Archives : MARKET IN TWENTY-20 MODE. - 25/04/2008
Market in Twenty-20 mode. – 25/04/2008.
Just refresh your memories, what we had written last week about how the RBI governor will spring a surprise regarding the CRR hike and he did not let us down. He surprised on Friday evening itself. That’s the way he works, unpredictable. Another thing we mentioned was that the market had given a bullish pattern breakout and the indicators too had given a buy signal and so every downfall was a buying opportunity. See how the market went up and on the way, it managed to close above the long term trendline (16943) of more than four years and as a result of which the markets will gain momentum.
- GLOBAL MARKETS TO THE RESCUE.
- Inflation inline with expectations.
- THANKS TO SASKEN COMMUNICATIONS.
- HOW TO TRADE?
- LAST WEEK S RECOMMENDATIONS:
- THIS WEEK S RECOMMENDATONS:
- CASH RECOMMENDATIONS:
GLOBAL MARKETS TO THE RESCUE.
Global markets aided our market to post splendid bounce. Chinese markets rose more than 9% in a single day, almost an upper circuit, because the Chinese government cut the stamp duty on stocks from 0.3% to 0.1%. This Chinese bullish flu spread to the Asian markets and that had a major impact on our markets. As a result our market was up by more than 644 points on a weekly basis. Hope our government takes a cue from the Chinese government.
Inflation inline with expectations.
Inflation, for the week ended April 12th 2008, stood at 7.33% versus 7.14%. The market had estimated at 7.29%. Inflation was almost in line with what the market had expected. As a result the market rallied and closed with a gain of 404 points on Friday. Being an election year, the government is very serious about controlling inflation. Since it is above 7% consistently chances are the RBI may hike REPO rates.
THANKS TO SASKEN COMMUNICATIONS.
Sasken Communications recommended at 136 to all our readers achieved all the targets and was on fire. It reached a high of 220 i.e. a rise of a whopping 61% in a week’s time. Our readers were happy and so are we as you are the ones for whom we toll and if you make money we are the happiest. Sasken Comm went up as the company announced a very good result and a buy back offer as well at 260. This provided a much needed boost to the stock and the stock flew in to the skies.
I would like to clarify one thing over here, this was possible only because of technical analysis and it is very easy. So for every serious trader and investor who dreams of making money at the bourses, it is imperative that they have the knowledge of technical analysis.
Sensex opened the week at 16611, made a high of 17150, low of 16589 and closed the week at 17125. Result was net weekly gain of 644 points. Just as we said last week Sensex had given a bullish breakout and hence it went up this week. As a result the short and the medium term trend has turned positive and on the way Sensex closed above the four year trendline (16943). Long term trend is on the verge of turning positive and will do so when it is able to cross and close above the 200DMA which is falling at 17331. The trendline support is at 16943-16344-16179-15963. On the way up there is an unfilled gap between 17227 and 17258 which will be tested next week. On the down side there is a gap left this week between 16570 and 16589. The Retracement level of the fall from 18899 to 14677 falls at 16288, which is coinciding with the gap and the 200 DMA. This zone of 17200 to 17350 will be the key resistance zone and will not be easy to surpass. The Retracement levels for the entire fall from 21206 to 14677 falls at 17942 and 18712.The indicators are in momentum mode. The MACD has crossed over into the positive zone and will now help the Sensex gain further momentum. RSI is also moving up. The Price ROC is signaling further momentum. For the week ahead the Resistance is at 17227-17331-17942-18712. Support is at 16943-16570-16344-16179.
Nifty opened the week at 4955, made a high of 5117, low of 4955 and closed the week at 5111. Net result was a weekly gain of 153 points. The long term trend line is falling at 4970, and the Nifty has managed to stay above that which will provide momentum. The trendline support at 4971-4954-4868-4800. Nifty will face strong resistance at 5134 levels, which is where the 200 DMA falls and it is coinciding with the Retracement level of the fall from 5545 to 4468. Nifty future has closed at a premium of 14 points. Nifty OI PCR is 1.40, which shows that the market is adequately hedged. Lot of Put writing is being witnessed at 4900 and 5000 levels. Nifty futures closed the week at a premium of 14 points. For the week ahead, Resistance is at 5134-5342-5403-5628. Support at 5052- 4970-4954-4868.
HOW TO TRADE?
One can construct a bull call spread for RNRL and RCOM. Other strategy would be to buy Bharti and hedge it by taking a short position on the Nifty future.
LAST WEEK S RECOMMENDATIONS:
Once again inspite of very volatile and uncertain market conditions, majority of our recommendations reached their targets with ease. Guj Alkali will reach the target this week.
ESCORTS @ 96 TGT was 103-108 reached 108.
STERLITE OPTIC 189 TGT was 202 reached 210.
GUJ ALKALI @ 192 reached 197.
HIND ZINC @593 TGT was 615-655 reached 674.
GUJ NRE COKE @ 156 TGT 168-175 reached 175.
THIS WEEK S RECOMMENDATONS:
RNRL:123 SL 117 TGT 129-140.
BHARTI: 922 SL 890 TGT 944-965-983.
SESA GOA: 3500 SL 3440 TGT 3568-3630-3705.
RENUKA SUGAR 129 SL 122 TGT 136-147.
WELSPUN GUJ 451 SL 436 TGT 465-484.
Mundra port (712) has given a bullish breakout and if it stays above 670, will achieve a target of 761-783-830.
Mercator Lines (93) has given a bullish volume led breakout and if it stays above 90, it will have a target of 103-108-118.
Rama Newsprint (40) SL 37 TGT 44-48.
R-Systems (107) SL 102 TGT 115-124.