Archives : DR. REDDY GIVES BULL INJECTION. - 02/05/2008

DR.REDDY GIVES BULL INJECTION. – 02/05/2008.

             Dr. Reddy, in what may be his last annual credit policy, injected Viagra to the already rampaging bulls and bulls went on to do exactly as what the doctor had prescribed! Dr. Reddy kept the REPO and Reverse REPO unchanged and that cheered the market. Market went from strength to strength and in the process not only closed above the long term trendline but also above the long term averages (200DMA).

BEAR OR BULL DOES NOT MATTER.

Many analysts are pointing out that we are still in a bear market and this rally is just a bear rally. Please instead of judging whether it is a bull or bear market, why not take a call on the rally. Just see the magnitude of this rally, from 14677 to 17621 almost an astonishing 3000 points i.e. a 20% rally in the index. What more do you ask for, an index rally of more than 20% in just over a month is fantastic to say the least. I request all my readers, not to go by what analysts on TV and other media say, but to have their own bet. Just see so many stocks have already posted gains anywhere between 50 to 150% in this rally. In fact, I believe that bear rallies give you the best opportunity to make money. So please let not this opportunity go waste.

INTEREST RATES UNCHANGED.

Inflation touches 7.57%.

SENSEX.

NIFTY.

HOW TO TRADE?

LAST WEEK S RECOMMENDATIONS:

THIS WEEK S  RECOMMENDATONS:

CASH RECOMMENDATIONS:


BEAR OR BULL DOES NOT MATTER.

Many analysts are pointing out that we are still in a bear market and this rally is just a bear rally. Please instead of judging whether it is a bull or bear market, why not take a call on the rally. Just see the magnitude of this rally, from 14677 to 17621 almost an astonishing 3000 points i.e. a 20% rally in the index. What more do you ask for, an index rally of more than 20% in just over a month is fantastic to say the least. I request all my readers, not to go by what analysts on TV and other media say, but to have their own bet. Just see so many stocks have already posted gains anywhere between 50 to 150% in this rally. In fact, I believe that bear rallies give you the best opportunity to make money. So please let not this opportunity go waste.

INTEREST RATES UNCHANGED.

Dr.Reddy, provided a pleasant surprise to the markets when it was not expected. He has made a habit of surprising the markets when least expected. In the policy announced on Tuesday, the RBI governor kept the REPO and Reverse REPO unchanged and instead hiked the CRR by 25bps. It made good sense, as a rate hike would have slowed down the growth and would have made life difficult for the borrowers. FM too was in a mood to party, as he extended tax exemptions to software technology parks till March 2010, which set the IT stocks on fire. Markets rejoiced by the doctor’s injection and FM’s goodies, went up by 400 points on Tuesday.

Inflation touches 7.57%.

Inflation is constantly remaining above 7%, and came in at 7.57% v/s 7.33% for the week ended April 19, which is a 42-month high. Market had estimated inflation figure to be around 7.38%. It was the highest since a reading of 7.68% on November 13, 2004. Inspite of the inflation reaching such unexpected high levels, then too the market rallied smartly to the end the day with a gain of over 300 points. The rally was aided by short covering.

SENSEX.

Sensex opened the week at 17251, made a high of 17621, low of 16978 and closed the week at 17600. Result was net weekly gain of 475 points. In the process, Sensex managed to close above the 200 DMA-17379 and also closed the falling gap between 17227 and 17258. As a result, the short, the medium and now the long term trend has turned positive. The long term trendline is at 17070, which will provide strong support in case of a fall. The Retracement levels for the entire fall from 21206 to 14677 falls at 17942 and 18712, which will provide strong resistances. The 100DMA is placed at 17822, which too will provide resistance going forward.The MACD is already in the positive zone and will now help the Sensex gain further momentum. RSI is pointing up and also the Price ROC is signaling continued momentum. So please treat every dip as a buying opportunity. For the week ahead the Resistance is at 17822-17991-18137-18314-18712. Support is at 17517-17445-17379-17070.

NIFTY.

Nifty opened the week at 5112, made a high of 5298, low of 5079 and closed the week at 5228. Net result was a weekly gain of 117 points. In the process, Nifty has managed to close above the 200 DMA which is at 5150 and is also trading way above the long term trend line support at 5010. Going forward the 100 DMA is at 5322, which will provide immediate resistance. There is double top formation at the price of 5368, which will provide strong resistance. Nifty is now correcting its fall from 6357 to 4448 and the correction levels are placed at 5403 and 5628. Nifty future has closed at a big premium of 18 points. It shows the amount of short covering in the Nifty. Nifty OI PCR is 1.45, which shows that the market is adequately hedged. Lot of Put writing is being witnessed at 5000 and 5100 levels. Lot of call writing is being witnessed at the strike of 5400. For the week ahead, Resistance is at 5321-5368-5403-5545-5628. Support is at 5150- 5079-5010-4991.

HOW TO TRADE?

One can buy REL 1527 for a target of 1633 and 1715, and hedge it by taking a short position on the Nifty future.One can also buy MindTree 484 for a target of 533 to 552, and hedge it by buying Nifty puts.

LAST WEEK S RECOMMENDATIONS:

Once again we were almost 100%, majority of our recommendations reached their targets with ease.

Just check out how SESA GOA was on fire and gained an astonishing Rs. 885 almost 25% rise in a matter of 5 days!!! Only Welspun Guj fell short of it.

  • SESA GOA @ 3500 TGT was 3705 reached 4385!!!
  • RNRL @ 123 TGT was 129 reached 129.
  • BHARTI @ 922 TGT was 944 reached 950.
  • RENUKA SUGAR @ 129 TGT was 136 reached 136.
  • WELSPUN GUJ TGT was 465 reached 457.

All Cash Recommendations too reached their targets.

  • Mundra Port 712 TGT was 783 reached 788.
  • Mercator Lines 93 TGT was 103 reached 106.
  • Rama Newsprint 40 TGT was 44 reached 48.
  • R-Systems 107 TGT was 115 reached 118.

THIS WEEK S  RECOMMENDATONS:

  • REL 1527 SL 1461 TGT 1633-1715.
  • ICICI BANK 937 SL 913 TGT 960-999.
  • FINANCIAL TECH 1861 SL 1794 TGT 1955-1991.
  • TECH MAHINDRA 950 SL 922 TGT 988-1040.
  • SUN TV 346 SL 337 TGT 355-376.
  • JSW STEEL 916 SL 904 TGT 937-962.
  • IOB 152 SL 148 TGT 162-169.

CASH RECOMMENDATIONS:

  • MINDTREE 484 SL 471 TGT 497-533-552.
  • TORRENT POWER 138 SL 133 TGT 144-150.
  • SREI INFRA 164 SL 154 TGT 180-186.
  • JYOTHI 102 SL 97 TGT 110-121.
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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