Archives : ALL EYES ON BUDGET; EXPECTATIONS VERY HIGH - 20/02/2015.

ALL EYES ON BUDGET; EXPECTATIONS VERY HIGH - 20/02/2015.

 

NO ROOM FOR ERROR.

In what can be termed as the most awaited budget of recent times, the market has already ran up so much that there remains little room for error. The FM will have to walk a tight rope and present a balanced budget which not only tackles fiscal discipline, subsidy and growth issues but also sensitive issues like disinvestment, power and the impending tax reforms. The expectations are reaching the sky, and it will take nothing short of magic from the FM, if the market has to sustain current high levels. Last week after taking a U-turn both the indices rallied but were stopped short of challenging previous life highs. Coming week will be very volatile to say the least and in such conditions, one will be well advised either to lighten their positions or have a hedging strategy in place.

 

 


ALL EYES ON BUDGET; EXPECTATIONS VERY HIGH - 20/02/2015. 

NO ROOM FOR ERROR.

In what can be termed as the most awaited budget of recent times, the market has already ran up so much that there remains little room for error. The FM will have to walk a tight rope and present a balanced budget which not only tackles fiscal discipline, subsidy and growth issues but also sensitive issues like disinvestment, power and the impending tax reforms. The expectations are reaching the sky, and it will take nothing short of magic from the FM, if the market has to sustain current high levels. Last week after taking a U-turn both the indices rallied but were stopped short of challenging previous life highs. Coming week will be very volatile to say the least and in such conditions, one will be well advised either to lighten their positions or have a hedging strategy in place.

TECHNICALLY SPEAKING.

Sensex opened the week at 29170, made a high of 29522, low of 29083 and closed the week at 29231. Thus it closed the week with a loss of 137 points. At the same time the Nifty opened the week at 8831, made a high of 8913, low of 8793 and closed the week at 8833. Thus the Nifty closed the week with a loss of 28 points.

On the daily charts, Nifty completed a Bearish Engulfing pattern which is a bearish reversal pattern. On the weekly charts, Nifty has formed a Doji with an upper shadow which indicates selling at higher levels. Thus daily as well as weekly candlestick patterns point towards a bearish bias in the near term.

On the monthly chart, both the indices have formed a Last Engulfing Top which is a bearish pattern. It requires a confirmation in the form of a black body candle in this month. But if the February month candle closes above the high of this pattern i.e. above Sensex 29844 and Nifty 8996 then the above pattern will stand negated. Thus a lot now depends on how the market perceives the Budget.

Both the indices continue to remain above the short term average of 20dma (Sensex – 29051 and Nifty – 8773), medium term average of 50dma (Sensex – 28148 and Nifty – 8489) and even the long term average of 200dma (Sensex – 26590 and Nifty – 7966). Thus the trend in the short term, medium term and long term timeframe continues to remain bullish.

MACD and Price ROC are both positive and continue with their Buy signals. RSI (59) suggests that bullish momentum is intact. MFI continues to remain around 58, indicating positive money flow. Stochastic Oscillator %K (79) continues to remain above %D and hence continues in Buy mode. ADX remains at 24, suggesting uptrend still has strength. Directional Indicators continue in Buy mode as +DI remains above –DI. OBV continues in Buy mode making higher top higher bottom formation. Thus Oscillators are suggesting a bullish bias in the near term. 

Option data suggest highest Call Open Interest buildup at the strike of 9000, whereas the highest Put build-up has shifted to the strike of 8800. Thus Option data suggests a short trading range with support coming in at 8800 and resistance around 9000. Friday saw strong build-up for 8900 Call which indicates that the level of 8900 might act as immediate resistance.

Trendline Resistance for the Sensex is at 30150. Trendline Support for the Sensex is at 28522.

Trendline Resistance for the Nifty is at 9084. Trendline Support for the Nifty falls at 8616.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8470

8605

8711

8833

8913

8996

9100

Sensex

28044

28406

28822

29231

29522

29844

30076

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy OFSS

3443

3545

3475

125

Rs. 4,000

Buy STFC

1260

1299

1284

250

Rs. 6,000

Buy Wipro

660

679

671

500

Rs. 5,500

Glenmark

766

789

799

500

Rs.16,500

TVSMotor

307

319

310

1000

Rs. 3,000

Total

Rs.35,000.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy ContCorp

1576

1524

1657

1739

Buy HondaPwr

1083

1052

1131

1181

Buy HindZinc

181

176

189

198

Buy SesaSter

217

212

225

234

Buy Nelco

92

87

100

109

WATCH OUT FOR:

Hind Zinc

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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