in serious condition regarding debt crises, so the demand of Gold & Silver has increased also. Gold made a high of 23000 and Silver 58600 on MCX. All this things will pressure the NIFTY Spot for downwards.

CRUCIAL LEVELS IN NIFTY:- 

30 DAYS MOVING AVERAGE 5516.93

50 DAYS MOVING AVERAGE 5504.30

150 DAYS MOVING AVERAGE 5624.21

200 DAYS MOVING AVERAGE 5733.35

After analyzing the above the following trading strategy can be taken in NIFTY Spot:-

FOR JULY EXPIRY:-

Strategy 1:-

Buy NIFTY 5500 PUT JULY EXPIRY @ RS. 48 + BUY NIFTY 5600 CALL JULY EXPIRY @ RS. 64 + SHORT NIFTY 5200 PUT JULY EXPIRY @ RS. 7.35 + SHORT NIFTY 5900 CALL JULY EXPIRY @ RS. 4.85. NIFTY Spot @ 5582 on 15 July 2011

NOTE: - SHORT NIFTY 5200 PUT JULY EXPIRY & SHORT NIFTY 5900 CALL JULY EXPIRY HAVE GIVEN BECAUSE IT IS EXPECTED THAT NIFTY SPOT IS NOT LOOKING BELOW 5200 IN JULY SERIES EXPIRY AND NOT LOOKING ABOVE 5900 IN JULY SESSION EXPIRY.

RISK & RETURN:- 

RISK: - Limited to 50* 99.8 = Rs. -4990 per Lot

RETURN: - Limited to 50 * 200.2 = Rs. 10010 per Lot

INVESTMENT REQUIRED IN THIS STRATEGY: - 65600

RISK IN %:- 7.60 (MAXIMUM)

RETURN IN %:- 15.25 (MAXIMUM)

CALCULATION OF PROFIT & LOSS OF THE ABOVE STRATEGY

NIFTY 5500 PUT @48	NIFTY 5600 CALL @ 64	NIFTY 5200 PUT @ 7.35	NIFTY 5900 CALL @ 4.85	NIFTY SPOT CLOSING AT JULY 11 EXPIRY	PROFIT & LOSS PER LOT
452	-64	-192.65	4.85	5000	200.2
352	-64	-92.65	4.85	5100	200.20
252	-64	7.35	4.85	5200	200.2
202	-64	7.35	4.85	5250	150.2
152	-64	7.35	4.85	5300	100.20
102	-64	7.35	4.85	5350	50.2
52	-64	7.35	4.85	5400	0.2
2	-64	7.35	4.85	5450	-49.8
-48	-64	7.35	4.85	5500	-99.8
-48	-64	7.35	4.85	5550	-99.8
-48	-64	7.35	4.85	5600	-99.8
-48	-14	7.35	4.85	5650	-49.8
-48	36	7.35	4.85	5700	0.2
-48	86	7.35	4.85	5750	50.2
-48	136	7.35	4.85	5800	100.2
-48	186	7.35	4.85	5850	150.2
-48	236	7.35	4.85	5900	200.2
-48	336	7.35	-95.15	6000	200.2
-48	436	7.35	-195.15	6100	200.2

After analyzing the above profit & loss calculation. It is clear that if NIFTY Spot closes between 5450 – 5650 then strategy will generate loss & the Maximum loss is Rs. -99.8. Profit will occurs when NIFTY Spot closes below 5400 or above 5700. So it is clear that this strategy should not be adopted when the market is under sideways. This strategy should be adopted when market is looking high volatile.

Some Change in the above strategy:-

Strategy 2:-

BUY NIFTY 5500 PUT JULY EXPIRY @ RS. 48 + BUY NIFTY 5600 CALL JULY EXPIRY @ RS. 64. NIFTY SPOT @ 5582 ON 15 JULY 2011.

CALCULATION OF PROFIT & LOSS OF THE ABOVE STRATEGY

NIFTY 5500 PUT @48	NIFTY 5600 CALL @ 64	NIFTY SPOT CLOSING AT JULY 11 EXPIRY	PROFIT & LOSS PER LOT
452	-64	5000	388
352	-64	5100	288
252	-64	5200	188
202	-64	5250	138
152	-64	5300	88
102	-64	5350	38
52	-64	5400	-12
2	-64	5450	-62
-48	-64	5500	-112
-48	-64	5550	-112
-48	-64	5600	-112
-48	-14	5650	-62
-48	36	5700	-12
-48	86	5750	38
-48	136	5800	88
-48	186	5850	138
-48	236	5900	188
-48	336	6000	288
-48	436	6100	388

After analyzing the above table, it is clear that if NIFTY Spot closes at expiry between 5400 – 5700, then loss will occur. If NIFTY Spot closes at expiry below 5400 or above 5700 then profit will occur.

Risk & Return in the above Strategy:-

Risk: - Limited to 50 * 112 = Rs. -5600 per lot

Return: - Unlimited

INVESTMENT REQUIRED IN THIS STRATEGY: - 5600

RISK IN %:- 100

RETURN IN %:- UNLIMITED

Some Change in the above strategy:-

Strategy 3:-

BUY NIFTY 5500 PUT JULY EXPIRY @ RS. 48, STOP LOSS @ 24 + BUY NIFTY 5600 CALL JULY EXPIRY @ RS. 64, STOP LOSS @ Rs. 32. NIFTY Spot @ 5582 on 15 July 2011

NIFTY 5500 PUT @48, Stop Loss @ 24	NIFTY 5600 CALL @ 64, Stop Loss @ 32	NIFTY SPOT CLOSING AT JULY 11 EXPIRY	PROFIT & LOSS PER LOT
476	-32	5000	444
376	-32	5100	344
276	-32	5200	244
226	-32	5250	194
176	-32	5300	144
126	-32	5350	94
76	-32	5400	44
26	-32	5450	-6
-24	-32	5500	-56
-24	-32	5550	-56
-24	-32	5600	-56
-24	18	5650	-6
-24	36	5700	44
-24	86	5750	94
-24	136	5800	144
-24	186	5850	194
-24	236	5900	244
-24	336	6000	344
-24	436	6100	444

After analyzing the above table, it is clear that maintaining the stop loss reduces the risk in comparison to not to maintain the stop loss.

Risk Return of the above strategy:- 

Risk: - Limited to 50 * -56 = Rs. -2800

Return: - Unlimited

INVESTMENT REQUIRED IN THIS STRATEGY: - 5600

RISK IN %:- 50

RETURN IN %:- UNLIMITED

Analysis:- 

After analyzing all the above strategies it is clear that it is better to adopt the 3^rd strategy for NIFTY Spot in July 2011 Expiry, because in this strategy Loss is limited to Rs. -2800 and Profit is Unlimited. In 2^nd Strategy there is also Loss is limited and profit is unlimited but 3^rd Strategy Stop loss has taken that reduces the risk amount. Loss of probability is same in both the strategy but because of stop loss, 3^rd Strategy reduces the amount of risk.