Archives : PROMISING START TO JUNE SERIES - 28 05 2010

PROMISING START TO JUNE SERIES – 28/05/2010.

 

The May series ended on a positive note as our market rallied near the expiry backed by strong global markets. The market took support on the demand trendline at lower end of the rising channel in which the market is moving for the past six months. Both Sensex and Nifty after trading below the 200dma for a few days rebounded and closed the week above their respective 200dma (Sensex – 16765 and Nifty – 5001); which is a positive sign. Currently the market is correcting the recent fall and is in pullback mode. Now it is headed to test the resistances at 100dma (Sensex – 17053 and Nifty – 5104) and then 50dma (Sensex – 17316 and Nifty – 5188). Only on close above the 50dma, the medium term trend will turn up.

 


PROMISING START TO JUNE SERIES – 28/05/2010. 

 

 

The May series ended on a positive note as our market rallied near the expiry backed by strong global markets. The market took support on the demand trendline at lower end of the rising channel in which the market is moving for the past six months. Both Sensex and Nifty after trading below the 200dma for a few days rebounded and closed the week above their respective 200dma (Sensex – 16765 and Nifty – 5001); which is a positive sign. Currently the market is correcting the recent fall and is in pullback mode. Now it is headed to test the resistances at 100dma (Sensex – 17053 and Nifty – 5104) and then 50dma (Sensex – 17316 and Nifty – 5188). Only on close above the 50dma, the medium term trend will turn up.

BILLIONAIRE BROTHERS PATCH UP. 

The decision by Ambani Bros to dump their differences and scrap the contentious Non-Compete agreement was almost like an anti-climax to one of the most keenly watched corporate war ever. The scrapping of the Non-Compete agreement may be an indication of the beginning of the fresh business rivalry as both the groups can now enter into each others territory or it can be perceived as a positive step towards reconciliation in the long running feud between the billionaire brothers. The market took the announcement positively and opened with a gap up on Monday, but weak global markets made sure that our market closed near the low of the day. The Nifty lost more than 110 points from the top.

 

EURO PROBLEMS - LONG TERM PROBLEM.

 

It will be plain wishful thinking that the debt problems of Europe are under control. The bailout of Greece is seen by many as a forceful and regressive step as it has been taken under political unwillingness. Eventually, the Greek contagion may spread across various nations like Spain, Portugal, Ireland and many more, which will result in serious global financial breakdown and many more bail-outs. The U.S. too will have to work its way out of serious problems, because the massive stimuli which has propelled its GDP growth, is temporary. It will take years and years of consolidation before the U.S. is out of the woods. The most likely scenario is that the U.S. and E.U. will face a double dip recession and after that a long period of economic stagnation. This in itself will be an opportunity for country like ours to outperform and grow.

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ROLLOVER ANALYSIS.

 

 

The Nifty Rollovers were 65% as compared to three months average of 70%. Low rollover indicates lesser number of short Nifty positions have been rolled over to the June series. Banking and Financial sector along with IT sector have shown low rollovers as compared to metal sector. Strong short rollovers have been seen in Sterlite Ind, IDBI, Bharat Forge, Renuka and HDiL. In case the bounce back continues, one can expect short covering in the above mentioned stocks.

TECHNICALLY SPEAKING.

 

 

The Sensex opened the week at 16494, made a high of 16891, a low of 15960 and closed the week at 16863. The Sensex gained 418 points on a weekly basis. Similarly Nifty opened the week at 4944, made a high of 5077, a low of 4786 and closed the week at 5066. The Nifty too closed with the week with a gain of 135 points.

 

On the weekly charts both Sensex and Nifty have formed Bullish Harami pattern which is a bullish reversal pattern. The long lower shadow formed on the weekly candle is because of the strong bounce seen from the lows. On the daily charts both the indices have formed a bullish reversal pattern in the last three days called Three White Soldiers indicating a trend reversal in the immediate term.

 

Oscillators like MACD and ROC, even though in the negative territory is on the verge of giving a buy signal. The RSI along with MFI has given a buy signal and is moving up. The Stochastic Oscillator has given a Buy signal and so has the OBV. The Directional Indicators continue in their Sell mode but the –DI is now moving towards the +DI.

 

Market rebounded last week after Sensex made a low of 15960 and Nifty 4786. The market is now in a pull back mode and the pull-back levels for the Sensex are 16757-17003-17250 and those for the Nifty are 5020-5092-5165.

 

From slightly longer term view we are looking at the correction of Sensex rise from 13219 to 18047 and the correction levels are 16203-15633-15063. Similarly one has to consider the Nifty rise from 3918 to 5399 and for that the correction levels are 4833-4659-4484. Both Sensex and Nifty corrected more than 38.2% correction level before bouncing back; Sensex bounced back from 15960 and Nifty from 4786.

 

Nifty OI PCR is quite healthy at 1.34 suggesting that some stability has returned to the market. For June series strong Call writing is seen at 5100 and 5200 strikes. Similarly Put writing is seen at 4800 strike. One can expect the market to find support around 4800 and resistance around 5100-5200.

 

Sensex has strong Trendline resistance at 17276 and Nifty at 5229.

 

For the week ahead, Sensex will find Support at 16704-16551-16373 and will find Resistance at 17028-17276-17493.

 

For the week ahead, Nifty will find Support at 5017-4966-4908 and will find Resistance at 5105-5160-5214.

INDEX LEVELS:

 

S3S2S1CLOSER1R2R3
Nifty4908496650175066510551605214
Sensex16373165511670416863170281727617493
 

LAST WEEKS RECOMMENDATIONS: 

PAIR NO.STOCKRec.priceTgt Reached Lot sizeProfit
1BuyPFC2882942951200Rs. 8,400
SellTataPow125911961190200Rs. 13,800
2BuyGAIL4534614601125Rs. 7,875
SellBomDye5144834751150Rs. 44,850
3BuyStrides3573693651000Rs. 8,000
SellPantaloon384361353850Rs. 26,350
      ProfitRs.1,09,275

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Buy BGR Energy593582611632
Buy BalramChini80788488
Buy ApolloTyres70687478
Buy DivisLab732722750769
Buy AlstomProj588582602615

 

 WATCH OUT FOR:

BGR

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