Archives : MODI CREATES HISTORY - 16/05/2014.

MODI CREATES HISTORY –  16/05/2014.

REAL TEST BEGINS NOW.

16th May 2014 will go down in India’s history as the beginning of ‘Modi’ Era. It is the first time in three decades that a single party has got a clear majority. India voted for Change and Growth and as a result ‘Modi Sarkar’ is a reality. With the frenzy of the elections out of the way, the real test begins now. Main challenge facing the Modi government will be not only to put India back on the robust Growth trajectory but also to tackle sensitive issues like subsidy sharing.

 

 


MODI CREATES HISTORY –  16/05/2014.

REAL TEST BEGINS NOW.

16th May 2014 will go down in India’s history as the beginning of ‘Modi’ Era. It is the first time in three decades that a single party has got a clear majority. India voted for Change and Growth and as a result ‘Modi Sarkar’ is a reality. With the frenzy of the elections out of the way, the real test begins now. Main challenge facing the Modi government will be not only to put India back on the robust Growth trajectory but also to tackle sensitive issues like subsidy sharing.

TECHNICALLY SPEAKING.

Sensex opened the week at 23031, made a high of 25375, low of 23008 and closed the week at 24121. Thus it closed the week with a strong gain of 1127 points. At the same time the Nifty opened the week at 6863, made a high of 7563, low of 6862 and closed the week at 7203. Thus the Nifty closed the week with a gain of 345 points.

One of the main Principle of Classical theory - “Price discounts everything” was beautifully showcased on Friday. Friday saw both the indices completing a small black body Spinning Top with a very long upper shadow. Long upper shadow was a result of Sell on News. Also both Sensex and Nifty have formed a big Opening White body Marubuzo with a long upper shadow on the weekly charts. The long upper shadow indicates profit booking witnessed at higher levels. Whenever such formations happen, trend remains intact but the price tends to consolidate in the range of the upper shadow. However the immediate bias remains positive.

Friday saw both the indices completing a Bullish Flag pattern on daily charts, which has a target of Sensex 25859 and Nifty 7706. Interestingly, both the indices also completed a Flag pattern on the weekly charts as well and the target as per that is Sensex 25915 and Nifty 7805. Thus as per Flag pattern on daily as well as weekly charts, one can expect a target of 25859-25915 for the Sensex and 7706-7805 for the Nifty.

Market has left behind a Bullish Rising Gap on Tuesday between Sensex 23729-23572 and Nifty 7067-7020, which will act as strong support. Besides acting as a support, it is also a Measuring Gap whose targets for the indices were achieved on Friday itself. However a stronger support zone exists between Sensex 22256-22197 and Nifty 6665-6650 which has been tested successfully many times before, without getting breached and hence the current uptrend will reverse only if this support zone gets breached.

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 long term bullish rally.

Both Sensex and Nifty are way above the short term average of 20dma (Sensex – 22889 and Nifty – 6836), the medium term average of 50dma (Sensex – 22373 and Nifty – 6681) and the long term average of 200dma (Sensex – 20785 and Nifty – 6179). Thus the trend in the short term, medium term and the long term timeframe continues to remain bullish.

MACD and ROC are both positive and continue with their Buy signals. RSI (78) continues to remain overbought since Monday. MFI (51) has just crossed the centerline from below giving a fresh Buy, suggesting positive money flow for the market. Stochastic Oscillator %K (76) is in Sell mode as it has gone below %D. ADX (34) has increased to 34, suggesting that the Uptrend is now stronger. The Directional Indicators continue with their Buy signal as +DI is well above -DI. OBV too has started moving higher and has crossed previous top. Buy signal continues on Bollinger Band since Monday. Thus Oscillators are suggesting a positive bias in the near term.

Volatility Index India VIX, crashed by 33% from almost 37 levels to a low of 21 before closing at around 24. Thus as pointed out last week India VIX did experience Volatility Crunch on 16th May i.e. Friday. Hence option traders who created Short Strangles between strikes of 6800 and 7200 costing about 380, made handsome profits as the Strangle reduced to 180 by closing on Friday. Nifty option data suggest high Put writing at the strike of 7000 and strong Call writing at the strike of 7500. Thus one can expect a short term range of the market between Nifty 7000 and 7500.

For the week ahead, Sensex will find Support at 23873-23572-23236 and will find Resistance at 24429-24799-25375.

For the week ahead, Nifty will find Support at 7123-7020-6940 and will find Resistance at 7326-7454-7563.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

6940

7020

7123

7203

7326

7454

7563

Sensex

23236

23572

23873

24121

24429

24799

25375

LAST WEEKS RECOMMENDATIONS:

It was a Super week as all the Recommendations of the previous week reached their targets with ease. However the Star Performer of the week was PFC which went by an amazing 45%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy M&M

1102

1173

1184

250

Rs. 20,500

Buy IOC

286

309

343

1000

Rs. 57,000

Buy Bhel

194

211

235

2000

Rs. 82,000

Buy PFC

201

218

291

2000

Rs.1,80,000

Buy OBC

265

286

337

1000

Rs. 72,000

Total

Rs.4,11,500

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy ABNuvo

1174

1148

1214

1256

Buy IndCem

80

77

85

91

Buy TataPower

90

87

95

101

Buy BFUtility

700

675

738

778

Buy JindalSaw

64

61

69

75

WATCH OUT FOR:

ABNuvo

IFCI

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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