Archives : NIFTY 5071-STOPLOSS.- GOOD FRIDAY.MARKET RALLIES 600 POINTS. -01/02/2008
GOOD FRIDAY. MARKET RALLIES 600 POINTS.01/02/2008 

                Market has staged a sort of comeback on Friday. The rally on Friday of nearly 600 points helped the Sensex close the week at a respectable level. But still it can be termed as a pull back rally and it will be facing lot of selling pressure on the way up. The rally was marked by low volumes. The week was very eventful, what with the FOMC meet, RBI credit policy review, and F&O expiry.

  1.                            RBI MAINTAINS STATUS QUO.
  2.                 BEN DOES IT AGAIN.
  3.                 LOW ROLLOVER MARKS EXPIRY.
  4.                 SENSEX.
  5.                 NIFTY.
  6.                 HOW TO TRADE?
  7.                 LAST WEEK’S RECOMMENDATIONS: 
  8.                 THIS WEEK’S RECOMMENDATIONS: 

            RBI MAINTAINS STATUS QUO.

                    RBI in its policy review has maintained a no change stance and left all its key interest rates unchanged. RBI has moved from a tightening of interest rates to a neutral stance. One can expect some relief in the interest rates from the RBI in the time to come. The rate differential between the US rates and our rates is 4.75% and one fears a deluge of dollars flowing into India in the next few days. May be then the RBI may be forced to do a rethink on the interest rates.

                BEN DOES IT AGAIN.

                US FED Chief, Ben Bernanke, cut interest rates by 50 bps on Wednesday and has cut interest rates by 125 bps in a matter of 8 days. Fears of a recession in the US, is looming large and that has prompted the FED to act fast and cut rates twice by 125 bps. By cutting rates, FED has ensured that there will be more liquidity in the markets and that will help the economy to recover somewhat.

                LOW ROLLOVER MARKS EXPIRY.

                The expiry was marked by very rollover in the Nifty and Stock futures. Nifty futures rollover was 74% as compared with 81% in December. Nifty futures ended the expiry with a discount of 53 points with huge addition in open interest, suggest a strong short rollover in the Nifty futures. The OI PCR at the start of the month is as low as 0.76. This is the lowest OI PCR in recent times. This suggest that Put writers are unwilling to write puts at any rate and are asking for high premiums as they are uncertain about the market.

                 SENSEX.

                Sensex opened the week at 18011, made a high of 18491, low of 17417 and closed the week at 18242. The weekly loss was 119 points. The Sensex is undergoing a pull back rally and the pull back levels are 18269-18962. The trendline resistance is at 18981-20080. The trendline support is at 17336-15418. The gap between 18919-18930 will act as a resistance going ahead. The zone around 17350-17425 is providing strong support to the Sensex. For the week ahead, the resistance is at 18491-18815-18981-19430. Support is at 17576-17336-16725.  

                NIFTY.

                Nifty opened the week at 5380, made a high of 5391, low of 5071 and closed the week at 5317. The weekly loss for the Nifty was 66 points. The Nifty is in a pull back mode and the pull back levels are 5403-5628. The trendline resistance is at 5638-5847-6134. The trendline support is at 5134-4856. The Nifty has formed a base around 5071 levels and is bouncing from this level. This level of 5071 should be kept as a stop-loss for all the long positions. The Nifty OI PCR is at 0.81 and which indicates lack of willingness amongst Put writers to write Puts. The 5100 Put has added substantial open interest and hence will act as a support in any fall. For the week ahead, the resistance is at 5403-5575-5628-5800. Support is at 5134-5071-4927.

                 HOW TO TRADE? 

               Market is in a pull back mode, hence we suggest that any long position in the stock futures should be hedged using Nifty futures. This week one can go long on CNX IT futures and hedge it by selling Nifty futures.

                 LAST WEEK’S RECOMMENDATIONS:  

                 Once again last week’s recommendations we were on the target  95% inspite of such unfavourable market conditions. SBI has actually achieved the target since it was ex-rights. Only RPL & RNRL are yet to reach their targets.               

WELSPUN GUJ @ 496 TGT WAS 519 REACHED 528.               

REL @ 2027 TGT WAS 2154 REACHED 2182.               

BOI @ 395 TGT WAS 416 REACHED 419.               

AXIS BANK @1097 TGT WAS 1195 REACHED 1195.               

ICICI BANK @ 1261 TGT WAS 1303 REACHED 1314.                

THIS WEEK’S RECOMMENDATIONS:               

  • TATA MOTORS 753 SL 730 TGT 790-824.               
  • TCS 929 SL 890 TGT 980-1008.               
  • ITC 205 SL 197 TGT 214-220.               
  • HDFC 2999 SL 2915 TGT 3105-3148-3215.               
  • REI AGRO 1108 SL 1050 TGT 1154-1183.               
  • PRITHVI 304 SL 287 TGT 314-338. 
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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