Archives : ELECTION BUDGET - THE BIG PUSH - 01/02/2019

‘ELECTION’ BUDGET – THE BIG PUSH - 01/02/2019.

 

PRO-PEOPLE, PRO-FARMERS.

 

Today’s Interim Budget was a last chance for the Modi Government to cover its bases after it lost three major States in last year’s election to Congress. In what was supposed to be an Interim Budget, Finance Minister Mr. Piyush Goyal turned it into an almost full-fledged Budget with an array of populist Announcements.

# In what turned out to be a game changing announcement, the FM exempted people with an earning of upto Rs.5 Lacs from payment of Income Tax.

# The FM announced an annual cash dole out of Rs 6,000 to small Farmers.

# The FM provided a monthly pension of Rs 3,000 to workers in the unorganised sector.

The FM has thus made a big populist push in its Final Budget before Elections, by proposing an array of incentives for both middle-class and farmers, whose disenchantment had cost the BJP dearly in the recent assembly elections.

 


‘ELECTION’ BUDGET – THE BIG PUSH - 01/02/2019.

 

PRO-PEOPLE, PRO-FARMERS.

 

Today’s Interim Budget was a last chance for the Modi Government to cover its bases after it lost three major States in last year’s election to Congress. In what was supposed to be an Interim Budget, Finance Minister Mr. Piyush Goyal turned it into an almost full-fledged Budget with an array of populist Announcements.

# In what turned out to be a game changing announcement, the FM exempted people with an earning of upto Rs.5 Lacs from payment of Income Tax.

# The FM announced an annual cash dole out of Rs 6,000 to small Farmers.

# The FM provided a monthly pension of Rs 3,000 to workers in the unorganised sector.

The FM has thus made a big populist push in its Final Budget before Elections, by proposing an array of incentives for both middle-class and farmers, whose disenchantment had cost the BJP dearly in the recent assembly elections.

 

STILL IN THE TRADING RANGE.

 

It was expected that the Nifty finally might be able to break the Trading Range 10534-10985 with the Budget announcements, but that was not to be. An intra-week dip near the lower end of the trading range (10583) attracted the Buyers, which propelled the Nifty towards the higher end of the trading range (10983) before settling lower. The Range remains but more importantly the Support Zone provided by the Moving Averages viz. 200dma, 100dma, 50dma and 20dma, remains intact. A close above Nifty 11089, which is the Trend Reversal Level, will propel the Nifty towards a short term pattern target of 11416.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 36099, made a high of 36778, low of 35375 and closed the week at 36469. Thus it closed the week with a gain of 444 points. At the same time the Nifty opened the week at 10792, made a high of 10983, low of 10583 and closed the week at 10893. Thus the Nifty closed the week with a gain of 113 points.

 

On the daily charts, both the indices have formed a white body candle with a long upper shadow which is indicative of the Retracement that the indices had seen on Friday after reaching the upper end of Trading Range. On the weekly timeframe, both Sensex and Nifty have formed a Bullish Harami. This is a Bullish Reversal pattern but cannot be considered as it has formed in sideways trend. Thus daily as well as weekly candlestick formations are suggesting a bullish bias.

 

This is the 8th week that both the indices are still trading within well defined boundaries; the short term Trading Range for the Sensex is 36554-35010 and Nifty 10985-10534. A break of the lower boundary will lead the Sensex to test higher bottoms of 34426-33291 and Nifty 10333-10004. Similarly a break of the upper boundary, will lead the Sensex to test the Reversal level of 36813 and 11089 for the Nifty.

 

Interestingly all the significant Moving Averages (20dma, 50dma, 100dma & 200dma) have converged into a narrow Confluence Zone between Sensex 36116-35726 and Nifty 10844-10743. This Zone will act as Strong Support Zone going forward.

 

The Correction of the current upward Retracement is at Sensex 35300-34922-35538 and Nifty 10610-10494-10379. A break below Nifty 10379, will see the intermediate Correction resuming and the intermediate Correction levels are placed at Sensex 33920-32354-30788 and Nifty 10283-9827-9371. Higher degree Correction levels are placed at Sensex 32688-30742-28796 and Nifty 9875-9293-8710. Thus we have two confluence zones which will act as Support Zones. First Confluence Support Zone is between Sensex 32688-32354 and Nifty 9875-9827. Second Confluence Support Zone falls between Sensex 30788-30724 and Nifty 9371-9293.

 

This week, again both the indices tested all the Moving Averages viz. the long term average of 200dma (Sensex – 35914 and Nifty – 10844), the medium term average of 50dma (Sensex – 35940 and Nifty – 10787) and also the short term average of 20dma (Sensex – 36116 and Nifty – 10820), and also managed a close above all of them. Thus the Trend in long term, medium term and short term is still Bullish.

 

MACD is still in Sell mode whereas Price ROC has given a fresh Buy. RSI (55) suggests Bullish momentum. Stochastic Oscillator %K (51) is above %D and hence in Buy mode. ADX (11) suggests a further sideways consolidation with no clear trend. Directional Indicators are in Buy mode as +DI has gone above –DI. MFI (51) suggests Positive Money Flow. OBV continues to make higher top higher bottom. Thus majority of Oscillators are suggesting a Bullish bias.

 

Options data for February series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is at the strike of 10700. Thus Options data suggests a narrow trading range with resistance at 11000 & support at 10700.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10583

10692

10782

10893

10999

11078

11185

Sensex

35302

35711

36046

36469

36938

37342

37711

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Britannia

3251

3195

3335

3423

Buy Divis Lab

1532

1501

1579

1627

Buy Asian Paints

1457

1427

1502

1549

Buy Tech Mah

746

731

769

793

Buy Lupin

883

866

909

936

 

WATCH OUT FOR:

 

Asian Paints
 
 

 

 

 

 


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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