Archives : BULLS LOSING STEAM; NIFTY BELOW 5300 - 16/04/2010

BULLS LOSING STEAM; NIFTY BELOW 5300 – 16/04/2010.

TRADING RANGE BROKEN.

Last week began on an optimistic mode as the markets had given strong bullish signals, but failed to move further upwards as the follow up buying was missing. Not to add the showdown between the two regulatory authorities SEBI and IRDA regarding ULIPs. Finally the finance ministry had to step in to resolve the matter for the time being and the small investor could breathe a sigh of relief. As a result of the imbroglio, banking and brokerage stocks took a beating and the market broke the trading range of the past few days on the lower side. Nifty which had strong support at 5290, closed well below that and as a result the very short term trend has turned negative. Bulls are looking sluggish, just as the Bears are tightening their grip on the market.

INFOSYS KICKS OFF THE RESULT SEASON.


BULLS LOSING STEAM; NIFTY BELOW 5300 – 16/04/2010.

TRADING RANGE BROKEN.

Last week began on an optimistic mode as the markets had given strong bullish signals, but failed to move further upwards as the follow up buying was missing. Not to add the showdown between the two regulatory authorities SEBI and IRDA regarding ULIPs. Finally the finance ministry had to step in to resolve the matter for the time being and the small investor could breathe a sigh of relief. As a result of the imbroglio, banking and brokerage stocks took a beating and the market broke the trading range of the past few days on the lower side. Nifty which had strong support at 5290, closed well below that and as a result the very short term trend has turned negative. Bulls are looking sluggish, just as the Bears are tightening their grip on the market.

INFOSYS KICKS OFF THE RESULT SEASON.

Infosys came out with results which were on expected lines, but the market did not like the EPS guidance in Re terms and as a result stock went down. However the revenue guidance in dollar terms was well received by the market even as the FIIs continued their buying mode. Strong buying at lower levels accompanied by short covering saw the IT stocks bounce back led by Infosys. The market is now waiting for the credit policy event to get over and then decide on future direction of the market. The market is expecting an increase not only in the interest rates but also in the CRR. The market has already discounted a 25bps interest rate hike. But any further surprises by the RBI on the higher side will certainly be a reason for concern for the market.

TECHNICALLY SPEAKING. 

The Sensex opened the week at 17874, made a high of 17995, a low of 17529 and closed the week at 17591. The Sensex lost 342 points on a weekly basis. Similarly Nifty opened the week at 5354, made a high of 5382, a low of 5237 and closed the week at 5262. The Nifty too closed with the week with a loss of 99 points.

 

A big black candle was registered on the weekly charts of both Sensex and Nifty, after nine consecutive weeks of white candle formation. As a result the short term trend for both Sensex and Nifty has turned down. On the daily charts, both the indices are showing a star formation on Friday, with slight long lower shadow.

 

Oscillators like the ROC and the MACD have given a Sell signal, even though the MACD still continues to remain northwards of the zero line. OBV has given a Sell signal and the RSI and MFI continue to move lower, even though the RSI continues to remain above 50. ADX has come down to 34 from 39 indicating that the current trend has lost some strength. The Direction Indicators are still in Buy mode but have moved very close towards each other which is not a very bullish thing.

 

The short term trend for both Sensex and Nifty has turned down. As a result Sensex is correcting its immediate rise from 15651-18047 and their correction levels are 17132-16849-16566. Similarly Nifty is correcting its rise from 4675 to 5399 and its correction levels are 5122-5037-4952.

 

Sensex and Nifty have made higher bottoms at 17337 and 5187 respectively as compared to the previous bottom of Sensex 17061 and Nifty 5101. In the recent past, Sensex has bounced back from 17488 and Nifty 5235, thus confirming a support zone between Sensex 17488-17337 and Nifty 5235-5187 in the immediate term. From the medium term point of view, it is necessary that the Sensex holds the support zone of 17061-17027 and Nifty 5101-5092.

 

Sensex has Trendline Resistance at 18081 and Trendline Support at 17183, while Nifty has strong Trendline Support at 5178-5103 and Trendline Resistance at 5411.

 

Nifty OI PCR is moderate at 1.36 and is giving no alarm signals. Strong Call writing is visible in the strikes of 5300 and 5400. Put writing is seen at 5200 strike price, which should provide support in case of a further fall.

 

For the week ahead, Sensex will find Support at 17488-17337-17171 and will find Resistance at 17735-17915-18081.

 

For the week ahead, Nifty will find Support at 5235-5178-5122 and will find Resistance at 5310-5368-5411.

INDEX LEVELS: 

 S3S2S1CLOSER1R2R3
Nifty5122517852355262531053685411
Sensex17171173371748817591177351791518081

LAST WEEKS RECOMMENDATIONS:

Just as the market moved lower and gave a negative breakout, none of the stocks performed as per expectations and as a result the stoplosses got triggered.

THIS WEEKS RECOMMENDATIONS:

Expect lot of volatility in the coming week, hence we suggest hedging your trades. One can adopt Pair Strategy approach for this week. 

PAIR NO.STOCKCMPSLTGT - 1TGT -2
1BuyJsW Steel1288127513071320
SellMcDowell1232125612021176
2BuyJindal Steel730720744761
SellKotak Bank725741705686
3Buy Titan Ind2056202420942136
SellPunjLloyd168173161153

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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