Archives : INFY BEATS ESTIMATES, BUT FAILS TO CHEER THE MARKET - 10/01/2014.

INFY BEATS ESTIMATES; BUT FAILS TO CHEER THE MARKET – 10/01/2014.

CRITICAL SUPPORT LINE BREACHED.

The demand trendline which was supporting the market since past week was breached and in the process short term as well as medium term trend turned bearish. That breach also completed a Bearish Rising Wedge pattern breakout. Thus despite positive results by Infy, market failed to latch on to that trigger and gave away most of its gains. Infosys beat margin estimates and it also increased overall sales outlook for the year, but had little impact on the market.

 

 


INFY BEATS ESTIMATES; BUT FAILS TO CHEER THE MARKET – 10/01/2014.

CRITICAL SUPPORT LINE BREACHED.

The demand trendline which was supporting the market since past week was breached and in the process short term as well as medium term trend turned bearish. That breach also completed a Bearish Rising Wedge pattern breakout. Thus despite positive results by Infy, market failed to latch on to that trigger and gave away most of its gains. Infosys beat margin estimates and it also increased overall sales outlook for the year, but had little impact on the market.

TECHNICALLY SPEAKING. 

Sensex opened the week at 20913, made a high of 20971, low of 20625 and closed the week at 20758. Thus it registered a weekly loss of 93 points. At the same time the Nifty opened the week at 6220, made a high of 6239, low of 6139 and closed the week at 6171. Thus the Nifty closed the week with a loss of 40 points.

On the daily charts, both Sensex and Nifty have formed a Juji as the formation has long legs. It is a neutral formation suggesting uncertainty. On the weekly charts, both the indices have formed a black body candle after the Bearish Engulfing got completed the previous week. Hence both daily as well as weekly candlestick patterns point towards a slight bearish bias in the immediate short term.

The trendline support which was supporting the market in the near past; got breached and this led to completion of Rising Wedge formation. This is a Bearish pattern breakout and the target as per this formation works out to be Sensex 19706 and Nifty 5841.

Last time the market bounced was from the Support zone between Sensex 20651 – 20636 and Nifty 6142 – 6140. This support zone is due to the confluence formed by 61.8% Retracement (Sensex – 20651 and Nifty 6141) of the immediate rise and 38.2% Retracement (Sensex – 20636 and Nifty – 6142) of the intermediate rally.

Correction will resume only if Sensex falls below 20568 and Nifty falls below the low of 6129, and for that the Correction levels will be Sensex 20636-20374-20112 and Nifty 6142-6058-5973.

From a longer term perspective, Market has a strong support zone between Sensex 19444-19264 and Nifty 5738-5688. This is a confluence zone formed by the presence of Bullish Rising Gap between Sensex 19444-19293 and Nifty 5738-5688, intermediate low of Sensex 19264 and Nifty 5700 and the 50% Retracement level which is at Sensex 19385 and Nifty 5730. Thus this is a strong Support Zone and a breach of this support zone will end the current long term uptrend.

This week, both Sensex and Nifty have closed below the medium term average of 50dma (Sensex – 20818 and Nifty – 6193) besides already being below the short term average of 20dma (Sensex – 20895 and Nifty – 6223). Also both the indices continue to stay above the long term average of 200dma (Sensex – 19809 and Nifty – 5924). Thus the trend in the short term and medium term is negative, whereas the trend in the long term timeframe continues to remain positive.

MACD and ROC are both negative and continue in their Sell mode. RSI (45) continues in Sell mode, suggesting bearish momentum. MFI (28) has gone down further below the equilibrium line, suggesting money flowing out. Stochastic Oscillator continues in Sell mode as %K (13) is below %D. ADX is at a low level of 13, suggesting that the market is still in sideways mode. The Directional Indicators have given a fresh Buy signal as +DI has gone above –DI. OBV continues with its Sell signal making lower tops lower bottoms. Thus Oscillators are pointing towards a bearish bias in the short term.

The Nifty O.I. PCR is at a low level of 0.99. For the current series, highest Open interest build up continues to be at 6000 Put and 6300 Call. This suggests that the market expects a trading range with support coming in at 6000 levels and resistance around 6300 levels. Interestingly Friday saw strong Put writing at the strike of 5800. This can be the next strong support below the level of 6000.

The Trendline Resistance for the Sensex is at 21263. The Trendline Support for the Sensex is at 20115.

The Trendline Resistance for the Nifty is at 6334. The Trendline Support for the Nifty is at 5968.

For the week ahead, Sensex will find Support at 20443-20137-19826 and will find Resistance at 21013-21331-21650.

For the week ahead, Nifty will find Support at 6079-5972-5877 and will find Resistance at 6259-6358-6472.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5877

5972

6079

6171

6259

6358

6472

Sensex

19826

20137

20443

20758

21013

21331

21650

LAST WEEKS RECOMMENDATIONS:

STOCK

Recom @

Target

Reached

Buy Lupin

932

956

951

Buy McDowell

2699

2771

2815

Buy OFSS

3361

3458

3395

Buy Havells

815

846

845

Buy Ranbaxy

478

493

490

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell ReLCap

342

348

332

321

Sell IndusInd

406

417

389

371

Sell REC

199

203

192

184

Sell Crompton

120

122

116

112

Sell IDFC

99

101

95

91

WATCH OUT FOR:

Rel Cap

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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