Archives : CORRECTION RESUMES - 04/05/2012.

CORRECTION RESUMES – 04/05/2012.

BELOW 200DMA, SUPPORT ZONE UNDER THREAT.

With Rupee threatening to go down further, the equity market continues to bear the brunt of FII selling. Also uncertainty regarding GAAR issue and the inaction on the Policy front is not helping the market. With not much going in the favour of the Bulls, the Bears pulled down the market below the critical level of 200dma. The long term trend of the market will be under threat if the market continues to stay below the 200dma. During the last week, both Sensex and Nifty closed below their intermittent lows and thus have resumed the correction. It will be an interesting tussle this week to verify the strength of the Support zone which is at Sensex 16829 - 16694 and Nifty 5080 – 5042.

 

 


CORRECTION RESUMES – 04/05/2012.

BELOW 200DMA, SUPPORT ZONE UNDER THREAT.

With Rupee threatening to go down further, the equity market continues to bear the brunt of FII selling. Also uncertainty regarding GAAR issue and the inaction on the Policy front is not helping the market. With not much going in the favour of the Bulls, the Bears pulled down the market below the critical level of 200dma. The long term trend of the market will be under threat if the market continues to stay below the 200dma. During the last week, both Sensex and Nifty closed below their intermittent lows and thus have resumed the correction. It will be an interesting tussle this week to verify the strength of the Support zone which is at Sensex 16829 - 16694 and Nifty 5080 – 5042.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17195, made a high of 17432, low of 16776 and closed the week at 16831. Thus it registered a weekly loss of 356 points. At the same time the Nifty opened the week at 5201, made a high of 5279, low of 5070 and closed the week at 5086. Thus the Nifty went down by 123 points on a weekly basis.

On the daily charts on Friday, both Sensex and Nifty have formed a big black body candle which has breached crucial support levels. On the weekly charts too, both Sensex and Nifty have formed a big black body candle with a slightly long upper shadow. The upper shadow represents selling pressure witnessed at higher levels. Both the daily and weekly formations show the continuation of bearishness.

This week the Bears managed to pull down both Sensex and Nifty below the critical level of 200dma (Sensex – 16968 and Nifty – 5117). As a result the long term trend has turned down. Both the indices continue to remain below the short term average of 20dma (Sensex – 17218 and Nifty – 5230) and the medium term average of 50dma (Sensex – 17380 and Nifty – 5282). As a result, the trend in the Short term timeframe and the Medium term timeframe continue to be Bearish. The trend in the Long term timeframe has also turned Bearish.

The market has breached the intermediate bottom at Sensex 16920 and Nifty 5135 this week. Thus the market continues to make lower top lower bottom formation and the Correction has resumed. The market will continue to correct the entire rise from Sensex 15135 to 18523 and Nifty from 4531 to 5629 and the Correction levels are 17229-16829-16429 for the Sensex and 5210-5080-4950 for the Nifty.

Both Sensex and Nifty are moving in Falling Wedge pattern. If the Trendline joining the lows which lie at Sensex 16770 and Nifty 5077 is breached, then the Falling Wedge will get completed with a bearish breakout. A Falling Wedge has a natural tendency to give a Bullish breakout, so it will be interesting to watch what happens in the coming week.

Market went down upto the level of the Falling Channel Top twice in March and it acted as a strong support. Currently the Falling Channel Top comes in at Sensex 16694 and Nifty 5042. These levels should provide strong support for the market. The overall bullish long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

Both the indices are having strong Resistance zone between Sensex 17368 - 17432 and Nifty 5261 – 5282 which is a result of the confluence of the current intermediate tops (Sensex 17432 and Nifty 5279), Trendline Resistance (Sensex – 17368 and Nifty – 5261) and the 50dma. The Uptrend will resume only if the indices close above the Resistance zone.

A strong support is likely to emerge between Sensex 16829 - 16694 and Nifty 5080 -5042 which is a result of confluence of 50% Retracement level of the entire rise (Sensex 15135 to 18523 and Nifty 4531 to 5629), Falling Channel Top and Trendline Support (Sensex – 16770 and Nifty – 5077). A breach of this Support zone will result in the long term trend of the market getting affected.

MACD and ROC continue with their Sell signals and are both negative. RSI (36) continues to be below the equilibrium line and continues with its Sell signal. Stochastic Oscillator (21) is in Sell mode as %K is below %D. ADX is quite low at 16 indicating lack of direction in the market. Directional Indicators are in Sell mode as -DI is above +DI. MFI (39) too is under Sell mode, suggesting money flowing out of the market. The OBV continues to remain sideways. Bollinger band has given a fresh Sell signal on Friday when both Sensex and Nifty closed below the lower Bollinger Band.

Nifty O.I. PCR has reduced to 1.06. Highest open interest buildup is seen at 5000 Put and 5300 Call. This suggests that the range for the Nifty has narrowed to 5000 on the lower side to 5300 on the higher side. High Open Interest has also been added to the 5200 Call and 4800 Put. This suggests that strong support will be witnessed at the level of 4800, incase the level of 5000 is breached. 

Trendline Resistance for the Sensex is at 17368. The Trendline Support for the Sensex is at 16770.

Trendline Resistance for the Nifty is at 5261. The Trendline Support for the Nifty falls at 5077.

For the week ahead, Sensex will find Support at 16517-16244-15962 and will find Resistance at 17122-17432-17731.

For the week ahead, Nifty will find Support at 4991-4898-4801 and will find Resistance at 5177-5279-5385.

INDEX LEVELS:  

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4801

4898

4991

5086

5177

5279

5385

Sensex

15962

16244

16517

16831

17122

17432

17731

LAST WEEKS RECOMMENDATIONS:

Almost all the recommendations did well and achieved their targets with the exception of Cairn India. But the Star performers for the week were Bank of Baroda and PFC which went down by almost 10% and 9% respectively.  

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell BoB

760

718

681

250

Rs. 19,750

Sell YesBnk

348

339

331

1000

Rs. 17,000

Sell PFC

168

154

153

2000

Rs. 30,000

Sell BGR

329

318

308

1000

Rs. 21,000

Sell Cairn

335

326

331

1000

Rs. 4,000

Total

Rs. 91,750

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell B.Dyeing

498

509

483

467

Sell M&M

687

697

672

656

Sell Siemens

749

761

730

709

Sell Jubiliant

1097

1115

1062

1024

Sell ONGC

259

263

252

245

WATCH OUT FOR:

Bombay Dyeing

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap