Archives : READY TO TUMBLE - 23/01/2009.

READY TO TUMBLE – 23/01/2009. 

The market went down consistently and by the end of the week gave a downward breakout of the trading range 2700-3000. Thus, whatever hopes the Bulls have had evaporated because of Fridays closing below 2700. As a result the Nifty and Sensex have given a Bearish Head & Shoulders Breakout and are headed southwards.The week was dominated by the swearing in ceremony of President Obama and his inaugural speech, the results of biggies of Corporate India and as usual Satyam. 

SATYAM: THE MYSTERY CONTINUES.

RESULTS OKAY.

SENSEX.

NIFTY.

Strategy for the week:

LAST WEEK’S RECOMMEDATIONS:
THIS WEEK’S RECOMMENDATIONS:
TO READ FULL ARTICLE CLICK MORE:


READY TO TUMBLE – 23/01/2009.

The market went down consistently and by the end of the week gave a downward breakout of the trading range 2700-3000. Thus, whatever hopes the Bulls have had evaporated because of Fridays closing below 2700. As a result the Nifty and Sensex have given a Bearish Head & Shoulders Breakout and are headed southwards.The week was dominated by the swearing in ceremony of President Obama and his inaugural speech, the results of biggies of Corporate India and as usual Satyam.

SATYAM: THE MYSTERY CONTINUES.

The Sensex and Nifty lost heavily during the course of the week along with the Index heavy weights. Surprisingly the winner of the week turned out to be Satyam Computers which gained around 60% in a week. It seems there is a strong buzz of some company taking over Satyam which is propelling the stock price upwards.Technically Satyam has formed a Bullish Engulfing pattern on very high volumes which suggests the stock might shoot up to 49-53 levels. But that does not change the Satyam story and hence we do not recommend any investment in this stock. Only traders can buy for short term gains with a strict stop loss.

RESULTS OKAY.

The results of biggies of India Inc. turned out to be just about average. But that was better then what the market had expected. The market was discounting very poor results as a result of slowdown in the economy. The result of Reliance Industries certainly came in much better then expected and surprises the market. Similarly Bharti Airtel, Idea, Infosys continued with their strong quarterly performance.

SENSEX.

Sensex opened the week at 9381, made a high of 9409, made a low of 8631, and closed the week at 8674, thus registering a weekly loss of 649 points.The Sensex is showing very good weakness and it is confirmed by the formation of a Black Marubuzo in the weekly charts. It is completely Engulfing previous week’s Hammer and negating the Hammer pattern by closing below the previous week’s low of 8946.It is the lowest weekly close of the Sensex since November 2005.Since the lower end of the range is broken and the Sensex has managed to close below it, many critical supports also have been broken and Sensex has managed a Bearish Hand & Shoulders Breakout and is headed towards 8483-7530.The level of 9412 which is the previous week’s high assumes great significance as a strong resistance because this week’s high and the 50 DMA is coinciding with it.The lower levels will be tested. Any rise in the Sensex will be a selling/shorting opportunity.The Trendline Resistance is at 9062-9660 and Trendline Support is at 8581.

For the week ahead the Resistance is at 8799-9162-9412-9631. Support is at 8581-8316-7921-7697. 

NIFTY.

Nifty opened the week at 2828, made a high of 2868, low of 2661, and closed the week at 2678. The weekly loss was 150 points.The Nifty has broken the lower end of the short term trading range 2700-3100 and managed to close below it, which is signaling further Bearishness in the Nifty. The Nifty as a result has given a Bearish Head & Shoulders Breakout and is now headed towards 2536-2250.The level of 2869 assumes great significance as a critical resistance because it is the previous weeks high and incidentally these weeks high and the 50 DMA fall near this point. Thus, for any short term uptrend, Nifty needs to trade above 2863.The Nifty has Trendline Line Resistance at 2732. The Trendline Support is at 2616. Lot of CALL writing is seen in the strike price of 2700 and 2800, which shows that there will be strong resistance being offered in the market at these levels. The PUT writers are comparatively less secured and hence there is lesser PUT writing in the Nifty.The O.I.PCR is 0.66 which means market is entering oversold territory.For the week ahead, the Resistance is at 2732-2783-2812-2869. Support is at 2616-2570-2502-2426-2300. 

Strategy for the week:

  • Bear Spread for the Nifty.
Buy 2700 PUT (64) and Sell 2500 PUT (9). The cost of this Bear Spread will be 55 (Rs. 2750) and maximum profit will be 145 (Rs.7250)      
  • Construct a Bull Spread for Satyam.

Sataym (38) is showing strength. It is advisable to construct a Bull Spread instead naked long position. Buy 40 CALL (3.95) and simultaneously sell 50 CALL (1.3). The cost of Bull Spread will be 2.65 (Rs.1590) and maximum profit will be 7.35 (Rs.4410).      .

 
  • LAST WEEK’S RECOMMEDATIONS:

Last week as the market went down, only 50% of our recommendations HPCL, BPCL, IOC managed to reach their targets. But we had recommended to hedge with Nifty Futures or by buying PUT. Hence, once again our readers must have been benefited tremendously.
  • Buy HPCL Tgt was 292 Reached 296.
  • Buy BPCL Tgt was 396 Reached 396.
  • Buy IOC Tgt was 446 Reached 449.
  • Buy HDFC Tgt was 1598 Reached 1570.
  • Buy Balrampur Chini Tgt was 58 Reached 56.
  • Buy Moser Baer Tgt was 76 Reached 73.
 
  • THIS WEEK’S RECOMMENDATIONS:

Once again we expect lot of volatility in the market. So it is advised to hedge your position by buying Calls or using Protective Call Strategy.

  • SELL BHEL 1320 SL 1365 TGT 1266-1213-1155.
  • SELL SBI 1041 SL 1081 TGT 1021-985.
  • SELL L&T 641 SL 670 TGT 606-568.
  • SELL REL CAP 383 SL 398 TGT 359-346-330.
  • SELL CANARA BANK 174 SL 184 TGT 163-158.

 WATCH OUT FOR:

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap