CALM BEFORE THE BULL STORM.16/11/2007
The bulls hit the market with vengeance after enjoying their well deserved Deepawali vacation. The bulls were in command and the Sensex reversed its direction after Diwali correction. Support was found at trendline support at 18333 levels. The recovery was very fast paced and took the Sensex almost upto 20000 levels.The Sensex has formed a congestion zone around 19987 to 20238. Once this zone is taken out, it will eventually have a target of 22143.
THIS WEEK’S RECOMMENDATIONS:
BIGGEST ONE DAY GAIN 893 POINTS.
Sensex posted its biggest one day gain on closing basis of 893 points, tracking global markets. US markets and Asian markets provided the initial impetus and the Sensex was on its way and never looked back through out the day. Also the Left parties said that they may allow the government to negotiate in connection with the nuclear deal with the US. This boosted the sentiment further. There is a belief that the US Fed may again cut interest rates by 75 basis points in the next six months, which will trigger another round of liquidity in the Indian markets.
REFINERIES STEAL THE SHOW.
The week gone by, belonged to the oil refinery scripts. It was the place to be in for the week. They moved like never before. The RPL show, which was on about two weeks back, has now been taken over by Essar Oil and other state owned refineries like Bongagaon Ref, MRPL and Chennai Petro. HPCL, BPCL and IOC too joined the party. Essar Oil, which was languishing around 70 odd levels, rose almost 200% and went well above 200. It was like poor man’s RPL. Bongaigaon rose from 75 levels to 117, MRPL and Chennai Petro followed suit by posting handsome gains during the week.
SENSEX.Sensex opened the week at 18640, made a high of 19987, low of 18333 and closed the week at 19698. The gains registered during the week were 640 points. In the fall that the Sensex witnessed, support was found at the trendline support which was at 18333 and which also coincided with the 61.8 % retracement level at 18343. So for the rally to continue ahead, Sensex must not break the support at 18333. In the process of recovery, Sensex again tried to conquer 20000 level, but to little avail. There is now a congestion zone from 19987-20238. Once this zone is crossed, the possible target for the Snnsex is 22143. The trendline support is now at 18851 and the trendline resistance is now at 19910. Once the resistance of 19910 is crossed, we can expect the Sensex to test previous high and move further up. In the process, Sensex has left a gap between 19210 and 19336. For the week ahead resistance is at 19910-20238-20566. Support is at 19336-19006-18851-18333.
NIFTY.Nifty opened the week at 5660, made a high of 5966, low of 5477 and closed the week at 5906, registering a gain of 208 points on a weekly basis. The Trendline support is at 5613-5400 and Trendline resistance is at 5956. There is a resistance zone developed in the region of 5966-6012, and once this zone is taken out the eventual target will be 6490. The Nifty OI Put Call Ratio is at 1.19. Lot of Call writing is seen at the strike of 6000, which will provide resistance going forward. For the week ahead the resistance is at 5956-6012-6068. Support is at 5817-5700-5613-5477.
HOW TO TRADE?
This week one can buy ESCORTS 143 future and hedge it by selling Nifty future. Escorts target is 163-172, SL is 129. Or one can also buy an OTM call for Escorts. Another one is buying SUZLON 2064 future and hedge it with selling Nifty future. Suzlon targets are 2149-2242, SL of 1998.
LAST WEEK’S RECOMMENDATION:
Almost all scripts achieved their higher targets with the exception of gail, which will be reaching its target in the next week. GMR INFRA @ 206 reached 235, BIOCON @ 592 reached 663, NALCO @ 374 reached 443, IOC @ 512 reached 651, Hindalco @ 203 reached 240, Dena Bank @ 79 reached 85. THIS WEEK’S RECOMMENDATIONS:
CHAMBAL FERT:- 72 SL 64 TGT 82-93.
ALOK IND:- 72 SL 68 TGT 79-84.
ITC:- 205 SL 195 TGT 212-225.
GNFC:- 190 SL 180 TGT 203-208.
GESCO:- 695 SL 608 TGT 760-824-879.
ESCORTS:- 143 SL 129 TGT 156-163-172.
ORBIT CORP:- 706 SL 675 TGT 738-787-850.
HOCL:- 78 SL 73 TGT 87-104.