Archives : NIFTY GAP 5526-5447 HOLDS FOR NOW - 08/08/2013.

NIFTY GAP 5526-5447 HOLDS FOR NOW – 08/08/2013.

ONLY A RELIEF RALLY.

As expected Market found support in the Gap between Nifty 5526-5447. This is a critical Bullish Rising Gap which is holding the market from a long term perspective. Nifty bounced after testing this gap by making an intra-week low of 5486 and managed to close the week above this gap. Since the indices were hammered down in the past three weeks, some sort of relief was expected. This is merely a pull-back or a relief rally, so one should not mistake this rally as a trend reversal. If the Nifty continues to remain above 5486, then the correction levels will be 5718-5790-5861.

 

  


NIFTY GAP 5526-5447 HOLDS FOR NOW – 08/08/2013.

ONLY A RELIEF RALLY.

As expected Market found support in the Gap between Nifty 5526-5447. This is a critical Bullish Rising Gap which is holding the market from a long term perspective. Nifty bounced after testing this gap by making an intra-week low of 5486 and managed to close the week above this gap. Since the indices were hammered down in the past three weeks, some sort of relief was expected. This is merely a pull-back or a relief rally, so one should not mistake this rally as a trend reversal. If the Nifty continues to remain above 5486, then the correction levels will be 5718-5790-5861.

TECHNICALLY SPEAKING.

Sensex opened the week at 19178, made a high of 19306, low of 18551 and closed the week at 18789. Thus it registered a weekly loss of 375 points. At the same time the Nifty opened the week at 5682, made a high of 5721, low of 5486 and closed the week at 5565. Thus the Nifty went down by 112 points on a weekly basis.

On the daily charts, Nifty has formed a Bullish Engulfing pattern if we consider the last two day candles. However Sensex has failed to do so. Hence we will require a confirmation in the form of a real white body candle formation on Monday, which will signal a short term trend reversal. There is a Bearish Black body candle on the weekly charts; if we consider the last three weeks formation, then a Bearish Three Black Crows formation has been completed. This is a Bearish pattern which means that the trend in slightly higher timeframe continues to remain bearish. Hence Bears are likely to build short positions on every increment.

Currently both the indices have managed to rise after making lows of Sensex 18551 and Nifty 5486. As long as the indices continue to remain above these levels, the market will experience a minor pull-back and the corresponding Correction levels for that are Sensex 19238-19451-19663 and Nifty 5718-5790-5861.

After filling the two Upward Bullish Rising Gaps, this week the market tested the most important Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447. Nifty managed to bounce back after making an intra-week low of 5486 inside the gap and closed the week above this gap, whereas the Sensex bounced from18551 which was above this gap. Market has managed to bounce back number of times from above this Gap but a breach of this gap will signal the end of the long term rally.

From a longer term perspective both the indices are undergoing a correction of rise from Sensex 15135 to 20443 and Nifty from 4531 to 6229. The corresponding correction levels are at Sensex 18416-17789-17163 and Nifty 5580-5380-5179.

Some time back Nifty gave a Rising Wedge bearish breakout and the target as per this breakout fell at Nifty 5566, the point from where the rally started. This week, Nifty achieved its target when it made a low of 5486.

This week both the indices have remained below the short term average of 20dma (Sensex – 19615 and Nifty – 5848), the medium term average of 50dma (Sensex – 19390 and Nifty – 5825) and the long term average of 200dma (Sensex – 19339 and Nifty – 5851). Thus the trend in the short term, medium term and long term timeframe continue to remain bearish.

MACD and ROC both are negative and continue with their Sell signal. RSI (32) continues in Sell mode suggesting high bearish momentum. Stochastic Oscillator has signaled a fresh Buy in oversold condition as %K (07) has gone above %D. MFI (21) has remained below the equilibrium line which suggests money flowing out of the market. ADX has improved and is above 23 suggesting that the current trend is now gathering strength. The Directional Indicators continue with its Sell signal as -DI is above +DI. OBV continues to make lower top lower bottom formation and hence it remains in its Sell mode. On Tuesday, both the Sensex and Nifty closed below the lower Bollinger band, signaling a Sell. Thus majority of the Oscillators points towards bearishness to continue in the near term.

The Nifty O.I. PCR has reduced and is now at 0.93. For the current month series, highest Open interest build up is seen at 5400 Put and 6000 Call. This suggests that the market expects a wide trading range with support coming in at 5400 levels and resistance around 6000 levels. Friday saw high amount of Call writing at 5700 strike which suggests immediate resistance to come in at that level.

The Trendline Resistance for the Sensex is at 19100. The Trendline Support for the Sensex is at 18100.

The Trendline Resistance for the Nifty is at 5625. Trendline Support for the Nifty falls at 5385.

For the week ahead, Sensex will find Support at 18467-18144-17884 and will find Resistance at 19078-19383-19640.

For the week ahead, Nifty will find Support at 5477-5399-5309 and will find Resistance at 5649-5739-5823.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5309

5399

5477

5565

5649

5739

5823

Sensex

17884

18144

18467

18789

19078

19383

19640

LAST WEEKS RECOMMENDATIONS:

The Recommendations of the previous week reached their targets with the exception of M&M, Kotak Mahindra Bank and Reliance Infra. But the Star Performers of the week were Ultra-Tech Cement and Bajaj Auto which went down by more than 8% respectively!!!

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

UltraTech

1779

1683

1624

125

Rs.19,375

Sell BajAut

1909

1813

1748

125

Rs.20,125

Sell M&M

855

819

837

250

Rs. 4,500

Sell Kotak

654

622

630

500

Rs.12,000

Sell ReLInf

312

301

308

1000

Rs. 4,000

Total

Rs.60,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Grasim

2434

2485

2352

2268

Sell HDFCBk

610

625

586

561

Sell AsianPnts

431

442

415

398

Sell HDFC

747

761

723

698

Sell ITC

325

330

317

309

WATCH OUT FOR:

HDFC Bank

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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