How do you spook long holders out of their positions? Well, you take the best performing sector or the one the with the most news element and then run it down. In the current case Banks and Financials happen to both those. In a day where breadth was about even and most sectors were in the green and the Nifty fut made it briefly past 25300 too, there was no reason why Banking should get clobbered a bit. It does leave the longs in a bit of a lurch and I would imagine a lot of them bailed. My stops aren’t hit but I must confess to a sense of disappointment that the stocks have not surged.

In addition, the option premiums on both calls and puts have receded a bit more and this suggests that there may not be much by way of movement today as well. This also leads to drop in the volumes and the two together, leads to some further dullness.

Nifty needs to hold 25000 if there is weakness today. Fresh momentum will seep in only if it is above 25225. Call writers are getting bolder in Bank Nifty. But if the BNF is able to regain territory above 56800, then the recent call shorts may get squeezed.

In major stocks it seems like short covering was visible. So that could continue into today and prepare the market to rally from Friday again? This is just a conjecture.

Yesterday I had mentioned that it would be stock specific news or flows that would create some opportunities. OMC stocks were firing yesterday. But sector rotation is rapid and only the nimble will be able to benefit.
I have recorded a video yesterday on the WellSet stock selector on Neotrader. When it gets listed on Youtube make sure to check this out (should happen ina day or so, after editing). This is an all-weather tool to select stocks that have high probability to signal some trends for the short term for 1-5% moves. If you see it, do let me know your impressions and comments.

In the near future, this Insight column will move to Neotrader website and thereafter this website would probably get merged with the Neotrader website. Those who are regular readers will be informed thru these columns and thru email as and when this will happen. I am stating this in advance because we took the decision on this today. There will be no discontinuity as far as readers are concerned, we will ensure that.