Archives : REFORMS PUSHES THE MARKET HIGHER - 14/09/2012.

REFORMS PUSHES THE MARKET HIGHER – 14/09/2012.

GOVERNMENT IN REFORMS MODE.

Sensex rallied by over 400 points on Friday on the back of Rs 5/litre hike in diesel prices and announcement of QE 3 by Ben Bernake. But more was to follow as Friday evening saw the Government continuing with reform process and saw important announcement regarding FDI. The Government relaxed FDI in Retail, Aviation, Power Exchanges and Broadcast Services, which were stalled due to political reasons. The message that the Government has send to the market and potential investors is that the Reforms are back and the Government is ready to take tough decisions. This move will certainly be taken very positively by the market and the effect will be seen on Monday.

  


REFORMS PUSHES THE MARKET HIGHER – 14/09/2012.

GOVERNMENT IN REFORMS MODE.

Sensex rallied by over 400 points on Friday on the back of Rs 5/litre hike in diesel prices and announcement of QE 3 by Ben Bernake. But more was to follow as Friday evening saw the Government continuing with reform process and saw important announcement regarding FDI. The Government relaxed FDI in Retail, Aviation, Power Exchanges and Broadcast Services, which were stalled due to political reasons. The message that the Government has send to the market and potential investors is that the Reforms are back and the Government is ready to take tough decisions. This move will certainly be taken very positively by the market and the effect will be seen on Monday.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17780, made a high of 18498, low of 17677 and closed the week at 18464. Thus it registered a strong weekly gain of 715 points. At the same time the Nifty opened the week at 5361, made a high of 5586, low of 5332 and closed the week at 5577. Thus the Nifty went up by 219 points on a weekly basis.

Both Sensex and Nifty opened with a big gap up on Friday and went from strength to strength and in the process registered a big Opening White body Marubuzo on the daily charts. On the weekly charts too, both the indices have formed a big white body candle. Thus both the weekly as well as daily formations show continuation of bullishness.

Once again this Friday saw a big gap up opening after which the market went from strength to strength. Thus a Bullish Rising Gap has been created between Sensex 18062-18284 and Nifty 5447-5526 which can be termed as a Measuring Gap. The target according to Measuring Gap theory falls at Sensex 19096 and Nifty 5758. Besides giving the target, the gap will also act as a support.

Both Sensex and Nifty need to close above their critical Resistance zone between Sensex 18523-18827 and Nifty 5629-5648. In doing so, both the indices will have overcome not only their previous intermittent top and also the 61.8% Retracement of the entire fall from Sensex 21108 to 15135 and Nifty 6338 to 4531. In doing so, the indices will have registered a higher top, higher bottom formation for the first time on the weekly charts and also the long term correction will be deemed complete.

On the weekly charts, both Sensex and Nifty have formed a Bullish Diamond pattern and the target as per this formation is Sensex 20171 and Nifty 6192. The targets will be achieved as long as the market stays above Sensex 15748 and Nifty 4770.

This week both Sensex and Nifty have traded well above their short term average of 20dma (Sensex – 17705 and Nifty – 5353), medium term average of 50dma (Sensex – 17460 and Nifty – 5290) and the long term average of 200dma (Sensex – 17011 and Nifty – 5150). Thus the trend in the short term, medium term and the long term timeframe are all up.

Market is now well above the level of the Falling Channel Top which comes in at Sensex 15576 and Nifty 4711. These levels should now provide 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.

MACD and ROC continue with their buy signals and both are in positive territory. RSI has moved higher at 74 and has entered overbought zone and same is the case with Stochastic Oscillator which too has entered overbought zone as %K is at 96. ADX has improved to 21 which suggest that a trend is being established. Also the Directional Indicators continue in buy mode as +DI is way above –DI. MFI has moved above the centerline at 53 which suggest that money is flowing into the market. The OBV indicator has also signaled a Buy as it has crossed the previous top. On Friday, both the indices have closed above the upper Bollinger Band and thus signaled a Buy.

The Nifty O.I. PCR has increased to 1.47. 5500 Put has added very high open interest which suggests that the market will find support at that level. Friday saw very high Put writing at the strike of 5600 which means that the market is likely to move above that level. Also 5600 Call has seen buying which means that the market is likely to move higher in the short term. Call writing is seen at 5700 which will act as a resistance in the short term.

Trendline Support for the Sensex is at 17947.

Trendline Support for the Nifty falls at 5420.

For the week ahead, Sensex will find Support at 18172-17867-17575 and will find Resistance at 18779-19074-19341.

For the week ahead, Nifty will find Support at 5486-5393-5309 and will find Resistance at 5670-5763-5855.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5309

5393

5486

5577

5670

5763

5855

Sensex

17575

17867

18172

18464

18779

19074

19341

LAST WEEKS RECOMMENDATIONS:

It was a great week as all the recommendations reached their targets with ease. But the star performer of the week was Financial Technology which went up by around 7%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Maruti

1205

1253

1268

250

Rs.15,750

AsianPnt

3770

3865

3917

125

Rs.18,375

FinTech

867

912

927

500

Rs.30,000

Buy SunTV

308

316

316

1000

Rs. 8,000

Buy Titan

227

240

244

1000

Rs.17,000

Total

Rs.89,125

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Grasim

3111

3076

3163

3217

Buy BajAuto

1744

1725

1774

1809

Buy AllahBnk

124

122

129

134

Buy IDBI

90

88

94

99

Buy AdaniEnt

188

184

195

204

WATCH OUT FOR:

IDBI

Adani Entp

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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