Archives : Volatility Returns; Bulls Fight Back On Friday - 14/08/2015.

VOLATILITY RETURNS; BULLS FIGHT BACK ON FRIDAY - 14/08/2015. 

BULLS FIGHT BACK.

As expected the market could not overcome the key resistance level of Nifty 8668 as it fell after making a high of 8621 and took support at 8337 which is just above the lower boundary. The fall can be attributed to the failure of Modi government in getting the much wanted GST bill passed. Besides the reason behind the fall, the more important part is the failure of the Bulls in overcoming the 61.8% Retracement level. The bounce back was a result of much lower than expected inflation numbers which fuelled a rate cut expectation. What was surprising was the speed of recovery, as the market made up for most of the losses of last three days in just Friday’s trading session!


VOLATILITY RETURNS; BULLS FIGHT BACK ON FRIDAY - 14/08/2015. 

BULLS FIGHT BACK.

As expected the market could not overcome the key resistance level of Nifty 8668 as it fell after making a high of 8621 and took support at 8337 which is just above the lower boundary. The fall can be attributed to the failure of Modi government in getting the much wanted GST bill passed. Besides the reason behind the fall, the more important part is the failure of the Bulls in overcoming the 61.8% Retracement level. The bounce back was a result of much lower than expected inflation numbers which fuelled a rate cut expectation. What was surprising was the speed of recovery, as the market made up for most of the losses of last three days in just Friday’s trading session!

TECHNICALLY SPEAKING.

Sensex opened the week at 28250, made a high of 28417, low of 27479 and closed the week at 28067. Thus it closed the week with a loss of 169 points. At the same time the Nifty opened the week at 8577, made a high of 8621, low of 8337 and closed the week at 8518. Thus the Nifty closed the week with a loss of 46 points.

On the daily charts, both the indices made a Homing Pigeon formation on Thursday which is a bullish reversal pattern. On the weekly charts Sensex has formed a Bearish Engulfing pattern but both the candles have small bodies and hence not decisive. Thus daily charts suggest bullishness in the near term.

This week, both the indices once again fell from just below the strong Resistance zone of Sensex 28578-28604 and Nifty 8654-8668; which is a result of confluence of 61.8% Retracement and the Tweezer Top registered last time. Thus this Correction will only end when both Sensex and Nifty overcome this strong Resistance zone.

As mentioned in the last week’s article, the Nifty continues to move in a range. After testing the upper boundary, market went down to test the Support zone of 8321-8315 which is due to confluence of two intermediate bottoms made at 8315 and 8321.

A breach of the above Support zone will lead the indices lower to test the Strong Support zone between Sensex 27209-27174 and Nifty 8213-8186 which is result of confluence between the Bullish Upward Gap (Sensex 27202-27175 and Nifty 8195-8186), an intermediate low made by Sensex 27209 and Nifty 8195 and 61.8% Retracement of the current rise i.e. Sensex 27174 and Nifty 8213.

This week, both the indices not only breached the short term average of 20dma (Sensex – 28005 and Nifty – 8494), the medium term average of 50dma (Sensex – 27720 and Nifty – 8385) and the long term average of 200dma (Sensex – 27997 and Nifty – 8455) but more interestingly managed to climb back and close the week well above them. Thus the trend in the short term, medium term and even the long term timeframe remains bullish. 

Bearish pattern formations still remain intact and hence one can still expect indices to achieve the target of Bearish Rising Wedge pattern which falls at 26049 for the Sensex and 7882 for the Nifty, as well as Ascending Broadening pattern and the target for that pattern is at Sensex 25034 and Nifty 7533. Coupled with this, both the indices had also completed a Head and Shoulders pattern and the target as per this pattern is at Sensex 24486 and Nifty 7425. The above mentioned patterns will fail only if Sensex closes above 29094 and Nifty above 8844.

Options data for August series indicates highest Put Open Interest build-up at the strike of 8200 and highest Call build-up is at the strike of 8700. Thus Option data suggests a wide trading range with resistance coming in at 8700 and support around 8200.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8195

8315

8408

8518

8626

8723

8844

Sensex

27000

27385

27703

28067

28335

28693

29094

.
LAST WEEKS RECOMMENDATIONS:
.

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Ceat

1021

1061

1064

250

Rs.10,750

Buy HPCL

970

1008

991

500

Rs.10,500

TataMot

393

407

395

1000

Rs. 2,000

Buy Exide

159

167

161

2000

Rs. 4,000

Buy RCom

73

77

75

4000

Rs. 8,000

Total

Rs.35,250.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy IPCALab

816

798

844

873

Buy ZeeEnt

419

409

435

452

Buy AdaniPrt

363

355

376

389

Buy TorntPwr

178

173

186

195

Buy PNB

166

162

173

180

WATCH OUT FOR:

Tornt Pwr  

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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