Archives : TALE OF TWO MARKETS - 25/01/2013.

TALE OF TWO MARKETS – 25/01/2013. 

MIDCAP CARNAGE.

. 

What can one say when the large cap universe behaves so differently as compared to small and midcap universe. Whereas the index just went down by around 1%, the midcap index went down by around 10%. There may be reasons behind this sharp fall, but the key question remains; whether this correction in the midcap universe now shifts to the index or not. Friday’s closing once again underlines the strength of the bulls in the market. Ideally speaking a small correction after reaching target levels of Nifty 6150-6200 will augur well for the broader market as it will prepare the market to test the previous high.

 


TALE OF TWO MARKETS – 25/01/2013. 

MIDCAP CARNAGE.

What can one say when the large cap universe behaves so differently as compared to small and midcap universe. Whereas the index just went down by around 1%, the midcap index went down by around 10%. There may be reasons behind this sharp fall, but the key question remains; whether this correction in the midcap universe now shifts to the index or not. Friday’s closing once again underlines the strength of the bulls in the market. Ideally speaking a small correction after reaching target levels of Nifty 6150-6200 will augur well for the broader market as it will prepare the market to test the previous high.

TECHNICALLY SPEAKING. 

Sensex opened the week at 20132, made a high of 20163, low of 19884 and closed the week at 20103. Thus it registered a weekly gain of 64 points. At the same time the Nifty opened the week at 6085, made a high of 6101, low of 6007 and closed the week at 6074. Thus the Nifty went up by 10 points on a weekly basis.

Both Sensex and Nifty have formed a big white body candle on Friday in accordance with the uptrend. On the weekly charts both the indices have formed a small black body candle with a long lower shadow and a small upper shadow. Long lower shadow is because of the pull back by the indices from lower levels. Candlestick formation suggests bullishness to continue.

The indices have moved lower and nearer to the short term average of 20dma (Sensex – 19827 and Nifty – 6011), but still remains above that. 20dma will provide support in the short term. The indices continue to remain above the medium term average of 50dma (Sensex – 19385 and Nifty – 5888), and long term average of 200dma (Sensex – 17974 and Nifty – 5454). Thus the trend in the short term, medium term and long term timeframes continue to remain bullish.

Correction will be strengthened if the indices close below the 20dma i.e. Sensex 19827 and Nifty 6011. In case of correction continuing, the minimum retracement levels for the Sensex will be 19775-19656-19536 and 5995-5962-5929 for the Nifty.

When the Sensex closed 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.

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.

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.

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.

MACD has given a Sell signal while remaining in positive zone. ROC has moved lower but is positive and continues in Buy mode. The RSI at 61, is still above the centerline. Stochastic Oscillator remains in Sell mode as %K (67) is below %D. MFI has gone below the centerline and is at 36, which suggest money flowing out of the market. ADX has remained higher around 36 indicating that the uptrend is still intact. The Directional Indicators continue in Buy mode as +DI remains above -DI. OBV too continues to remain in Buy mode. Bollinger Band too continues with its Buy signal. Thus oscillators are giving mixed signals.

The Nifty O.I. PCR is at 1.43. Highest Open interest build up is at 6200 Call and 6000 Put. This suggests that the market expects a trading range for the Nifty with support coming in at 6000 and resistance around 6200 levels. On Friday very high amount of Put writing was seen at 6000 levels suggesting that this level will act as strong support level.

Trendline Support for the Sensex is at 19955 and for the Nifty is at 6027.

Trendline Resistance for the Sensex is at 20311 and for the Nifty is at 6120.

For the week ahead, Sensex will find Support at 19856-19596-19285 and will find Resistance at 20383-20664-20917.

For the week ahead, Nifty will find Support at 5988-5899-5815 and will find Resistance at 6151-6223-6303.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5815

5899

5988

6074

6151

6223

6303

Sensex

19285

19596

19856

20103

20383

20664

20917

LAST WEEKS RECOMMENDATIONS: 

STOCK

Recom @

Target

Reached

Buy FinTech

1182

1202

1198

Buy RiL

900

920

955

Buy IGL

274

287

280

Buy JsWEng

69

72

75

Buy UniPhos

141

146

144

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy SBI

2513

2488

2551

2590

Buy Maruti

1599

1585

1621

1645

Buy L&T

1611

1596

1636

1661

Buy KotakBnk

665

657

677

690

Buy Satyam

120

116

127

135

 

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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