Archives : MID-CAPS CORRECT - 11/01/2013.

MID – CAPS CORRECT – 11/01/2013.

INFY SUPPORTS THE MARKET.

Infosys rallied around 17% on Friday on the back of strong quarterly results and an upping of revenue guidance. Even though the Sensex and Nifty showed minor losses for the day, the ground reality was totally different. The overall market was in correction mode with the exception of IT stocks. Had it not been for Infosys, the indices would have been down by a considerable margin.

ONLY A SHORT TERM CORRECTION.

Even if the bearish undertone continues, it will only lead to a correction in the short term timeframe without affecting the medium and long term trends. In that case strong support will be seen near the first correction level of Nifty 5853. So any further dip towards the above mentioned level, will present a buying opportunity in the higher timeframe.

  


MID – CAPS CORRECT – 11/01/2013.

INFY SUPPORTS THE MARKET.

Infosys rallied around 17% on Friday on the back of strong quarterly results and an upping of revenue guidance. Even though the Sensex and Nifty showed minor losses for the day, the ground reality was totally different. The overall market was in correction mode with the exception of IT stocks. Had it not been for Infosys, the indices would have been down by a considerable margin.

ONLY A SHORT TERM CORRECTION.

Even if the bearish undertone continues, it will only lead to a correction in the short term timeframe without affecting the medium and long term trends. In that case strong support will be seen near the first correction level of Nifty 5853. So any further dip towards the above mentioned level, will present a buying opportunity in the higher timeframe.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19820, made a high of 19856, low of 19596 and closed the week at 19663. Thus it registered a weekly loss of 121 points. At the same time the Nifty opened the week at 6042, made a high of 6042, low of 5940 and closed the week at 5951. Thus the Nifty went down by 65 points on a weekly basis.

Both the indices have formed a black body candle on the weekly charts. Nifty has formed a black body candle such that it forms a Bearish Reversal pattern called Dark Cloud Cover. But the Sensex has formed a smaller black body candle which does not close below the mid-point of the previous weeks candle and hence can be classified as a Bullish Continuation pattern on similar lines as Thrusting. Hence we wait for the next weeks candle for confirmation. On the daily charts both the indices have formed black body candle while moving sideways with a negative bias.

Currently the indices are undergoing a short term retracement or correction of the previous rise from Sensex 18255 to 19856 and Nifty 5548 to 6042. The correction levels are at 19244–19056-18867 for the Sensex and 5853-5795-5736 for the Nifty. Strong support will be seen at the 38.2% correction level of Sensex 19244 and Nifty 5853 which is near by to the minor intermittent bottom. Hence any dip towards these levels should be treated as a buying opportunity.

When the Sensex closed the previous week above 19612 & Nifty above 5965, a Flag formation on the weekly charts got completed. The Flag pole started from a low of Sensex 18255 and Nifty 5548 and the targets as per this formation are Sensex 20969 and Nifty 6382. The targets will be achieved as long as Sensex remains above 19149 and Nifty above 5823. Since the Sensex and Nifty are still way higher, the above mentioned targets are likely to be achieved.

The indices are just above the short term average of 20dma (Sensex – 19511 and Nifty – 5931), the medium term average of 50dma (Sensex – 19130 and Nifty – 5817), and long term average of 200dma (Sensex – 17840 and Nifty – 5415). Thus the trend in the short term, medium term and long term timeframes continue to remain bullish.

On the daily chats, both Sensex and Nifty have formed a Bullish Diamond pattern and the target as per this formation is Sensex 20171 and Nifty 6192. Also market had tested the Falling Channel Top and bounced back from there. Hence the overall long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

On the weekly charts, both the indices have been moving higher in Flag formations and it had previously completed a Flag formation and the target according to the pattern comes in at Sensex 21024 and Nifty 6415. The targets will be achieved as long as the Sensex remains above 18255 and Nifty 5548. If we take the Saucer formation which is due to the fall from Sensex 18523 to 15748 and Nifty 5629 to 4770, then the target comes in at Sensex 21298 and Nifty 6488. Hence we have a Target zone of 21024 - 21298 on the Sensex and 6415 - 6488 on the Nifty.

Both the indices had bounced back from Sensex 18255 and Nifty 5548 which is within the Bullish Rising Gap between Sensex 18062-18284 and Nifty 5447-5526. This gap has acted as a strong support for the market even before as the Sensex had bounced back from a low 18291 and Nifty 5534. This gap holds more significance because a breach of this gap will signal the end of the current rally.

MACD has given a Sell signal this week even while remaining in positive zone. ROC too is positive but continues in Buy mode. The RSI has moved lower and is at 56, indicating that the bullish momentum is not lost entirely. MFI is just above the equilibrium line at 51. Stochastic Oscillator at 60 continues in Sell mode as %K is below %D. ADX has started to move up once again and is currently at 34 indicating that the uptrend is now strong. The Directional Indicators continue in Buy mode as +DI remains above -DI. Meanwhile OBV remains sideways. Bollinger Band continues with its Buy signal given two weeks back. Thus the Oscillators are not giving a clear picture in the short term.

The Nifty O.I. PCR is steady at 1.25. Highest Open interest build up for the January series is at 6200 Call and 5700 Put. This suggests that the market expects a trading range for the Nifty with support coming in at 5700 and resistance around 6200 levels. Friday saw strong Call writing at the strike of 6000 indicating a short term resistance at that level.

Trendline Support for the Sensex is at 19385. Trendline Resistance for the Sensex is at 19859.

Trendline Support for the Nifty is at 5893. Trendline Resistance for the Nifty falls at 6044.

For the week ahead, Sensex will find Support at 19396-19137-18862 and will find Resistance at 19856-20045-20238.

For the week ahead, Nifty will find Support at 5881-5815-5744 and will find Resistance at 6021-6110-6185.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5744

5815

5881

5951

6021

6110

6185

Sensex

18862

19137

19396

19663

19856

20045

20238

LAST WEEKS RECOMMENDATIONS: 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

FinTech

1170

1213

1183

250

Rs. 3,250

Buy JainIrr

79

83

85

4000

Rs.24,000

CenTex

448

463

452

1000

Rs.4,000

UcoBnk

84

88

87

4000

Rs.12,000

Buy Sintex

70

74

72

4000

Rs. 8,000

Total

Rs.51,250

THIS WEEKS RECOMMENDATIONS:

This week is expected to be very volatile and hence Pair Strategies are suggested. 

PAIR NO.

STOCK

CMP

SL

TGT - 1

TGT -2

1

Buy

TCS

1306

1290

1329

1353

Sell

JP Ass

93

95

90

86

2

Buy

Sintex

70

68

74

79

Sell

AdaniEnt

261

266

253

244

3

Buy

MindTree

733

720

755

778

Sell

Bhel

227

230

222

217

WATCH OUT FOR:

JP Associates

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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