Archives : 4350 - THE DIVIDING LINE - 21/08/2009.

 4350 – THE DIVIDING LINE – 21/08/2009. 

Our simple strategy of selling when the market nears the top end of the range and buying when the market is near the bottom end of the range, worked very well in the previous week. The market saw strong selling pressure around Nifty 4500 levels till Thursday, but on Friday the market saw some strong buying which helped it to recovery and close above the resistance level of 4500. The support level of 4350 was repeatedly put under severe test but somehow it stood the onslaught of the Bears without breaking. Thus if the rally is to continue any further, it is imperative that 4350 is not breached.

  
  • FACTORS AFFECTING THE MARKET.
  • SENSEX.
  • NIFTY.
  • INDEX LEVELS:
  • THIS WEEK’S RECOMMENDATIONS:
  • WATCH OUT FOR:

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4350 – THE DIVIDING LINE – 21/08/2009.

   

Our simple strategy of selling when the market nears the top end of the range and buying when the market is near the bottom end of the range, worked very well in the previous week. The market saw strong selling pressure around Nifty 4500 levels till Thursday, but on Friday the market saw some strong buying which helped it to recovery and close above the resistance level of 4500. The support level of 4350 was repeatedly put under severe test but somehow it stood the onslaught of the Bears without breaking. Thus if the rally is to continue any further, it is imperative that 4350 is not breached.

  
  • FACTORS AFFECTING THE MARKET.

  • NEGATIVE FACTORS.
  • MONSOON.

One of the major worries for the market currently is the lack of rains. Poor monsoon is a reality and already a draught has been declared in many parts of the country. The GDP figure is bound to be affected by poor agricultural output. Also the subsidy bills will only increase the fiscal deficit.

 
  • GLOBAL MARKETS.

Even though the global markets recovered by the end of the week, there was enough drama to scare the Bulls. The sell-off in the Chinese market in the middle of the week created lot of fear, but the Chinese market managed to recover by the end of the week which helped our markets to improve, it does not mean that the Chinese market scare is over.

 
  • POSITIVE FACTORS.
  • IIP NO.

The industrial growth at 7.8%for June was way above what the market had expected. The IIP nos. clearly shows a revival of industrial growth for the first time since September 2008. With the monsoon casting a shadow on agriculture, this type of industrial growth will partly offset the adverse impact of a weak monsoon.

  

  • SENSEX.

The Sensex opened at 15284, made a high of 15284, made a low of 14684 and closed the week at 15240. The weekly loss was 171 points.

 

Sensex has formed a Bullish white candle on Friday on the daily charts. On the weekly charts it has formed a Dragon Fly Doji with a long lower shadow which indicates strong buying at lower levels. Such a formation has Bullish implications.

 

Sensex has falling gap between 15367-15284 which will act as a resistance going forward.

 

The Sensex has taken strong support at the Trendline joining the low from 8047 to 13219. The support was held despite being tested several times. This Trendline support is at 15117.

 

The 50dma has withstood several Bear onslaughts and is still holding true. This 50dma is currently at 14809 and will act as a strong support.

 

The Sensex will witness a breakout if it manages to close above 16002 and the target will be 17185.

 

The indicators are not painting a very rosy picture, even though the RSI is at 53 and moving up, the MACD and ROC continue with their sell signals.

 For the week ahead Sensex will face resistance at 15369-15545-16002 and support will be at 15117-14888-14526.   

  • NIFTY. 

The Nifty opened at 4578, made a high of 4578, made a low of 4353 and closed the week at 4528. The weekly loss was 52 points.

 

Nifty formed a big white candle on the daily charts on Friday. On the weekly charts the Nifty has formed a Hammer with a Black body.

 

The Nifty has taken strong support at the Trendline joining the low from 2539 to 3918. The support was held despite being tested several times. This Trendline support is at 4419.

 

The Nifty will witness a breakout if it manages to close above 4731 and the target will be 5109-5243.

 

The indicators are not painting a very rosy picture, even though the RSI is at 53 and moving up, the MACD and ROC continue with their sell signals.

 

The Nifty O.I.PCR is quite healthy at 1.13. Strong PUT writing is being witnessed at 4400 strike price which suggests support for the market at that level. For the September series the 4300 strike PUTS are being written, which suggests support at that level.

 For the week ahead, Nifty will face resistance at 4586-4693-4731 and support will be at 4465-4420-4353.  

  • INDEX LEVELS:  
 S3S2S1CLOSER1R2R3
Nifty4353442044654528458646934731
Sensex14526148881511715240153691554516002

  

  • THIS WEEK’S RECOMMENDATIONS: 
STOCKCMPSLTgt-1Tgt-2
Buy Balaji Tele61576773
Buy Sintex213207225236
Buy CMC864837910961
Buy BPCL530518544556
Buy IVRCL Infra345336353374
  
  • 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.

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