Archives : NIFTY 5349 HOLDS GOOD - 03/09/2010.
NIFTY 5349 HOLDS GOOD - 03/09/2010.  

UPTREND INTACT.

 

In the previous week’s article, we had written that the Nifty had formed a higher bottom at 5349 and as long as that level remains safe, the uptrend will be intact. This week, the level of Nifty 5349 proved to be a saviour for the markets as the Nifty once again bounced from that particular level. The Nifty has taken support at that level for the third time before staging a rally. On the same lines CLICK MORE:too bounced from 17819. While staging a bounce back, both the indices formed a Bullish Hammer formation, which can be classified as Takuri line. Thus the uptrend will remain intact as long as Sensex 17819 and Nifty 5349 remains intact.


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NIFTY 5349 HOLDS GOOD - 03/09/2010.  

UPTREND INTACT.

 

In the previous week’s article, we had written that the Nifty had formed a higher bottom at 5349 and as long as that level remains safe, the uptrend will be intact. This week, the level of Nifty 5349 proved to be a saviour for the markets as the Nifty once again bounced from that particular level. The Nifty has taken support at that level for the third time before staging a rally. On the same lines Sensex too bounced from 17819. While staging a bounce back, both the indices formed a Bullish Hammer formation, which can be classified as Takuri line. Thus the uptrend will remain intact as long as Sensex 17819 and Nifty 5349 remains intact.

 
TECHNICALLY SPEAKING. 

The Sensex opened the week at 18063, made a high of 18355, a low of 17819 and closed the week at 18221. The Sensex gained 223 points on a weekly basis. Similarly Nifty opened the week at 5408, made a high of 5513, a low of 5348 and closed the week at 5479. The Nifty too closed with the week with a gain of 71 points.

 

On the weekly charts both Sensex and Nifty have formed a Bullish Harami pattern as this week’s smaller white body is completely within the previous weeks black body candle. This is a Bullish Reversal Pattern. While bouncing back a bullish reversal Hammer formation was seen in the daily charts on Tuesday. The lower shadow was too long and hence can be classified as Takuri line. On the daily charts on Thursday, a Shooting Star was formed because of the long upper shadow. This candle formation has bearish implications and these can be reversed only if Sensex closes above 18355 and Nifty above 5513.

 

A falling trendline has been supporting both the indices for quite some time including last week. Sensex has that trendline at 17784 and Nifty at 5331. Sensex has also reiterated strong support at 17819, which is from where it bounced back this week. The Nifty too has bounced back from 5348 this week. Hence strong support will be seen in the Sensex zone between 17819-17784 and Nifty zone of 5349-5331.

 Since last October, the market is moving in a rising channel and the channel top has provided strong resistance to the market and that supply trendline top falls at Sensex 18500 and Nifty 5555. For the market to continue with its current upmove, it is necessary that the market cross and close above trendline top consistently. 

The above pattern formation is keeping in mind slightly longer time duration in mind. But if we consider short dynamic pattern formation then we have a Broadening Top formation for both Sensex and Nifty. The rising trendline joining the higher highs form Broadening Top and the falling trendline joining lower lows form Broadening Bottom. Broadening Top (Sensex – 18622 and Nifty – 5584) will continue to provide resistance and Broadening Bottom (Sensex – 17784 and Nifty – 5331) will provide support.

 

In the current upmove both the indices rebounded last week from Sensex 17819 and Nifty 5348 and in the process have registered higher bottom formation. Sensex has formed higher bottoms at 17819-17373 and Nifty has formed higher bottoms at 5348-5210. The short term trend will be in danger only if both the indices close below their first higher bottoms i.e. Sensex – 17819 and Nifty – 5348. In such a case a short term down trend will be triggered and the market will then head towards next major higher bottom which is at Sensex 17373 and Nifty 5210. Short term trend will remain intact as long as the Sensex stays above 17819 and Nifty remains above 5348. One need not worry about the medium term as long as the level of 17373 for the Sensex and 5210 for the Nifty remains intact.

 

On the moving averages front, both the indices have closed above their 20dma (Sensex – 18191 and Nifty – 5463) and hence the short term trend is positive. Both the indices are above their 50dma and hence the intermediate trend is also up. 50dma for the Sensex is at 18004 and Nifty 5406.

 

MACD continues with its Sell signal but is still in positive territory and is slowly inching upwards. The RSI is at 53 and continues with its Buy signal and so does the OBV. The Direction Indicators have now signaled a Buy as the +DI has crossed over the -DI from below. The ADX is at 20, suggesting that the current trend is losing strength. The MFI for the Sensex at 50 has given a Buy signal, whereas it is yet to do so for the Nifty. Stochastic oscillator has given a Buy signal as % K is above % D.

 

The O.I.PCR is quite bullish at 1.55. Call writing continues at the strike of 5600, which will act as a resistance going forward. Put writing is seen at the strike of 5400. Hence one can expect some support at around 5400.

 

Sensex has strong Trendline Support at 17935. The Trendline Resistance for the Sensex is at 18500 which is also the Rising Channel top.

 

Nifty has strong Trendline Support at 5384. The Trendline Resistance for the Nifty is at 5555 which is also the Rising Channel top.

 

For the week ahead, Sensex will find Support at 18118-17944-17819 and will find Resistance at 18369-18529-18689.

 

For the week ahead, Nifty will find Support at 5431-5387-5348 and will find Resistance at 5523-5566-5613.

      
INDEX LEVELS:
  
 S3S2S1CLOSER1R2R3
Nifty5348538754315479552355665613
Sensex17819179441811818221183691852918689
   
LAST WEEKS RECOMMENDATIONS:  Once again a super duper week as all our stock achieved their targets with ease. The star performers for the week were Escorts and Venus Remedies which went up by an astonishing 11% and 10% respectively.
  
STOCKReco. PriceTgtReachedLot SizeProfit
Buy ONGC131813571360250Rs.10,500
Buy Escorts1962112182000Rs.44,000
Buy VenusRem3053303361000Rs.31,000
Buy Cummins729747757500Rs.14,000
Buy AssamCo21.4023.352310000Rs.16,000
    TotalRs.1,15,500
    
THIS WEEKS RECOMMENDATIONS:
  
STOCKCMPSLTgt-1Tgt-2
Buy BajajAuto2871285329112952
Buy LMW2338227224622620
Buy MRF8661855589179189
Buy BOSCH6299620964356588
Buy Thermax784772806829
  
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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