BULLS REIGN SUPREME – 16/05/2008.
Markets ignored the high inflation figure dished out on Friday and continued with its new found vigour. Market has witnessed a tremendous bounce back after falling to a low and touching the trendline support. It is now challenging the 200dma and is on the verge of breaking it and closing above it and putting to rest the speculation regarding the direction of the market. It wants to shut the mouth of pessimists who were dismissing this rally as nothing and were expecting the Sensex to come down to its knees. Now the market is giving them a fitting reply by bouncing back and laying all doubts to rest.
Inflation surges ahead, & so does mr. market.
Inflation for the week ended May 3 is at 7.83% versus 7.61%. Market had estimated the inflation figure to come in at 7.59%. But despite poor inflation figure, market ignored it completely and went ahead on its own course, i.e following the course of the bulls.
IIP NUMBERS THE WEAK LINK.
IIP numbers announced were the poorest to hit the market in last three years. Industrial growth slowed down to almost 3% and is showing signs of slow down in the economy. Government is concerned and knows that high interest rate regime has taken a toll on the industrial figure and therefore the chances of any increase in the interest rate has been put to the back burner. This sort of self assured the banking, financial and property stocks, which posted handsome gains for the week.
Sensex opened the week at 16641, made a high of 17497, low of 16546 and closed the week at 17434. Thus, Sensex registered a weekly gain of 697 points. In the process Sensex has managed to fill the gap between 16589 and 16570. The MACD indicator is in the positive and is on the verge of giving a buy signal again. The RSI is moving towards momentum. The ROC is turning up. The Sensex has managed to close above the long term trendline of 17256, which is a very big positive and in future will provide strong support. The Sensex has just closed below the 200 dma which is at 17490. It will be necessary for a close above the 200 dma, which will change the long term trend to positive. The trendline resistance is now falling at 17543 and 17639. Sensex is in a pull back rally of the entire fall from 21206 to 14677 and the pull back levels are 17942 and 18712. Thus for the week ahead the Resistance will be at 17543-17639-17942-18712. Support will be at 17315-17256-16859.
Nifty opened the week at 4981, made a high of 5167, low of 5012 and closed the week at 5157. The weekly gain was 175 points. The indicators are showing positive build up. The Nifty OI PCR is quite healthy at 1.47. It shows presence of hedged positions in the market and this will act as a cushion in any fall. Nifty 5000 and 4900 strikes have shown tremendous addition of open interest and will act as supports. The Nifty has managed to close above the long term trendline at 5070, which will now act as support. Nifty is just breathing down the neck of 200 dma which is at 5187 and is about to break it. The trendline resistances are at 5251 and 5280. Nifty will face resistance at 5368 where there is a presence of double top formation. Thus for the week ahead resistance will be at 5228-5298-5368-5403. Support will be at 5106-5070-4990.
LAST WEEK S RECOMMENDATIONS:
ONCE AGAIN 100%. WHAT MORE YOU WANT.
ITC 218 TGT WAS 229 REACHED 229.
WEBEL 350 TGT WAS 379 REACHED 379.
NICHOLAS PIRAMAL 344 TGT WAS 373 REACHED 379.
BASF 225 TGT WAS 247 REACHED 261.
TODAYS WRITING TGT WAS 84 REACHED 84.
THIS WEEK S RECOMMEDATIONS:
WATCH OUT FOR :
ABAN LLOYD: 3873 SL 3814 TGT 3998-4058-4160.
JINDAL STEEL: 2400 SL 2372 TGT 2485-2630.
NIIT TECH: 151 SL 146 TGT 162-178.
GREAT OFFSHORE: 699 SL 680 TGT 725-740.
IL&FS INVESTSMART: 198 SL 193 TGT 208-213.
NIIT TECH (151).
TARGET 178-208 AS LONG AS ABOVE 140.