Nifty Update for August 1

A rather tame expiry day. I have seen some really volatile ones. This was more like some day in the middle of a lazy afternoon. Option writers - read FIs - generally tend to close the Nifty around the strike price that has the maximum number of puts and calls. This time it was 4300, where the puts were sold at Rs 20 and calls Rs 51 yesterday. Today the range was indeed between these two numbers i.e. 4280 and 4351.

Tomorrow is a very important day that would either confirm the bullishness I have expressed or condemn it. The inflation numbers have come in lower at 11.99 percent as opposed to the 12.01 percent touted by CNBC. Nonetheless, inflation was higher than 11.89 percent of last week, and governor Reddy of the RBI has a lot of work on hands. Perhaps why we saw repo rate (0.5 percent) and CRR rate (0.25 percent) hikes yesterday.

Tomorrow, August 1, I expect to see a dip on opening and then follow it up with a bit of consolidation. Somewhere later in the day, the Nifty will make its decisive move for the target 4530 or conversely, downward for 4275. Cracks at today's low of 4275 would break the rising channel trendline and any close below this would mean that we could be heading for 3950, which is the worst case bearish scenario.

The chart is self-explanatory.