Be brave hearted....Buy OTM April Calls...

NF made a low of 4667 on 8th feb 2010. Since then we have moved up by almost 500 points touching a high of 5145 on 8th March 2010 in exactly 30 days....Now we are witnessing a little bit of sideways movements with corrections in some heavyweights like RIL. But the overall breadth has been really positive and midcaps index is inching higher slowly.

Some other interesting facts which one should take note of....

1. FII buying figure in cash and futures market....

The above photo shows that FIIs been a net buyer of 7146.75 cr in cash in the 6 trading days of March 2010 alone as against 9160.14 cr of selling done in cash in Jan and Feb 2010.

At the same time, DIIs were a net seller of only 3201.51 cr in March as against 13533.98 cr of buying done in Jan and Feb 2010.

The above figures show that there has been an increase in net buy positions in cash segment over the last couple of months at lower levels.

2. Another intersting fact is the Retail Clients position....See the data in the above figure....While FIIs are buying in bulk and DIIs are adjusting their already bought positions, retail clients are slowing selling their losing positions which were taken at the peaks of 5300. In the last 6 days of trading, retailers have sold 2306 crs in cash. This shows the normal retail sentiment in the market which is in a pessimistic mood. Generally, under these circumstances, market do not fall....

Now, take a look at the following chart.

The mathematical indicators like Stochs are in the overbought zone but the last couple of days of sideways movement was followed by decreasing volume in the market. And during these 2 days, FIIs bought 3200 cr in cash market and ended with decent positive buying fugure in futures market (I am unable to provide the exact details of buying in Futures as I do not have a back up copy ready with me now)......Now please note the parallel downchannel drawn on charts. The upper band is at 5000 which is also the 34ema on daily charts. It may so happen that NF will fall to 5000 odd levels to correct the mathematical indicators. But the trend is positive and that is also reflected by the overall bullish signal shown in the bottom (The buy/sell indicator and the bullish/bearish zone are generated by SST). The weekly chart has also been positive and buy signal had been generated yesterday and is still holding today.

Options are also suggesting aggressive puts writing from 4300 to 5000 levels which again gives a strong support at 5000 levels. The current PCR is at 1.15.

All in all, I would suggest to stay hold on to your positions. If one has not bought afresh, then just wait till the 5111-5160 congestion is crossed. But do buy some OTM calls (buy the April ones as they have enough time value left). Be OPTIMISTIC when everyone is afraid.

Happy Investing....