Archives : ALL EYES ON INFY - 11/04/2014.

ALL EYES ON INFY –  11/04/2014.

FOCUS SHIFTS TO EARNINGS.

The earnings season starts from Tuesday with Infosys declaring its results. Even though a truncated week, it is an earnings heavy week with all IT majors along with Reliance Industries set to declare their earnings. Infosys seems pretty subdued this time and it is expected to remain so after the results too. Strong support for Infosys is seen at around 3026 levels. Correction will start only if Sensex closes below 22379 and Nifty 6705; till then it remains a buy on decline market.

 

 


ALL EYES ON INFY –  11/04/2014.

FOCUS SHIFTS TO EARNINGS.

The earnings season starts from Tuesday with Infosys declaring its results. Even though a truncated week, it is an earnings heavy week with all IT majors along with Reliance Industries set to declare their earnings. Infosys seems pretty subdued this time and it is expected to remain so after the results too. Strong support for Infosys is seen at around 3026 levels. Correction will start only if Sensex closes below 22379 and Nifty 6705; till then it remains a buy on decline market.

TECHNICALLY SPEAKING.

Sensex opened the week at 22355, made a high of 22792, low of 22197 and closed the week at 22628. Thus it registered a weekly gain of 269 points. At the same time the Nifty opened the week at 6694, made a high of 6819, low of 6650 and closed the week at 6776. Thus the Nifty closed the week with a gain of 82 point.

On the daily charts both Sensex and Nifty have been forming neutral candlestick formations for the past two days. Sensex has formed two Doji formations on Thursday and Friday. If we consider the last three days candlestick formation, then it is observed that there is Rising Three Methods pattern being formed. This is a Bullish Continuation pattern and it will be complete either on Tuesday or Wednesday, only if the Nifty forms a big White body candle and closes above 6796. On the weekly charts, both Sensex and Nifty have formed a white body candle in line with the uptrend. Hence both daily as well as weekly charts suggest a bullish bias.

The market is moving sideways but will start a correction if Sensex closes below 22379 and Nifty below 6705. If this were to happen, Sensex will correct the rise from 19963 to 22792 and Nifty 5933 to 6819. The corresponding Correction levels will be at Sensex 21711-21377-21043 and Nifty 6480-6376-6271.

Both the indices completed a Bullish Flag pattern when Sensex closed above 22023 and Nifty 6562. The pattern has a potential target of atleast Sensex 23126 and Nifty 6912 and on the higher side Sensex 24083 and Nifty 7191. These targets are likely to be achieved as long as Sensex remains above 21573 and Nifty above 6432.

The market has left behind a Bullish Upward Gap (Sensex 21539-21525 and Nifty 6413-6403). This Bullish Gap is acting as a strong support which got validated when the Sensex reversed from a low of 21573 and Nifty from 6432. Also the Bullish Gap mentioned above is also a Measuring Gap and as per Gap theory the target falls at Sensex 23101 and Nifty 6886.

Pattern formation is a dynamic process and last week witnessed completion of Rising Wedge formation in weekly line chart. Rising Wedge has a natural tendency to give a bearish breakout but here it has given a bullish breakout and hence one can expect a strong upmove towards a potential target of Sensex 24429 and Nifty 7326.

When the indices closed above the previous top, both the indices completed a Bullish pattern in the intermediate term and the targets as per that falls at Sensex 23003 and Nifty 6897.

Thus as per Gap theory and Pattern analysis, Sensex seems headed towards a target of 23003-23126 and Nifty 6886-6912 in the intermediate term.

When the market overcame the previous top and made fresh lifetime highs, it marked the end of six year consolidation. On the weekly charts both Sensex and Nifty have completed a Bullish Saucer formation and the targets as per that will fall at Sensex 24799 and Nifty 7454 on the lower side and Sensex 27081 and Nifty 8145 on the higher side. The targets are likely to be achieved over a period of next 20 months.

Current rally has started from a low of Sensex 19963 and Nifty 5933. Hence it becomes imperative that this support level holds so that the indices can move towards higher targets. Thus a breach of Sensex 19963 and Nifty 5933 will derail the current bullish rally.

This week, both Sensex and Nifty managed to remain above the short term average of 20dma (Sensex – 22206 and Nifty – 6640), the medium term average of 50dma (Sensex – 21386 and Nifty – 6373) and the long term average of 200dma (Sensex – 20438 and Nifty – 6079). Thus the trend in the short term, the medium term and the long term timeframe continues to remain bullish.

MACD and ROC are both positive and continue with its Buy signal. RSI (73) continues to remain overbought territory since last three weeks. MFI (68) suggests positive money inflow for the market. Stochastic Oscillator %K (91) is in overbought zone and has signaled a Buy as %K is above %D. ADX (44) has become steady and suggests that the uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Since the Oscillators are in overbought territory, one can expect some weakness in the short term and if that happens, then one should use that as an opportunity to buy into the market.

Open Interest Put Call Ratio O.I.PCR for the current month has increased to a level of 1.45 which indicates a bullish bias. Highest Open interest build up is seen at 6700 Put and 6900 Call. This suggests that the market expects a trading range with support coming in at 6700 levels and resistance around 6900 levels.

The Trendline Support for the Sensex is at 22174.

The Trendline Support for the Nifty is at 6590.

For the week ahead, Sensex will find Support at 22355-22040-21704 and will find Resistance at 22956-23236-23534.

For the week ahead, Nifty will find Support at 6694-6575-6473 and will find Resistance at 6862-6941-7068.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

6473

6575

6694

6776

6862

6941

7068

Sensex

21704

22040

22355

22628

22956

23236

23534

LAST WEEKS RECOMMENDATIONS:

All the Recommendations did well and reached their targets with ease except for JsW Steel. The Star performers of the week were Patel Eng and RCF which went by as much as 20% and 15% respectively!!!

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

JsWStL

1064

1094

1085

250

Rs. 5,250

Buy IRB

112

123

124

4000

Rs.48,000

RPower

71

75

76

4000

Rs.20,000

PatelEng

66

75

79

4000

Rs.52,000

Buy RCF

34

37

39

8000

Rs.40,000

Total

Rs.1,65,250

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Biocon

438

429

452

467

Buy Hexaware

170

165

180

191

Buy IDBI

68

66

72

76

Buy Atul

485

473

508

532

Buy GMRInfra

25

24

28

32

WATCH OUT FOR:

Biocon

SCI

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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