Tag Archives: nifty futures trading

Nifty Options Chain Analysis – 16 Dec 2014

Nifty Put Options went explosive today with Nifty coming close to 8050 today (day low 8052), having lost nearly 600 points in the last two weeks, making people want to buy protection as urgently as possible, at whatever price. We were selling Puts (with good profit) that we had bought when they were much cheaper. All those folks who resisted buying Puts, hoping for a pullback, could no longer wait and watch the market sinking, and see the Nifty Put options swelling in value 50% per day, every day!

Imagine, Nifty Dec 8500 Put option was at Rs 50 at the start of this series, and nobody really expected much downside despite sluggish moves in November 2014. That same Nifty Dec 8500 Put option was at 383 today, a gain of 666%!! Agreed that Nifty Put options have not paid off always in last 12 months, because of the bullish market, but they pay when markets are correcting from high levels, like in this month. Continue reading Nifty Options Chain Analysis – 16 Dec 2014

Nifty Valuation Check – 16Nov2014

See the attached the Nifty P/E chart. This is the chart we should be trading with because the FIIs are looking at it.

Nifty has traded in a P/E range of 10.5 to 26.5 in the last 14 years from Jan 2000 to Oct 2014. About 95% of the time, Nifty has traded in P/E range of 12 to 24, with P/E 15-17 as ideal buying level, and P/E 21-23 as ideal selling level.

Risk-reward ratio for investors has been poor above P/E 21, but nimble traders can ride the Nifty long and exit/sell on downturn. Nifty is currently near P/E 22 at cmp 8383. There is trend line resistance on Nifty P/E chart around 23, so maybe 4-5% upside left till 8700, maybe not.

The following Nifty P/E Chart credit goes to Piyush Dwivedi.



Nifty hits 6700, Momentum not supportive


While the bullish rally of Nifty hitting lifetime high 6700 is welcome, and it has given good profits on long-positions on beaten down stocks like SBI, DLF, etc, the concern is that Nifty is now rising while momentum is falling, and the momentum of the current rally is still lower than the momentum of Nifty rally in Sep 2013.  Life time high with lower-grade momentum is not a good sign. Conclusion: unless momentum picks up in April, Nifty may come down to 6300 in April.