Archives : SEARCHING FOR DIRECTION - 23/03/2012.

SEARCHING FOR DIRECTION – 23/03/2012.

SENSEX TRADING RANGE : 17000 - 18000.

The market has been in a trading range for the last one month. Even a big ticket event like Budget proved to be a non-event as the Sensex continued to move between 17000 to 18000 and Nifty between 5171 on the lower side to 5499 on the higher side. Last week the indices took support at the gap registered between Sensex 17239-17325 and Nifty 5243-5291. Even though the prices went below the gap in intra-day trading but there was no closing below the gap. Short term and Medium term trends have turned bearish, but the long term trend continues to be bullish.

 

 


SEARCHING FOR DIRECTION – 23/03/2012.

SENSEX TRADING RANGE : 17000 - 18000.

The market has been in a trading range for the last one month. Even a big ticket event like Budget proved to be a non-event as the Sensex continued to move between 17000 to 18000 and Nifty between 5171 on the lower side to 5499 on the higher side. Last week the indices took support at the gap registered between Sensex 17239-17325 and Nifty 5243-5291. Even though the prices went below the gap in intra-day trading but there was no closing below the gap. Short term and Medium term trends have turned bearish, but the long term trend continues to be bullish.

TECHNICALLY SPEAKING.

Sensex opened the week at 17531, made a high of 17687, low of 17136 and closed the week at 17361. Thus it registered a weekly loss of 105 points. At the same time the Nifty opened the week at 5337, made a high of 5385, low of 5205 and closed the week at 5278. Thus the Nifty fell by 39 points on a weekly basis. 

After witnessing a lot of volatility during the week, both the indices managed to form a small black body formation with long upper and lower shadows but it fails to qualify as a Spinning Top. Thus the formation shows a reduction in bearish momentum and not a reversal in bearishness. Both Sensex and Nifty have formed a Bullish Harami on the daily charts on Friday. This is a Bullish Reversal pattern but it requires a confirmation in the form of a white body candle formation on Monday. Thus daily as well as weekly candlestick patterns offer some bullish hope.

This week both the indices tested, breached and closed the week below the 50dma (Sensex – 17415 and Nifty – 5280) which has turned the medium term trend Bearish. Both the indices continue to remain below the short term average of 20dma (Sensex – 17509 and Nifty – 5325) and as a result the short term trend remains Bearish. But both the indices are still above the crucial level of 200dma (Sensex – 17126 and Nifty – 5156). As a result, the trend in the Short term timeframe and Medium term timeframe has turned Bearish but the trend in the Long term timeframe continues to be Bullish.

The Bullish Upward Gap created two weeks back i.e. from 17239 to 17325 for the Sensex and 5243 to 5291 for the Nifty, acted as strong support for the market. Both the indices went and tested that gap and even going below the gap in intraday trading but there was no closing below the gap. A closing below the gap will push the indices towards the lower boundary of the trading channel i.e. Sensex – 17008 and Nifty – 5171.

If the market breaches the lower boundary of the trading channel which is also the intermediate bottom which is at Sensex 17008 and Nifty 5171, the correction will resume. The market will once again correct the entire rise from Sensex 15135 to 18523 and Nifty from 4531 to 5629 and the Correction levels will be 17229-16829-16429 for the Sensex and 5210-5080-4950 for the Nifty.

Two weeks back the market corrected exactly upto the level of the Falling Channel Top which acted as a Support. As is the case many times, the market after a strong breakout came back to retest the breakout level and in the process formed a higher bottom. Currently the Falling Channel Top falls at Sensex 17025 and Nifty 5137. The overall bullish target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

A strong support is likely to emerge between Sensex 17126 – 17008 and Nifty 5171-5137 which is a result of confluence of immediate current bottom, critical level of 200dma and the Falling Channel Top.

MACD continues with its Sell signal for this week and has also turned negative. RSI (47) continues in Sell mode as it remains below the equilibrium line. Stochastic Oscillator (%K) is at 36 and is in Sell mode as %K is below %D. ADX has now reduced further to 17 suggesting that the market is trendless. Directional Indicators are in Sell mode as +DI remains below –DI. MFI is in Sell mode as it is below the centerline at 38. OBV is in Sell mode and has made a lower top formation but is yet to make a lower bottom.

Nifty O.I. PCR has reduced to a level of 1.11. Highest open interest buildup for the next month series is seen at 5000 Put. But 5200 Put has seen a good OI buildup which suggests immediate support will be at 5200. High Call writing is seen at the strike of 5600. Thus expect a Trading range between 5000-5600 in the next month series. 

Trendline Resistance for the Sensex is at 17767. The Trendline Support is at 17092.

Trendline Resistance for the Nifty is at 5426. The Trendline Support falls at 5212.

For the week ahead, Sensex will find Support at 17025-16709-16382 and will find Resistance at 17687-18001-18327.

For the week ahead, Nifty will find Support at 5171-5076-4980 and will find Resistance at 5385-5499-5512.

INDEX LEVELS: 

 S3S2S1CLOSER1R2R3
Nifty4980507651715278538554995512
Sensex16382167091702517361176871800118327

LAST WEEKS RECOMMENDATIONS:

Almost all the recommendations did well with the exception of Divis Lab and Arvind which just failed to reach their targets. The Star Performers for the last week were Reliance Communication and Oriental Bank which went up by almost 5%!!! 

STOCKReco. PriceTgtReachedLot SizeProfit
Sell RelCap400390380500Rs. 10,000
Sell Divis725712715500Rs. 5,000
Sell RCom9289874000Rs. 20,000
Sell OBC2782712641000Rs. 14,000
Sell Arvind8380814000Rs.8,000
    TotalRs. 57,000

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Buy ABNuvo950941965981
Buy McLeod266261274283
Buy STFC599592612627
Buy HuL403398411419
Buy IVRCL58566266

WATCH OUT FOR:

McLeod Russel

HUL

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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