Archives : TIME FOR BUDGET-2013 - 22/02/2013.

TIME FOR ‘BUDGET – 2013’ – 22/02/2013.

FM TO DELIVER.

It is again that time of the year, when the market expects the FM to weave magic and deliver a big-reform Budget. Until now the FM has managed expectations rather well and that has made India Inc look forward to the Budget with great optimism. It is given that the FM will try everything to reduce widening fiscal deficit. Besides rolling out the roadmap for GST, it will be necessary for the FM to boost investor confidence as well. Even though this will be the last budget before elections, populism will not be at the expense of prudence.

 

 


TIME FOR ‘BUDGET – 2013’ – 22/02/2013.

FM TO DELIVER.

It is again that time of the year, when the market expects the FM to weave magic and deliver a big-reform Budget. Until now the FM has managed expectations rather well and that has made India Inc look forward to the Budget with great optimism. It is given that the FM will try everything to reduce widening fiscal deficit. Besides rolling out the roadmap for GST, it will be necessary for the FM to boost investor confidence as well. Even though this will be the last budget before elections, populism will not be at the expense of prudence.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19496, made a high of 19742, low of 19289 and closed the week at 19317. Thus it registered a weekly loss of 151 points. At the same time the Nifty opened the week at 5888, made a high of 5971, low of 5835 and closed the week at 5850. Thus the Nifty went down by 37 points on a weekly basis.

Both Sensex and Nifty have formed a small black body with a long upper shadow on the weekly charts. The upper shadow is because of some buying seen at lower levels, but could not be sustained. On the daily charts, Sensex has formed a neutral formation in the form of a small black body candle whereas the Nifty has formed a small white body candle with a long upper shadow, which is just falling short of being called an Inverted Hammer. This is a neutral formation coming in the wake of a downtrend; hence it indicates a reduction in the bearish momentum.

This week both the indices tested the short term average of 20dma (Sensex – 19645 and Nifty – 5949) but could not surpass it. Both Sensex and Nifty continue to remain below the medium term average of 50dma (Sensex – 19659 and Nifty – 5961) and hence the both short and medium term trends continue to be bearish. However, the indices continue to remain above the long term average of 200dma (Sensex – 18226 and Nifty – 5529). Thus the trend in the short term and medium term timeframe continues to be down, while that in the long term timeframes continues to remain bullish.

A key long term trendline starting from low of Sensex 15748 and Nifty 4770 was breached and as a result the market is in correction mode. If we consider the rally from Sensex 18255 to 20203 and Nifty 5548 to 6111, then the minimum retracement levels for the Sensex will be 19459-19229-18999 and 5896-5830-5763 for the Nifty.

The 50% Retracement level of both the indices is likely to provide strong support as that level is in very close vicinity of previous intermittent low (Sensex 19149 and Nifty 5823) and the 100dma (Sensex – 19239 and Nifty – 5841). Thus zone between Sensex 19239-19148 and Nifty 5841-5815 is likely to act as strong Support zone.

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.

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 daily charts, both Sensex and Nifty had formed a Bullish Diamond pattern and the target as per this formation was Sensex 20171 and Nifty 6192. The target has been achieved in Sensex. 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.

MACD and ROC both are negative and continue in Sell mode. The RSI at 36 continues to fall and is indicating bearish momentum. Stochastic Oscillator is in oversold zone at 19 but %K is below %D. MFI has moved higher but is still below the centerline at 43, hence it continues in Sell mode. ADX continues to remain low and is currently at 23, suggesting a reduction in the strength of the current trend. The Directional Indicators are in Sell mode as +DI continues to remain below -DI. OBV continues in its Sell mode. Bollinger Band continues with its Sell signal. Majority of oscillators are in Sell mode and hence one can expect bearishness to continue in the short term.

The Nifty O.I. PCR has reduced further to 0.83. Highest Open interest build up is at 6000 Call and 5800 Put. Even for the next month series, the highest build up is at 6000 Call and 5800 Put, followed by 5700 Put. Despite the prevailing bearishness in the market, 5800 continues to be strong support according to the options data. This suggests that the market expects a trading range for the Nifty with support coming in at 5800 and resistance around 6000 levels. One can expect volatility to increase in the coming week so it would not be a bad idea to apply long Vega strategies.

Trendline Support for the Sensex is at 19096. Trendline Resistance is at 19644.

Trendline Support for the Nifty is at 5798. Trendline Resistance is at 5942.

For the week ahead, Sensex will find Support at 18973-18687-18393 and will find Resistance at 19596-19884-20203.

For the week ahead, Nifty will find Support at 5751-5658-5548 and will find Resistance at 5937-6020-6111.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5548

5658

5751

5850

5937

6020

6111

Sensex

18393

18687

18973

19317

19596

19884

20203

LAST WEEKS RECOMMENDATIONS:

It was a very volatile week, but the star performer for the week was Punj Llyod which went down by around 6%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell Cairn

304

295

302

1000

Rs. 2,000

Sell BajAut

1970

1937

1935

125

Rs. 4,375

PunjLyd

48

45

45

8000

Rs.24,000

LiCHsg

248

240

239

1000

Rs. 9,000

Sell IndHot

60

57

58

4000

Rs. 8,000

Total

Rs.47,375

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Infosys

2840

2819

2871

2906

Buy TechMah

1039

1027

1061

1084

Buy DLF

281

276

289

298

Buy HCLTech

720

708

736

754

Buy McLeod

382

372

396

411

WATCH OUT FOR:

Tech Mahindra

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