Archives : ALL EYES ON RAJAN, HOPING FOR A RATE CUT - 01/04/2016.

ALL EYES ON RAJAN; HOPING FOR A RATE CUT - 01/04/2016.

SUPER ‘MARCH’ ENDS ON A STRONG NOTE.

March series saw Bulls making a terrific comeback as the indices registered massive gains of around 11%. It provided a big relief to the Bulls who are now looking forward to the RBI Credit Policy next week. The expectations have been built up as the Government has stuck to its Fiscal Discipline roadmap and Inflation has been moderated. Given this backdrop, the market has already discounted a 25bps cut in interest rate. Anything above this will surprise the market and will push the market higher. But the more likely scenario is a rate cut of 25bps, which will result in a sell-off and a short term top being registered.


ALL EYES ON RAJAN; HOPING FOR A RATE CUT - 01/04/2016.

SUPER ‘MARCH’ ENDS ON A STRONG NOTE.

March series saw Bulls making a terrific comeback as the indices registered massive gains of around 11%. It provided a big relief to the Bulls who are now looking forward to the RBI Credit Policy next week. The expectations have been built up as the Government has stuck to its Fiscal Discipline roadmap and Inflation has been moderated. Given this backdrop, the market has already discounted a 25bps cut in interest rate. Anything above this will surprise the market and will push the market higher. But the more likely scenario is a rate cut of 25bps, which will result in a sell-off and a short term top being registered.

TECHNICALLY SPEAKING.

Sensex opened the week at 25417, made a high of 25479, low of 24835 and closed the week at 25269. Thus it closed the week with a loss of 68 points. At the same time the Nifty opened the week at 7741, made a high of 7777, low of 7582 and closed the week at 7713. Thus the Nifty closed the week with a minor loss of 3 points.

On the daily charts, both the indices have formed a Doji on Friday. On the weekly charts, both the indices have formed a small black body Spinning Top. Both weekly as well as daily charts have formed neutral formations. Thus candlestick pattern study indicates a pause in the current rally.

The market is in midst of a strong Pull-Back rally of the fall from Sensex 27618 and Nifty from 8336. The relevant Retracement levels for are placed at Sensex 24452-25056-25661 and Nifty 7403-7581-7759. Both the indices are testing the critical 61.8% Retracement level which is at Sensex 25661 and Nifty 7759 for past two weeks, but not able to close above it. Any closing above this level will lead the indices towards testing the 200dma (Sensex – 26015 and Nifty – 7892).

The Trendline joining lower tops which has been providing strong Resistance for both Sensex and Nifty falls at Sensex 26015 and Nifty 7889. These levels coincide with the 200dma (Sensex – 26015 and Nifty – 7892) and hence any upward move will face stiff resistance at this zone.

Both Sensex and Nifty have two Bullish Rising Gaps first between Sensex 24043-23821 and Nifty 7308-7235 and second between Sensex 24280-24383 and Nifty 7380-7406. Both these Gaps will not only provide support but are also Measuring Gaps. The relevant primary Target as per Gap Theory is at Sensex 25370 and Nifty 7718 which has been achieved and secondary Target falls at Sensex 26169 & Nifty 7961.

MACD and Price ROC both are positive and continue with their Buy signals. RSI (62) suggests Bullish Momentum. ADX has dropped further to below 20 and is at 16, suggesting that the prior Down-Trend has lost all its strength. Directional Indicators is in Buy mode as +DI remains above –DI. MFI (65) suggests Positive Money Flow. OBV continues to make higher Top, higher Bottom formation. Thus majority of Oscillators are suggesting a positive bias in the near term.

This week, both the indices managed to stay and close above the short term average of 20dma (Sensex – 24886 and Nifty – 7574) and even the medium term average of 50dma (Sensex – 24284 and Nifty – 7384). But both Sensex and Nifty still continue to remain below the long term average of 200dma (Sensex – 26015 and Nifty – 7892). Thus, the trend in the short term and medium term timeframe is positive whereas the trend in the long term timeframe remains bearish.

Options data for April series indicate highest Call Open Interest build-up at 8000 and highest Put build-up at 7500. Thus Option data suggests a trading range with resistance coming in at 8000 and support at 7500.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7406

7512

7604

7713

7819

7911

7995

Sensex

24280

24650

24960

25269

25656

25939

26256

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

BajFin

6874

7135

7030

125

Rs.19,500

Buy ABB

1206

1289

1315

300

Rs.32,700

Buy JetAir

554

574

570

900

Rs.14,400

ReLCap

376

392

379

1500

Rs. 4,500

Buy SAiL

45

49

45

9000

Rs. -

Total

Rs.71,100.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HeroMoto

2951

2875

3065

3183

Buy DLF

120

116

127

135

Buy IRB

236

230

246

257

Buy BoI

100

97

105

111

Buy PNB

87

85

91

96

WATCH OUT FOR:

DLF

RPower

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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