Archives : PREVIOUS LOWS TO BE TESTED IN OCTOBER SERIES - 24/09/2015.

PREVIOUS LOWS TO BE TESTED IN OCTOBER SERIES - 24/09/2015.

ALL EYES GLUED ON RBI POLICY.

In a weak global scenario, slowing economic growth and falling inflation and crude prices, the market participants are expecting the RBI governor to cut interest rates at the Policy Review meet on Tuesday. Market has already discounted a 25bps cut in interest rates, but a 50bps cut will provide a much needed impetus to the ongoing pull-back. In case if the RBI maintains status quo for the interest rates, then one can expect the bearishness to takeover and help the market slide lower. But even if the RBI obliges by providing a rate cut, one can expect that rally to be sold into. Thus one should be looking out for creating short positions at higher levels.


PREVIOUS LOWS TO BE TESTED IN OCTOBER SERIES - 24/09/2015.

ALL EYES GLUED ON RBI POLICY.

In a weak global scenario, slowing economic growth and falling inflation and crude prices, the market participants are expecting the RBI governor to cut interest rates at the Policy Review meet on Tuesday. Market has already discounted a 25bps cut in interest rates, but a 50bps cut will provide a much needed impetus to the ongoing pull-back. In case if the RBI maintains status quo for the interest rates, then one can expect the bearishness to takeover and help the market slide lower. But even if the RBI obliges by providing a rate cut, one can expect that rally to be sold into. Thus one should be looking out for creating short positions at higher levels.

TECHNICALLY SPEAKING.

Sensex opened the week at 26107, made a high of 26339, low of 25386 and closed the week at 25863. Thus it closed the week with a loss of 355 points. At the same time the Nifty opened the week at 7911, made a high of 8021, low of 7723 and closed the week at 7868. Thus the Nifty closed the week with a loss of 113 points.

On the weekly charts both the indices have formed a Bearish Harami, but it seems of little significance as it has occurred in sideways consolidation. On the daily chart, both Sensex and Nifty have formed a white body candle on last two days, but it looks more like a part of bearish continuation pattern. Thus daily and weekly candlestick study suggests a bearish bias in the near term.

We are in midst of a pull-back of 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. One should be ready for downtrend to resume once the Retracement gets done.

The market will face a strong resistance at the 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 (45) is below the equilibrium line suggesting bearish momentum. Stochastic oscillator (58) continues in Sell mode as %K remains below %D. ADX @ 36 suggests that the current down trend is still strong. Directional indicators continue in Sell mode. Thus Oscillators are presenting a mixed picture with no clear bias.

This week, both the indices overcame the short term average of 20dma (Sensex – 25773 and Nifty – 7831) but still remains below the medium term average of 50dma (Sensex – 26971 and Nifty – 8199) and the long term average of 200dma (Sensex – 27723 and Nifty – 8392). 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.

Volatility Index India VIX gained by around 14% for the week. Volatility is likely to drop post the RBI policy announcement on Tuesday. Options data for October series indicates highest Put Open Interest build-up at the strike of 7800 and highest Call build-up at the strike of 8300. Thus Option data suggests a trading range with support coming in at 7800 and resistance at 8300.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7539

7667

7764

7868

7961

8091

8195

Sensex

24833

25287

25553

25863

26307

26730

27131

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell BajFin

4966

4801

4677

125

Rs.36,125

Sell L&T

1541

1490

1447

250

Rs.23,500

Sell Strides

1152

1111

1152

250

Rs. -

Sell BEL

1088

1047

1083

250

Rs. 1,250

Sell HPCL

760

731

753

500

Rs. 3,500

Total

Rs.64,375.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Lupin

1990

1945

2059

2129

Buy MindTree

1560

1519

1623

1689

Buy Wipro

603

587

628

655

Buy EssarOiL

199

194

207

216

Buy DCB

141

137

148

155

WATCH OUT FOR:

ESSAR OIL

Bank Nifty weekly

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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