Archives : SENSEX HEADED TOWARDS 9669 - 10551. - 05/12/2008

SENSEX HEADED TOWARDS 9669-10501 – 05/12/2008.

Both Sensex and Nifty has given a Bullish Head and Shoulders Breakout and are headed higher, possibly towards 9669-10501 for the Sensex and 2972-3218 for the Nifty.

Last week the nation became extremely patriotic and stood united in the face of the terror attack. There was no knee jerk reaction. This week was dominated by the expectations of a stimulus package to be announced by the government over the weekend.

The basic fibre of the economic stimulus package will revolve around providing necessary support and back up for the cash starved infrastructure project.

The market gave up majority of the gains in the last hour on Friday. This selling could be attributed as front running exercise before the announcement of a strong stimulus package, which will be announced on Saturday.  

  • SUPER SATURDAY:

1. Economic Stimulus Package.

2. Interest Rate Cuts.3. Fuel Price Cut.
  • SENSEX.
  • NIFTY.
  • LAST WEEK’S RECOMMEDATIONS:
 
Majority of the Targets were achieved except Divis Labs and GTL Infra. Even though the Stop loss was triggered on both stocks, they managed to put a decent show nonetheless.  
  • Buy BPCL 355 Tgt was 374 Reached 376.
  • Buy Divis Lab 1226 Tgt was 1279 Reached 1249.
  • Buy Essar Oil 74 Tgt was 79 Reached 81.
  • Buy Educomp 2290 Tgt was 2365 Reached 2370.
  • Buy GTL Infra 45 Tgt was 49 Reached 47.
  • Buy Bhel 1359 Tgt was 1391 Reached 1399. 

  • THIS WEEK’S RECOMMENDATIONS:
  • Watch Out For:
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SENSEX HEADED TOWARDS 9669-10501 – 05/12/2008.

Both Sensex and Nifty has given a Bullish Head and Shoulders Breakout and are headed higher, possibly towards 9669-10501 for the Sensex and 2972-3218 for the Nifty.

Last week the nation became extremely patriotic and stood united in the face of the terror attack. There was no knee jerk reaction. This week was dominated by the expectations of a stimulus package to be announced by the government over the weekend.

The basic fibre of the economic stimulus package will revolve around providing necessary support and back up for the cash starved infrastructure project.

The market gave up majority of the gains in the last hour on Friday. This selling could be attributed as front running exercise before the announcement of a strong stimulus package, which will be announced on Saturday.

SUPER SATURDAY:

Suddenly all the attention of the market has shifted to Saturday, because the government is set to announce a fiscal stimulus package for the economy and simultaneously the RBI will make announcements regarding the interest rate cuts. Besides this another positive announcement will the fuel price cut.

1.Economic Stimulus Package.

Almost every country has been announcing some sort of financial revival packages, so not to be left behind, the Indian government too joined the bandwagon and announced the much needed economic stimulus package, which will be announced on Saturday.The growth has taken a back seat as can be seen in the recent Sept quarter results and the faltering IIP numbers. The focus of the stimulus package will be the Infrastructure sector. Besides Infrastructure, the other beneficiary is likely to be the cash ridden Real Estate sector. The government is also tinkering with the idea of a cut in excise duty to boost manufacturing sector.

2. Interest Rate Cuts.

The fiscal part of the package will be announced by the RBI in some sort of rate cut on Saturday. The fall in Inflation has been rather steep and this will strengthen the case of strong interest rate cut. The expectations are a cut in the Repo rate by 100 to 150 bps and a cut in the Reverse Repo to the tune of 50 to 100 bps. The CRR cut is not expected this time.

3. Fuel Price Cut.

The Fuel Price cut was announced on Friday, after market hours. The cut in Petrol prices was to the extent of Rs.5 per litre and the cut in diesel price was by Rs. 2 per litre. The crude has corrected from an all time high of $148 per barrel to the current low of $43 per barrel. The fall in crude has been more than $105, which means the crude has fallen by more than 70%. As compared to this the petrol and diesel prices remained unchanged until now. Even now the cut in petrol price is just Rs 5 and as per data, the Oil Marketing Companies are making a profit of more than Rs.17 per litre. So even after this cut, HPs and BPs of the world, have sufficient margin left on the table and hence stand to gain.    

SENSEX.

Sensex opened the week at 9162, made a high of 9340, made a low of 8467, and closed the week at 8965, thus registering a weekly loss of 127 points.The Sensex has formed a Hammer. Even though the body of Hammer is black, the significance of Hammer is not lost and is slightly positive.The Sensex has completed a Bullish Inverted Head and Shoulders formation and is now headed towards the targets of 9669 and 10501. The target is achievable as long as the Sensex stays and closes above 8606.The ROC has just turned positive and hence is giving a Buy signal. The MACD indicator too is in BUY mode.The Trendline Support is at 8740-8606 and the Trendline Resistance is at 9642-9823. 

For the week ahead the Resistance is at 9340-9570-9681-9823. Support is at 8740-8606-8467-8316.

NIFTY.

Nifty opened the week at 2690, made a high of 2790, low of 2633, and closed the week at 2755. The weekly gain was 62 points.The Nifty has completed a Bullish Inverted Head and Shoulders formation and is now headed towards the targets of 2972 and 3218. The target is achievable as long as the Nifty stays and closes above 2627.The MACD indicator has signaled a BUY and is moving up. The up move will continue as long as the Nifty remains above 2502. The Trendline Support is at 2627 and the Trendline Resistance is at 3030.The O.I. PCR is at 1.13. Strong Call writing is visible at the Nifty strikes of 2800 and 3000. Nifty is finding it increasingly difficult to cross the zone of 2832-2860. Put writing is visible at the strike of 2500. This level will provide strong support in case of a fall.

For the week ahead, the Resistance is at 2764-2832-3030-3161. Support is at 2670-2627-2570-2502.  
LAST WEEK’S RECOMMEDATIONS:

 Majority of the Targets were achieved except Divis Labs and GTL Infra. Even though the Stop loss was triggered on both stocks, they managed to put a decent show nonetheless.  

  • Buy BPCL 355 Tgt was 374 Reached 376.
  • Buy Divis Lab 1226 Tgt was 1279 Reached 1249.
  • Buy Essar Oil 74 Tgt was 79 Reached 81.
  • Buy Educomp 2290 Tgt was 2365 Reached 2370.
  • Buy GTL Infra 45 Tgt was 49 Reached 47.
  • Buy Bhel 1359 Tgt was 1391 Reached 1399.
  

THIS WEEK’S RECOMMENDATIONS:

  • Buy REL 532 SL 501 Tgt 582-612.
  • Buy Adlabs 163 SL 156 Tgt 175-189.
  • Buy TTML 20 SL 19 Tgt 22-25.
  • Buy Divis Lab 1226 SL 1185 Tgt 1249-1295.
  • Buy Tata Motors 153 SL 145 Tgt 164-171.
  • Buy GVK Power 18 SL 17 Tgt 21-24.
  • Buy Alstom Proj 241 SL 226 Tgt 255-271.
Watch Out For: 
  • TTML 20 SL 19 TGT 22 – 25.

FLG BREAKOUT.

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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