Archives : MID-CAP INDEX @ LIFE HIGHS - 23/05/2014.

MID-CAP INDEX @ LIFE HIGHS –  23/05/2014.

MID-CAP & SMALL-CAP FRENZY.

After a couple of days of consolidation, bulls swung into action lifting the market higher and ending the week on a strong footing. Even though the market went up by around 2%; the main action was seen in mid-cap arena which went up by 10% and ended the week at life-time high levels. Just as a rising tide lifts all the boats, all the mid-cap and small-cap stocks went up irrespective of their fundamentals. It was Modi magic at work, without doubt.

 


MID-CAP INDEX @ LIFE HIGHS –  23/05/2014.

MID-CAP & SMALL-CAP FRENZY.

After a couple of days of consolidation, bulls swung into action lifting the market higher and ending the week on a strong footing. Even though the market went up by around 2%; the main action was seen in mid-cap arena which went up by 10% and ended the week at life-time high levels. Just as a rising tide lifts all the boats, all the mid-cap and small-cap stocks went up irrespective of their fundamentals. It was Modi magic at work, without doubt.

TECHNICALLY SPEAKING.

Sensex opened the week at 24340, made a high of 24745, low of 24107 and closed the week at 24693. Thus it closed the week with a gain of 572 points. At the same time the Nifty opened the week at 7276, made a high of 7381, low of 7193 and closed the week at 7367. Thus the Nifty closed the week with a gain of 164 points.

The Election result day candle (Sensex 23873-25375 and Nifty 7130-7563) made on last Friday was so big that the last five days of this week were spent inside that candle. According to Candlestick analysis, these can be termed as Rest days, lacking major directional movement. In other words, market consolidated within range of Sensex 23873-25375 and Nifty 7130-7563. On the weekly chart, both Sensex and Nifty have formed a white body candle which is within the previous week’s upper shadow. Such a candle formation can be taken as positive formation. Thus daily and weekly candlestick analysis points towards more consolidation with a bullish bias.

Both the indices have completed a Bullish Flag pattern on daily charts, which has a target of Sensex 25859 and Nifty 7706. Interestingly, both the indices have also completed a Flag pattern on the weekly charts as well and the target as per that is Sensex 25915 and Nifty 7705. Thus as per Flag pattern on daily as well as weekly charts, one can expect a target of 25859-25915 for the Sensex and 7705-7706 for the Nifty.

Market has left behind a Bullish Rising Gap between Sensex 23729-23572 and Nifty 7067-7020, which will act as strong support. 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 27081 and Nifty 8145. 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 – 23329 and Nifty – 6961), the medium term average of 50dma (Sensex – 22678 and Nifty – 6775) and the long term average of 200dma (Sensex – 20903 and Nifty – 6214). 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 (79) continues to remain overbought since last two weeks. MFI (67) has increased from below suggesting positive money flow for the market. Stochastic Oscillator %K (71) is in Buy mode as it has gone above %D. ADX has increased sharply to 45, suggesting that the Uptrend is now very strong and mature. The Directional Indicators continue with their Buy signal as +DI is well above -DI. OBV continues to move higher making higher tops higher bottoms. Buy signal continues on Bollinger Band since two weeks. Thus Oscillators are suggesting a positive bias in the near term. 

Volatility Index India VIX, continued its fall even in the past week. It has gone down from a high level of 39 to a low of 14 before settling the week at 17. Option writers who created short Vega and short Theta strategy benefited this week. The VIX has reached a support area and is likely to witness some sort of pull-back from this level. Nifty Options 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 24298-23873-23551 and will find Resistance at 25034-25375-25682.

For the week ahead, Nifty will find Support at 7252-7130-7014 and will find Resistance at 7455-7563-7654.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7014

7130

7252

7367

7455

7563

7654

Sensex

23551

23873

24298

24693

25034

25375

25682

LAST WEEKS RECOMMENDATIONS:

It was a fantastic week as all the Recommendations of the previous week reached their targets with ease. However the Star Performers of the week were Jindal Saw & India Cement which went by an amazing 40% & 31% respectively!!!

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

ABNuvo

1174

1256

1400

250

Rs.56,500

IndiaCem

80

91

105

4000

Rs.1,00,000

TataPower

90

101

106

4000

Rs.64,000

BFUtility

700

738

755

500

Rs.27,500

JindalSaw

64

75

90

4000

Rs.1,04,000

Total

Rs.3,52,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Siemens

962

942

997

1034

Buy JindalSteel

300

293

313

327

Buy HindZinc

161

157

168

176

Buy JsWHolding

828

789

888

950

Buy UCO Bnk

111

108

116

122

WATCH OUT FOR:

Siemens

Jindal Poly

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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