Archives : DEEPAWALI SPECIAL - 16/10/2009

DEEPAWALI SPECIAL.

CAUTIOUS IN SHORT-TERM, BULLISH IN LONG-TERM - 16/10/2009.

First of all let me wish all my readers a very happy Deepawali and a Prosperous New Year. May you all have a roaring time ahead. 

Last year we started on the back foot, but this year the story is somewhat different. Last Deepawali left lot of bad taste in the mouths of investors and traders who saw their wealth getting destroyed. This year, even though we started on a weak note, the market went from strength to strength. The rise witnessed after March was breath taking to say the least. It has been a vertical rise without any major correction till date. From last Deepawali to this Deepawali, both Sensex and Nifty are up by more then 90%. The main reason has been strong inflows from the FIIs, who have put in more then $15Bn in the last 12 months.


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DEEPAWALI SPECIAL.

CAUTIOUS IN SHORT-TERM, BULLISH IN LONG-TERM - 16/10/2009.

First of all let me wish all my readers a very happy Deepawali and a Prosperous New Year. May you all have a roaring time ahead.

Last year we started on the back foot, but this year the story is somewhat different. Last Deepawali left lot of bad taste in the mouths of investors and traders who saw their wealth getting destroyed. This year, even though we started on a weak note, the market went from strength to strength. The rise witnessed after March was breath taking to say the least. It has been a vertical rise without any major correction till date. From last Deepawali to this Deepawali, both Sensex and Nifty are up by more then 90%. The main reason has been strong inflows from the FIIs, who have put in more then $15Bn in the last 12 months.

  • BULL MARKET GOT CONFIRMED.

When the Sensex closed above 16045 and Nifty above 4789, the Bull market got confirmed further. From a Sell on rise market, the market is now a Buy on declines. Any retracement or correction in the market will provide good buying opportunity for the medium to long term perspective.

  • PEEPING INTO THE FUTURE.

Both the Sensex and Nifty have confirmed a Bullish Inverted Head & Shoulder pattern on the weekly charts. The targets for Sensex are 18981 on the lower side and 23488 on the higher side. As far as Nifty goes, minimum target will be 6315 and on the higher side 7104. The above targets will be achieved as long as the Sensex continues to stay above 15600 and Nifty above 4711. 

The Sensex had left a big gap on the weekly chart between12219-13479 in May due to the strong positive election results. According to the Gap theory if we consider this gap as a measuring gap, then the target for Sensex falls at 17687.

 

Both the Sensex and Nifty have crossed the 61.8% retracement of the entire fall. Now both the indices will head toward the 78.6% of the entire fall of Sensex (21206-7697) and Nifty (6357-2252). The level for Sensex is 18315 and for Nifty is 5478.

 

If we consider the pattern formation according to Harmonic Pattern set up, where AB=CD, then the target for the Sensex will be 20772 and for the Nifty the target will be 6018. According to the Golden Ratio, the Sensex will have a target of 20450 and Nifty will have a target of 6130.

  

If we consider the immediate targets then the Sensex has a Bullish Rising Wedge breakout and the target will be 18645. The Nifty has given an Ascending Triangle breakout and the target for that will be 5468.

 

On the lower side both the indices are supported by Gann angle Trendlines. The support for Sensex is at 15500 and for Nifty it is at 4700. If these Gann support levels are breached then the next Gann support will be at 13200 for Sensex and 3790 for Nifty.

For the year ahead, Sensex will face Resistance at 18315-20450-23488 and Support will be at 15600-13219-11695. 

For the Year ahead, Nifty will face Resistance at 5468-6130-7104 and Support will be at 4770-3918-3534. 

  • YEARLY INDEX LEVELS: 
 S3S2S1CLOSER1R2R3
Nifty3534391847705142546861307104
Sensex11695132191560017322183152045023488

  • THIS YEAR’S RECOMMENDATIONS:
STOCKCMPSLTgt-1Tgt-2
Buy Auro Pharma86676011911549
Buy IDFC158134216281
Buy Essar Oil171145246345
Buy Glaxo Pharma1580129520662402

  • DEEPAWALI FIRE - CRACKER:

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WEEKLY OUTLOOK – 16/10/2009.

Last week both Sensex and Nifty had managed a close just above the Trendline support, which has been giving consistent support to the market. A breach of these Trendline would have triggered a minor correction but that was not to be as the market went up strongly due to the better then expected double-digit IIP nos.

  •  TECHNICALLY SPEAKING. 

Both Sensex and Nifty rebounded strongly and formed White Body Marubuzo on the weekly charts, which completely engulfs previous weeks Black Candle. In the process the Sensex managed a gain of 697 points and Nifty a gain of 197 points.

 

The Bearish Head & Shoulder pattern for both Sensex and Nifty was negated when Sensex managed a close above 17120 and Nifty managed a close above 5077. In the short term, the current pattern formation suggests a Sensex target of 17784 and Nifty target of 5276.

 

The Trendline support for the Sensex is at 16783 and for the Nifty it is at 5021. A breach of this Trendline will trigger a minor short term correction.

For the week ahead, Sensex will face resistance at 17392-17644-17784 and will find support at 17092-16943-16783. 

For the week ahead, Nifty will face resistance at 5168-5220-5286 and will find support at 5077-5021-4955. 

  • INDEX LEVELS:
 S3S2S1CLOSER1R2R3
Nifty4955502150775142516852205286
Sensex16783169431709217322173921764417784

  •  THIS WEEK’S RECOMMENDATIONS: 
STOCKCMPSLTgt-1Tgt-2
Buy SBI2446241125022568
Buy Essar Oil171167182193
Buy LITL559542577589
Buy Sesa Goa354342368380
Buy JP Asso.260254269280

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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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