A Normal Morning Note

I am yet to know why we fell yesterday. Given the fact that US had rallied big on Friday and on Monday, it would have been right to expect a rally in India. However Nifty opened in a tepid fashion, giving the first clue that everything was not alright with the markets. After a period of consolidation, Nifty fell and broke below Friday's lows. When you combine this weakness in the Nifty with the fact that some midcaps were massacred, the mood turns sombre. It also gives us a clue that weakness persists and that rallies in this market could be sold into. All this emphasises the fact that one need not know the reasons for the move in the market in order to profit from it.

I am short and will continue to be short with a stop at 5210. This stop has worked well for me for a long time now and no point in changing something that is not broken.

Even as I write this note, Indian Nifty has gapped up and is trading above yesterdays close for some time. However, weakness persists and my short position should be ok. Despite this, if nifty futures trades above 5082 (todays high) I will buy some nifty 5200 calls with a view of 2-3 days. I will sell them if nifty eventually goes below 5000 (stoploss levels for the call) or reaches close to 5200. This is a short term trade and distinct from my nifty futures short position.