Archives : DECISION TIME FOR THE MARKET - 04/09/2009.

DECISION TIME FOR THE MARKET – 04/09/2009.

 

Last week we had written that “even though the Nifty has managed a weekly close above the resistance zone of 4693-4731, but it is yet to clear the 61.8% retracement level of the entire fall for both Sensex and Nifty. Even though the direction is pointing upwards, volatility will create doubt regarding the direction of the market”. How true it was. The market started the week on a weak note mainly due to China scare. The sharp decline in the Chinese market unnerved the global markets and our market too was not spared. Also poor results from European Financial Bank dragged down the European markets, which added further weakness in our market. Friday saw a magnificent pullback by our market from the low point of the week which has induced bullish momentum.

 

  1. STRONG SUPPORT ZONE RESCUES THE MARKET.
  2. ASCENDING TRIANGLE FORMATION.
  3. SENSEX.
  4. NIFTY.
  5. INDEX LEVELS:
  6.  LAST WEEKS RECOMMENDATIONS. 
  7.  THIS WEEK’S RECOMMENDATIONS:
  8. WATCH OUT FOR:

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DECISION TIME FOR THE MARKET – 04/09/2009.

  

Last week we had written that “even though the Nifty has managed a weekly close above the resistance zone of 4693-4731, but it is yet to clear the 61.8% retracement level of the entire fall for both Sensex and Nifty. Even though the direction is pointing upwards, volatility will create doubt regarding the direction of the market”. How true it was. The market started the week on a weak note mainly due to China scare. The sharp decline in the Chinese market unnerved the global markets and our market too was not spared. Also poor results from European Financial Bank dragged down the European markets, which added further weakness in our market. Friday saw a magnificent pullback by our market from the low point of the week which has induced bullish momentum.

 

 

  • STRONG SUPPORT ZONE RESCUES THE MARKET.

Last week the Sensex had left a bullish upward gap 15284-15362 on the daily as well as weekly charts. This gap acted as a strong support in this week as the Sensex bounced from 15358. In the case of Nifty, there was a strong Trendline support at 4573 and the Nifty managed to take support at this Trendline as it bounced back from the level of 4580.

  • ASCENDING TRIANGLE FORMATION.

The Nifty is on the verge of completing a Bullish Ascending Triangle pattern. A breakout will occur if the Nifty is able to close above 4756 and then the target will be 4906-5103. This pattern needs to be completed within this week or the significance of this pattern will be lost. The pattern will be negated if 4570 is breached consistently.

 

 

  • SENSEX.

The Sensex opened at 15812, made a high of 15923, made a low of 15356 and closed the week at 15689. The weekly loss was 233 points.

 

The Sensex has formed a Bullish White Candle on the daily charts. On the weekly chart, it has formed a small black body almost resembling like a ‘Spinning Top’. If we take into consideration last week’s bullish white candle then the formation is a ‘Bearish Harami’. The long lower shadow is because of strong buying witnessed from lower levels (15356) throughout the week.

 

The Sensex has not filled the gap between 15362-15284 which exists on the weekly as well as on the daily charts and this gap provided the support to the market in the last week.

 

The low of this week 15356 and that of last week 15362 is almost the same. Even the 30dma was in the same area and provided support to the Sensex. Now, this 30dma is falling at 15425.

 

The strong Trendline joining the lows of the rally which started from March is falling at 15404. This Trendline holds the key for further upmove and should not be breached.

 

There is a congruence of strong supports at 15356 (last 2 weeks low), 15404 (Trendline support) and 15425 (30dma). Hence one can expect strong support in the range of 15425-15350.

 

The Sensex is forming a Bullish pattern and the target for which are 16558 in the near term and 17265 over the medium term.

 For the week ahead Sensex will face resistance at 15868-16164-16457 and support will be at 15483-15332-15043. 

  • NIFTY.

The Nifty opened at 4730, made a high of 4735, made a low of 4576 and closed the week at 4680. The weekly loss was 52 points.

 

Nifty has formed a big body Bullish White Candle on the daily charts on Friday. On the weekly charts, candle has a small upper shadow and a long lower shadow with a small black body. It is almost like a ’Hammer’. The long lower shadow represents strong buying power from lower levels.

 

The Nifty consistently took support at 4576-4580 which was coinciding with the 30dma. This acted as a very strong support. The 30dma falls at 4578.

 

 The strong Trendline joining the lows of the rally which started from March is falling at 4586. This Trendline holds the key for further upmove and should not be breached.

 

There is a strong congruence of supports between 4576-4586 which is where last week’s low, the Trendline support and 30dma coincide. Hence this zone of 4576-4586 forms critical support area.

 

 The Nifty is forming a Bullish pattern and the target for which are 4906 in the near term and 5103 over the medium term.

Nifty O.I.PCR is quite healthy at 1.43. Strong PUT writing is visible at the strike of 4600, which should act as a support in case of a fall.

 For the week ahead, Nifty will face resistance at 4756-4803-4913 and support will be at 4586-4536-4468. 

 

  • INDEX LEVELS:
 S3S2S1CLOSER1R2R3
Nifty4468453645864680457648034913
Sensex15043153321548315689158681616416457

  •  LAST WEEKS RECOMMENDATIONS. 

All the targets were achieved except for CESC. JP Associates fell short of the target by just Rs.2.The star performer of the week was ICSA which rose by 12%.

 
STOCKReco. PriceTgtReachedLot SizeProfit
Buy Crompton3223363351000Rs.13,000
Buy Unitech991041104500Rs.49,500
Buy JP Asso.2302362341125Rs.4,500
Buy ICSA1962142202400Rs.57,600
Buy CESC3803963841100Rs.4,400
    ProfitRs.1,29,000

  •  THIS WEEK’S RECOMMENDATIONS: 
STOCKCMPSLTgt-1Tgt-2
Buy IFCI58566368
Buy Hind Zinc788767823859
Buy CMC1094105011671214
Buy Adlabs354343372388
Buy Jindal Steel3281323533363438
Buy IDFC134132139145
  
  • WATCH OUT FOR:

 
   
Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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