Archives : MARKET RISES, UNCERTAINTY REMAINS - 18/09/2015.

MARKET RISES, UNCERTAINTY REMAINS - 18/09/2015. 

FED DEFENSIVE, MARKET NOT IMPRESSED.

The market sentiment got a temporary leg up from the news that the US Federal Reserve left key policy rates unchanged, bowing to the weak global economy. But interestingly it left open a possibility of a rate hike in October.  So this can be considered a temporary relief as the uncertainty remains which certainly does not augur well for global as well as Indian market. As a result of the Fed inaction, Nifty touched 8000 levels in intraday trading, but could not sustain that level. The market movement suggests that Bears are using this current upward move to build up short positions. It is time for caution.


MARKET RISES, UNCERTAINTY REMAINS - 18/09/2015.

FED DEFENSIVE, MARKET NOT IMPRESSED.

The market sentiment got a temporary leg up from the news that the US Federal Reserve left key policy rates unchanged, bowing to the weak global economy. But interestingly it left open a possibility of a rate hike in October.  So this can be considered a temporary relief as the uncertainty remains which certainly does not augur well for global as well as Indian market. As a result of the Fed inaction, Nifty touched 8000 levels in intraday trading, but could not sustain that level. The market movement suggests that Bears are using this current upward move to build up short positions. It is time for caution.

TECHNICALLY SPEAKING.

Sensex opened the week at 25706, made a high of 26471, low of 25531 and closed the week at 26218. Thus it closed the week with a gain of 608 points. At the same time the Nifty opened the week at 7811, made a high of 8055, low of 7761 and closed the week at 7981. Thus the Nifty closed the week with a gain of 192 points.

On the daily charts, both the indices have formed a white body Shooting Star formation. It is a bearish reversal pattern which requires confirmation. A closing above Sensex 26471 and Nifty 8055 will negate the Shooting Star pattern. On the weekly charts, both the indices have formed a white body candle. Last two weeks candle bodies are within the trading range of long black body candle formed two weeks back which suggests that it may be a part of bearish continuation pattern. Thus daily and weekly candlestick study suggests a bearish bias being developed in the near term.

The current rally is a Relief rally and hence current upward movement is just a Retracement of the previous fall and one should not consider it as Reversal of Trend. We are retracing the fall from Sensex 28578 and Nifty 8654. The corresponding Retracement levels are placed at Sensex 26264-26706-27147 and Nifty 7965-8097-8228 for the Nifty.

On Friday, both the indices overcame the first bearish gap between Sensex 26141-26215 and Nifty 7929-7947 and if it moves higher then it can test higher and more critical Bearish Falling Gap on daily as well as weekly chart i.e. between Sensex 26730-27131 and Nifty 8091-8225, which will act as a strong Resistance zone going forward.

After achieving the target for Bearish Rising Wedge and Ascending Broadening pattern, the indices remain on course to achieve the targets for Head and Shoulders pattern (Sensex 24486 and Nifty 7425). Besides a higher degree Head and Shoulders got completed recently, the target for that falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC continue in Buy mode. RSI has just crossed equilibrium line signalling bullish momentum. MFI (50) still remains above centreline suggesting positive money flow. Stochastic oscillator (67) continues in Buy mode as %K remains above %D. ADX @ 38 suggests that the current down trend is still strong. Directional indicators continue in Sell mode. Sell signal in Bollinger Band got negated on Wednesday. Thus Oscillators are suggesting a bullish bias in the near term.

This week, both the indices overcame the short term average of 20dma (Sensex – 25839 and Nifty – 7845) but still remains above the medium term average of 50dma (Sensex – 27136 and Nifty – 8232) and the long term average of 200dma (Sensex – 27773 and Nifty – 8402). Thus the trend in the short term has turned up whereas that in the medium term and even the long term timeframe continues to remain bearish.

Options data for September series indicates highest Put Open Interest build-up at the strike of 7800 and highest Call build-up is now at the strike of 8200. Thus Option data suggests a trading range with support coming in at 7800 and resistance at 8200.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7587

7720

7846

7981

8091

8225

8315

Sensex

24972

25411

25820

26218

26687

27131

27442

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Ceat

1216

1263

1236

250

Rs. 5,000

WelspunI

864

898

880

500

Rs. 8,000

ReLInfra

341

353

359

1000

Rs.18,000

JsWEngy

81

85

86

4000

Rs.20,000

JainIrrig

59

63

61

4000

Rs. 8,000

Total

Rs.59,000.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell BajajFin

4966

5075

4801

4633

Sell L&T

1541

1575

1490

1438

Sell Strides

1152

1179

1111

1069

Sell BEL

1088

1115

1047

1005

Sell HPCL

760

779

731

701

WATCH OUT FOR:

Strides

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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