Archives : NIFTY 6188-6243 : CHALLENGE FOR THE BULLS - 21/02/2014.

NIFTY 6188 - 6243 : CHALLENGE FOR THE BULLS –  21/02/2014.

FIRST BEARISH GAP CONQUERED.

Last week the Bulls rode on the interim budget and made sure that they not only conquered the first bearish gap between Nifty 6097 – 6109, but also close well above that. The next gap between Nifty 6188-6243 is a weekly gap which coincides with daily gap as well and is likely to provide a stern test for the bulls. A weekly closing above this gap will pave the way towards testing the previous top for the markets.

INTERIM BUDGET.

The interim budget was almost a non-event except for the surprise dramatic excise duty cut especially for the auto industry. It sounded very ambitious when the FM put the target for Fiscal deficit at 4.1% but in doing so he put the onus of achieving this ambitious target on the next government, which he knows is unlikely to be congress led.

  


NIFTY 6188 - 6243 : CHALLENGE FOR THE BULLS –  21/02/2014.

FIRST BEARISH GAP CONQUERED.

Last week the Bulls rode on the interim budget and made sure that they not only conquered the first bearish gap between Nifty 6097 – 6109, but also close well above that. The next gap between Nifty 6188-6243 is a weekly gap which coincides with daily gap as well and is likely to provide a stern test for the bulls. A weekly closing above this gap will pave the way towards testing the previous top for the markets.

INTERIM BUDGET.

The interim budget was almost a non-event except for the surprise dramatic excise duty cut especially for the auto industry. It sounded very ambitious when the FM put the target for Fiscal deficit at 4.1% but in doing so he put the onus of achieving this ambitious target on the next government, which he knows is unlikely to be congress led.

TECHNICALLY SPEAKING.

Sensex opened the week at 20438, made a high of 20750, low of 20338 and closed the week at 20700. Thus it registered a weekly gain of 334 points. At the same time the Nifty opened the week at 6057, made a high of 6160, low of 6038 and closed the week at 6155. Thus the Nifty closed the week with a gain of 107 points.

On the daily charts, both Sensex and Nifty have formed an Opening White body Marubuzo after a black body formation on the previous day, suggesting that the short term uptrend continues. The weekly chart has seen formation of big white body candle after two neutral candle-stick formations. Thus it suggests that the weekly bias has also turned bullish.

This week, the market overcame the first Bearish Gap between Sensex 20572 - 20613 and Nifty 6097 – 6109 and closed well above that. Now the bulls have trained their guns on the second Bearish Gap between Sensex 20899-21123 and Nifty 6188-6263 which holds greater significance as it matches with the formation of weekly Bearish Gap i.e. Sensex 20899-21001 and Nifty 6188-6243 and the 61.8% Retracement (Sensex – 20902 and Nifty – 6231) of the recent fall. Hence for the upward move to continue it becomes imperative for the market to close above this Resistance zone. A weekly closing above this gap will pave the way for the market to test the previous top.

Both the indices are witnessing a pull-back from lower levels. The pull-back levels of the fall from Sensex 21483 to 19963 and Nifty 6415 to 5933 are 20544-20723-20902 for the Sensex and 6117-6174-6231 for the Nifty.

On a larger degree, the Market is undergoing a Correction of the medium term rally from 17448 to 21483 for the Sensex and 5118 to 6415 for the Nifty. Accordingly the Intermediate Retracement levels fall at Sensex 19942-19466-18990 and 5920-5767-5614 for the Nifty. Last time both Sensex and Nifty has rebounded from the 38.2% Retracement of above mentioned rally.

A Bearish Rising Wedge formation got completed sometime back and the target as per this formation works out to be Sensex 19706 and Nifty 5841. The target is likely to be achieved as long as the Sensex remains below 21483 and Nifty below 6415.

From a longer term perspective, Market has strong Support zone between Sensex 19466-19264 and Nifty 5767-5688. 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 19466 and Nifty 5767. 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 managed to close above the short term average of 20dma (Sensex – 20459 and Nifty – 6075) but they are still below the medium term average of 50dma (Sensex – 20783 and Nifty – 6179). Both the indices continue to remain above the long term average of 200dma (Sensex – 20065 and Nifty – 5983). Thus the trend in the short term has turned positive while the trend in the medium term timeframe remains bearish and in the long term timeframe remains positive.

MACD continues with its Buy signal despite being in the negative zone. ROC is positive and continues with its Buy signal. RSI (52) has just crossed the equilibrium line suggesting bullish momentum. MFI (77) continues to move higher, suggesting money inflow. Stochastic Oscillator continues in Buy mode as %K (88) remains above %D. ADX (25) has reduced slightly but still suggests that the trend is strong. The Directional Indicators continue with its Sell signal as -DI remains above +DI. Even though OBV has moved higher, it is yet to cross the previous intermittent top. The Sell signal in Bollinger Band got negated this week when the indices managed to close above the mean of 20dma. Thus Oscillators suggests positive bias in the near term.

The Nifty O.I. PCR has increased and is now at 1.57. For the Feb series, highest Open interest build up is at 6000 Put and 6200 Call. This suggests that the market expects a small trading range with support coming in at 6000 levels and resistance around 6200 levels. Friday saw strong put writing at the strike of 6100 level which is likely to act as an immediate support.

The Trendline Resistance for the Sensex is at 21358. The Trendline Support for the Sensex is at 19916.

The Trendline Resistance for the Nifty is at 6313. The Trendline Support for the Nifty falls at 5923.

For the week ahead, Sensex will find Support at 20443-20137-19785 and will find Resistance at 21001-21321-21650.

For the week ahead, Nifty will find Support at 6079-5972-5877 and will find Resistance at 6243-6342-6415.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5877

5972

6079

6155

6243

6342

6415

Sensex

19785

20137

20443

20700

21001

21321

21650

LAST WEEKS RECOMMENDATIONS:

STOCK

Recom @

Target

Reached

Sell OFSS

3085

3028

2985

Sell HDFC

771

747

767

Sell Ambuja

151

146

150

Sell Cipla

373

361

367

Sell BoI

174

169

165

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HCLTech

1538

1510

1581

1625

Buy JsW StL

886

872

908

931

Buy Wipro

571

562

586

602

Buy AdaniEnt

249

244

257

266

Buy PFC

153

150

158

163

WATCH OUT FOR:

Adani Entp

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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