Archives : MARKET SET TO BREAK THE TRADING RANGE - 26/03/2010
The market continued its affair with bullishness as it posted gains for the seventh consecutive week and closed just shy of the previous high. The market started the week on the back foot as it had to grapple with the RBI decision to increase the Repo and the Reverse Repo rate. The RBI made it clear that this was the first of the rate hikes and clearly signalled a shift towards high interest rate regime. The RBI is very clear about its role and it will not hesitate to increase the interest rates further in order to keep the inflation under check. The market continued its affair with bullishness as it posted gains for the seventh consecutive week and closed just shy of the previous high. The market started the week on the back foot as it had to grapple with the RBI decision to increase the Repo and the Reverse Repo rate. The RBI made it clear that this was the first of the rate hikes and clearly signalled a shift towards high interest rate regime. The RBI is very clear about its role and it will not hesitate to increase the interest rates further in order to keep the inflation under check. On Monday both Sensex and Nifty managed to bounce from the lows i.e. Sensex 17337 and Nifty 5187. Both the indices tested the above mentioned lows for the next three consecutive days and in the process formed a higher base. Sensex made a higher low of 17337 as compared to 17061 and Nifty made a higher low of 5187 as compared to 5101. Now the market is ready to test the previous high of Sensex 17790 and Nifty 5310, and in the process break out of the trading range of the past three months.
The Sensex opened the week at 17481, made a high of 17682, a low of 17337 and closed the week at 17644. The Sensex closed the week with a gain of 66 points. Similarly Nifty opened the week at 5260, made a high of 5293, a low of 5187 and closed the week at 5282. The Nifty too closed with the week with a small gain of 20 points. As a result both the indices have formed a small white body candle on the weekly charts which is a bullish formation.
Certain oscillators like the RSI, the Stochastic Oscillator and the Money Flow Index are in overbought zone which is the only cause of concern. At the same time the ADX is moving upwards indicating that the current trend is strong. Any likely dips are likely to be bought into. The momentum oscillators like the ROC, MACD and OBV continue to be in their Buy mode.
Sensex and Nifty took support at 17337 and 5187 respectively and bounced from there. Both the above mentioned lows were tested subsequently for the next three days before it could be confirmed as a higher base as compared to the previous bottom of Sensex 17061 and Nifty 5101. Hence for the very short term, Sensex will find support at 17337 and Nifty 5187. From the medium term point of view, it is necessary that the Sensex holds the support zone of 17061-17027 and Nifty 5101-5092.
On the higher side the Sensex is likely to face resistance in the zone of 18047-18091 as 18047 is the target for Flag formation and 18091 is the Trendline Resistance. Similarly Nifty will face strong resistance in the zone of 5419-5446 as 5419 is the target for Flag formation, whereas 5446 is the Trendline resistance.
Nifty OI PCR is at 1.38, which is indicative of the bullish mood that the market is in. Strong Put writing is seen at 5000 and 5200, which should act as strong support in case of a fall. Call writing is seen at 5400, which supposedly should provide some sort of a resistance going forward.
|STOCK||Reco. Price||Tgt ||Reached||Lot Size||Profit|
|Buy BEL||2219 ||2304||2252||276||Rs.9,108|
|Buy Sesa Goa||452||462||464||1500||Rs.18.000|
| || || || ||Total||Rs.71,108|