Archives : BLACK MONDAY TO MAGIC MONDAY - 22/05/2009

BLACK MONDAY TO MAGIC MONDAY - 22/05/2009.

Just as we mentioned last week that the election results will decide the direction of the market, it happened exactly the same way. The Congress led UPA won with an overwhelming majority, which helped the market to give a upward breakout. The investors were in for a pleasant surprise when the election results were announced. The Congress led UPA got 258 seats and blew away its rivals to triumphantly return to power. The Indian voter is intelligent enough, which was proved when it voted for stable government which will not require the support of the either the Left or any other misfit partners like Mayawati. As a result, Dr. Manmohan Singh is set to take charge as Prime Minister and become the only P.M. since Jawaharlal Nehru in 1961, to be voted back after completing a full 5 year term.

  • BLACK MONDAY TO MAGIC MONDAY.
  • INTERESTING PATTERN ON THE INDICES.
  • SENSEX.
  • NIFTY.
  • INDEX LEVELS: 
  •  S3S2S1CLOSER1R2R3
    Nifty4021407241594238430345584746
    Sensex12822132691361113887142211467715107
  • THIS WEEK’S RECOMMENDATIONS:
  • WATCH OUT FOR:
  • TO READ FULL ARTICLE CLICK MORE:



BLACK MONDAY TO MAGIC MONDAY - 22/05/2009.

Just as we mentioned last week that the election results will decide the direction of the market, it happened exactly the same way. The Congress led UPA won with an overwhelming majority, which helped the market to give a upward breakout. The investors were in for a pleasant surprise when the election results were announced. The Congress led UPA got 258 seats and blew away its rivals to triumphantly return to power. The Indian voter is intelligent enough, which was proved when it voted for stable government which will not require the support of the either the Left or any other misfit partners like Mayawati. As a result, Dr. Manmohan Singh is set to take charge as Prime Minister and become the only P.M. since Jawaharlal Nehru in 1961, to be voted back after completing a full 5 year term.

BLACK MONDAY TO MAGIC MONDAY.

In 2004, it was a tragic Monday after the polls, as Sensex crashed 842 points, when leaders of the Left started suggesting derailment of reforms. This Monday i.e. 18th May 2009, the Sensex soared by 2111 points the sharpest one day rise witnessed ever by any Index in the world. For the first time ever since 1875, the BSE halted trading for the day twice as the Sensex rose by 17.5%. It all happened in a matter of a minute. This rally is likely to continue till the budget. Till then the market has changed its way from being a ‘Sell on Rise’ to ‘Buy on Decline’ market.

INTERESTING PATTERN ON THE INDICES.

Both the indices have moved up in a very peculiar fashion. Both traded in a small range, tested the lower range of the range (support) three times and the higher end of the range (resistance) three times before giving an upward breakout. The Nifty initially traded in a range of 2500-2800, where both lower end and upper end of the range were tested three times before breaching the upper end. After that it started moving in a range of 2800-3150, where once again both upper and lower end were tested three times before giving an upward breakout. Then it moved in a range of 3200-3700, where the final breakout was given and the Nifty blasted its way by breaching the higher end of the range in the third attempt. The same was the case with Sensex.

SENSEX.

Sensex opened the week at 13479, made a high of 14930, made a low of 13479, and closed at 13887, thus registering a weekly gain of 1714 points almost registering a rise of 14% on weekly basis.

On the weekly charts Sensex has formed a Shooting Star formation with a huge gap on the daily as well as weekly charts between 12219-13479.The Sensex has managed to rise above 50% of the entire fall and is now moving towards the 61.8% retracement levels. The 50% and 61.8% retracement levels of the entire fall for the Sensex i.e. from 21206-7697 falls at 14452-15965.

The Sensex on Monday opened with a huge gap between 12219-13479, which is still unfilled on the daily as well as weekly charts. It is likely that the Sensex will come down to fill the gap up to a certain extent.

If we consider the immediate rise in Sensex from 11621-14930 then the correction levels are 13666-13275-12885. But if we consider the entire rise from 8047 to 14930 then the correction levels are 12301-11488-10676. In case of a downfall, Sensex has strong Trendline supports at 12286 which also happened to be its previous resistance but are now is acting as supports. This suggests that Sensex has strong support at the above mentioned levels.

For the week ahead the Resistance is at 14221-14677-15107. Support is at 13611-13479-13269-12822.

NIFTY.

Nifty opened the week at 3673, made a high of 4509, low of 3673, and closed at 4238. Thus the weekly gain was 617 points and registering a rise of 17% on weekly basis.

Nifty has formed White Opening Marubuzo on weekly charts with a long upper shadow. The Nifty has managed to rise above 50% of the entire fall and is now moving towards the 61.8% retracement levels. The 50% and 61.8% retracement levels of the entire fall for the Nifty from 6357-2252 falls at 4305-4764.

If we consider the immediate rise in Nifty from 3534-4509 then the correction levels are 4137-4021-3906. But if we consider the entire rise from 2539-4509 then the correction levels are 3756-3524-3292. In case of a downfall Nifty has strong Trendline at 3721, which also happened to be its previous resistances but is now acting as support. This suggests that Nifty has strong support at the above mentioned levels. 

Nifty strike of 4500 is seeing strong amount of CALL writing which will act as a resistance in the short to medium term. Nifty 4000 PUT is also witnessing heavy Put writing, which means that the Nifty would find support at around that level.

For the week ahead, the Resistance is at 4303-4558-4746. Support is at 4159-4072-4021-3790.

INDEX LEVELS: 

 S3S2S1CLOSER1R2R3
Nifty4021407241594238430345584746
Sensex12822132691361113887142211467715107

THIS WEEK’S RECOMMENDATIONS:  

STOCKCMPSLTgt-1Tgt-2
Buy TECHM474433565628
Buy Rel Cap.903876939958
Buy Praj106100114127
Buy FSL24222932
Buy Punj Llyd181170191211
Buy RiiL100794110671081

WATCH OUT FOR:

Tech mahindra: 474 SL 433 TGT 565 - 628.

Tech Mahindra22 may 2009

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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