Archives : market near striking distance of previous high - 19/03/2010.

MARKET NEAR STRIKING DISTANCE OF PREVIOUS HIGH – 19/03/2010. 

The market started the week on a strong footing backed by the strong IIP numbers. But once again the strong resistance zone between Sensex 17500-17800 and Nifty 5250-5310 came into play. This is the zone from where the market had retraced back atleast three times and hence it is imperative that the market show strength to cross and close above this level. Last week it was the IIP data but this week the market got a push from another unexpected source i.e. the rating agency S&P which improved the outlook on India from negative to stable. Thus the market ended the week with a gain of 2.5% over the previous week. 

RBI HIKES REPO, REVERSE REPO RATE.

S&P UPGRADES INDIA OUTLOOK.

TECHNICALLY SPEAKING.

INDEX LEVELS:

LAST WEEKS RECOMMENDATIONS:

THIS WEEKS RECOMMENDATIONS:

WATCH OUT FOR:


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MARKET NEAR STRIKING DISTANCE OF PREVIOUS HIGH – 19/03/2010. 

The market started the week on a strong footing backed by the strong IIP numbers. But once again the strong resistance zone between Sensex 17500-17800 and Nifty 5250-5310 came into play. This is the zone from where the market had retraced back atleast three times and hence it is imperative that the market show strength to cross and close above this level. Last week it was the IIP data but this week the market got a push from another unexpected source i.e. the rating agency S&P which improved the outlook on India from negative to stable. Thus the market ended the week with a gain of 2.5% over the previous week. 

RBI HIKES REPO, REVERSE REPO RATE. 

RBI finally swung into action and in a surprise move after the market closed on Friday, increased the Repo and Reverse Repo by 25bps. Repo rate was increased to 5% and Reverse Repo to 3.5%. The increase in the Repo and Reverse Repo rates were not totally unexpected, as the market had already discounted the hike in interest rates. What is surprising is the timing, as there was a consensus that the RBI will act and increase the rates in its April meet. The market will be happy as the RBI has acted to rein in inflation and it already views growth to be on track. There may be a knee jerk reaction in Banking and Property stocks, but that dip will be bought into. The market need not worry in the immediate future as long as the Sensex remains above 17000 and Nifty above 5100. 

S&P UPGRADES INDIA OUTLOOK. 

Global credit rating agency S&P revised the outlook on India from negative to stable due to improvement in governments financial policies. There is a renewed hope that India’s fiscal position could now improve. The outlook is based on some strong decisions taken by this government in the recent past like the reduction in subsidies and increasing prices of urea, petrol and diesel. The improved rating will make raising money from the offshore markets easier and cheaper, as the borrowing cost is likely to reduce. 

TECHNICALLY SPEAKING. 

The Sensex opened the week at 17166, made a high of 17600, a low of 17061 and closed the week at 17578. The Sensex closed the week with a gain of 412 points. Similarly Nifty opened the week at 5134, made a high of 5269, a low of 5101 and closed the week at 5262. The Nifty too closed with the week with a gain of 125 points. As a result both the indices have formed a big white body candle on the weekly charts which is a bullish formation. 

The momentum oscillators like the ROC, MACD and OBV continue to be in their Buy mode, whereas the RSI, the Stochastic Oscillator and the Money Flow Index are in overbought zone. The ADX is at 34 and is moving upwards indicating that the current trend is strong. Any likely dips are likely to be bought into. Sensex took support at 17061 during the past week before bouncing upwards and it is near the same level 17027 where it took the support 2 weeks before.

On similar lines Nifty has taken support at 5101 during the past week which was very near to 5092 level, which was the level from where the Nifty bounced 2 weeks before. Hence one can safely say that Sensex will find strong support near 17061-17027 and Nifty 5101-5092. The short and medium term trend is up as the Sensex and Nifty are above the critical 50dma and 100dma. Sensex (50dma – 16782 and 100dma – 16828) and Nifty (50dma – 5018 and 100dma – 5019) are almost coinciding and the market will find support in case of a fall around Sensex 16800 and Nifty 5000. The long term uptrend remains intact as the market remains above the 200dma (Sensex – 16167 and Nifty – 4817). 

Both the indices have given a Bullish Flag breakout and as a result of this, the Sensex has a target will have a target of 18047 and Nifty 5419. Sensex has Trendline Support at 17068 and Trendline Resistance at 18076 and Nifty has strong Trendline Support at 5178 and Trendline Resistance at 5437. 

On the higher side the Sensex is likely to face resistance in the zone of 18047-18076 as 18047 is the target for Flag formation and 18076 is the Trendline Resistance. Similarly Nifty will face strong resistance in the zone of 5419-5437 as 5419 is the target for Flag formation, whereas the 5437 is the Trendline resistance. Nifty OI PCR is now showing signs of exuberance at 2.02, which is indicative of the strong bullish mood that the market is in.

 Besides strong Put writing at 5000, one can also see strong Put writing at 5100 and 5200 strikes. Some Call writing is seen at 5300, which supposedly should provide some sort of a resistance going forward. 

For the week ahead, Sensex will find Support at 17417-17276-17061 and will find Resistance at 17790-18047-18314. 

For the week ahead, Nifty will find Support at 5214-5178-5116 and will find Resistance at 5310-5368-5437. INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty5116517852145262531053685437
Sensex17061172761741717578177901804718314

  LAST WEEKS RECOMMENDATIONS: 

STOCKReco. PriceTgt ReachedLot SizeProfit
Buy HindZinc1250  1277 1280500Rs.15,000
Buy Cairn2762852861250Rs.12,500
Buy JindalSaw2152222255000Rs.50.000
Buy SterliteInd827849844438Rs.7,446
Buy M&M114011681149312Rs.2,808
    TotalRs.87,754

  

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Buy BEL2219216623042423
Buy BhartiAir311306322331
Buy SesaGoa452446462475
Buy Havells567560583602
Buy NBVentures402393415429

     

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