Archives : BEAR MARKET RALLY - 13/03/2009

BEAR MARKET RALLY 13/03/2009.

Just as a rising tide lifts all boats; the U.S. market played the role of the rising tide and lifted all global markets along with it. The Indian market was no exception and caught up with the global rally, even though it was a truncated three day week.

 
  • BEAR MARKET RALLY?
  • IIP CONTRACTS AGAIN.

  • SENSEX.
  • NIFTY.
  • Strategy corner:
  • LAST WEEKS RECOMMENDATIONS:
  • Recommendations for the week:
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BEAR MARKET RALLY 13/03/2009.

Just as a rising tide lifts all boats; the U.S. market played the role of the rising tide and lifted all global markets along with it. The Indian market was no exception and caught up with the global rally, even though it was a truncated three day week.

BEAR MARKET RALLY?

The question on the mind of every trader and investor in market is whether it is only a Bear market rally or the start of a new Bull trend. The answer is we are still in a long term Bear market, but are witnessing a short term Bear market rally. The reason behind this rally is the surge in the global markets led by the U.S. market. The U.S. market has bounced almost 10% from its lows in the past week. The rub off of the rise in U.S. market was felt in the Indian market and as a result our market also rallied by almost 4% to 5% from previous week’s close. The rise in our market was mainly due to short covering and not due to any renewed buying. Bear market rallies are fast and furious and so swift that many people don’t identify until it is over.

IIP CONTRACTS AGAIN.

The IIP nos. for January declined to -0.5% v/s 6.2% last year. The capital goods sector and consumer durables showed strong rebound. The capital goods sector saw strong growth, with output rising 15.4%, led by an expansion in production of machinery and equipments. It feels like a recovery underway and the IIP nos. would improve in the months ahead.

SENSEX.

Sensex opened the week at 8259, made a high of 8793, made a low of 8110, and closed the week at 8756, thus registering a weekly gain of 431 points.

The Sensex has formed an Opening White Marubuzo on daily charts on Friday. Whereas on the weekly charts, Sensex has formed a Bullish Engulfing Pattern.

The Sensex has left two gaps while moving up. The first was between 8259-8274 and second was between 8439-8480. These gaps will continue to act as support.

The Sensex has not breached the previous week’s low of 8047 and hence this level gets significance and it should not be broken for any up move to sustain.

The indicators like MACD & ROC are in negative and have not given any buy signal, but are pointing northwards.

If we consider the immediate pullback of the fall from 9724-8047, then the retracement levels are 8688-8886-9083. If we consider the fall from 10469-8047 then the corrective levels are 8972-9258-9544.

The Trendline Resistance is at 9126 and Trendline Support is at 8066.

 For the week ahead the Resistance is at 8922-9162-9281-9412. Support is at 8467-8259-8066-7921.

NIFTY.

Nifty opened the week at 2620, made a high of 2726, low of 2555, and closed the week at 2719. The weekly gain was 99 points.

The Nifty has formed an Opening White Marubuzo on daily charts on Friday. Whereas on the weekly charts, it has formed a Bullish Harami.

The Nifty has not breached the previous week’s low of 2539 and hence this level gets significance and it should not be broken for any up move to sustain

If we consider the immediate pullback of the fall from2969-2539, then the retracement levels are 2702-2754-2805. If we consider the fall from 3147-2539 then the corrective levels are 2771-2843-2915.

Nifty O.I.PCR is at 1.43. Strong PUT writing is seen at 2600 strike price and 2500 strike price. Theses will act as a support in any fall. Strong CALL writing is visible on 2800 strike price, which will act as a resistance going forward.

 

The Nifty has Trendline Resistance at 2782-2840. The Trendline Support is at2554-2488.

For the week ahead, the Resistance is at 2782-2840-2881-2969. Support is at 2661-2555-2502-2391.

Strategy corner:

Construct a Bull Spread for SAIL 81. The likely target is 90. So Buy 80 CA @ Rs. 4 and Sell 90 CA @ Rs.1. The cost of the Bull Spread is Rs.3, which is also the highest loss one can suffer. The maximum profit will be Rs.7.

LAST WEEKS RECOMMENDATIONS:

All the pairs recommended last week did very well as can be seen below.

  • PAIR I:
Buy IVRCL Infra 112 Tgt was 118 Reached 117.Sell REL CAP. 286 Tgt was 273 Reached 274.
  • PAIR II:
Buy N.B.VENTURES 124 Tgt was 131 Reached 133.Sell BANK NIFTY 3455 Tgt was 3221 Reached 3314.
  • PAIR III:
Buy MPHASIS BFL 182 Tgt was 190 Reached 191.

Sell MARUTI 649 Tgt was 632 Reached 640.

Recommendations for the week:

Since the coming week too is going to be volatile and uncertain, we suggest Pair Strategy approach.
  • PAIR I:
Buy Jindal Steel 1069 SL 1030 Tgt 1114-1160-1195.Sell HPCL 242 SL 249 Tgt 236-230.
  • PAIR II:
Buy Cairn 170 SL 166 Tgt 175-182-188.Sell BPCL 345 SL 355 Tgt 339-325.
  • PAIR III:
Buy ABAN 254 SL 243 Tgt 265-276-298.Sell Nifty Futures as a hedge.   
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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