Archives : RATE HIKE FEAR DRAGS DOWN MARKET 18/12/2009

RATE HIKE FEAR DRAGS DOWN THE MARKET – 18/12/2009.

 

The market once again faced strong resistance when it challenged the supply area between Nifty 5152-5181. This time around both the indices broke the critical support and went down further and closed below the important level of 50dma. Sensex besides closing below the 50 dma, has also closed below the demand Trendline and as a result the short to medium term trend has turned down. The Nifty has not yet broken the demand Trendline, but is very near to that. It seems that the market is now ready for some sort of a correction before bouncing back.

  • INFLATION V/S GROWTH.
  • SENSEX.
  • NIFTY
  • INDEX LEVELS:
  • LAST TIMES RECOMMENDATIONS:
  • THIS WEEK’S RECOMMENDATIONS:
  • WATCH OUT FOR:

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RATE HIKE FEAR DRAGS DOWN THE MARKET – 18/12/2009. 

The market once again faced strong resistance when it challenged the supply area between Nifty 5152-5181. This time around both the indices broke the critical support and went down further and closed below the important level of 50dma. Sensex besides closing below the 50 dma, has also closed below the demand Trendline and as a result the short to medium term trend has turned down. The Nifty has not yet broken the demand Trendline, but is very near to that. It seems that the market is now ready for some sort of a correction before bouncing back.

 
  • INFLATION V/S GROWTH.
 

Food inflation rose to a 10 year high of 19.95% for the week ended Dec 5, as against the previous week’s figure of 19%. The annual whole-sale price inflation, which stood at 1.34% in October, rose to 4.78% in November. The way the inflation is jumping, it seems it will easily reach around 8% by the end of this fiscal. This has the Government worried and hence one can expect some monetary tightening measures to control the inflation. The fact is that this food price inflation is a supply side problem and hence cannot be controlled by tightening liquidity. But the RBI has always acted ahead of the curve and is expected to do the same this time around. So one can expect a CRR hike in the short term, before an interest rate hike takes effect.

 
  • SENSEX.
  • The Sensex opened the week at 17118, made a high of 17275, a low of 16693 and closed the week at 16719. The Sensex closed the week with a loss of 400 points. The Sensex has formed a Bearish Evening Doji Star Reversal Pattern on the weekly chart which has turned the short to medium term trend down.
  • The Sensex has closed below its 50dma (16825) and also below the Trendline supporting the upmove. As a result the short to medium term trend has turned down and hence one can expect some correction.

  • The Sensex can correct the current rise from 15330 to 17361 and the correction levels are 16585-16346-16106. If we consider the correction of the bigger rise from 13219 to 17493, then the correction levels are 15860-15336-14852.
  • The Sensex has been moving up in an upward sloping channel. The lower end of the channel which falls at 16288 should act as strong support.
  • The Sensex has given a Bearish breakout for the Ascending Triangle pattern formation and as a result the targets will be 16210-15330. Generally Ascending Triangle pattern is expected to give a bullish breakout, but if it gives a bearish breakout, then the rally can go down all the way to the starting point of the rally.
  • The indicators like RSI, MACD and ROC are all in Sell mode. The OBV has also given a Sell signal.
 For the week ahead, Sensex will face Resistance at 16943-17098-17275. Sensex will find Support at 16606-16494-16288. 
  • NIFTY
  • The Nifty opened the week at 5117, made a high of 5156, a low of 4979 and closed the week at 4987. The Nifty closed the week with a loss of 130 points. The Nifty has formed a Bearish Evening Doji Star Reversal Pattern on the weekly chart which has turned the short to medium term trend down.
  • The Nifty has closed below its 50dma (5002) but is just above the Trendline (4968) supporting the upmove. As a result the short to medium term trend will turn down as and when this Trendline is broken and then one can expect some correction.

  • The Nifty can correct the current rise from 4538 to 5182 and the correction levels are 4936-4861-4785. If we consider the correction of the bigger rise from 3918 to 5185, then the correction levels are 4699-4550-4401.
  • The Nifty has been moving up in an upward sloping channel. The lower end of the channel which falls at 4816 should act as strong support.
  • The Nifty has given a Bearish breakout for the Ascending Triangle pattern formation and as a result the targets will be 4816-4538. Generally Ascending Triangle pattern is expected to give a bullish breakout, but if it gives a bearish breakout, then the rally can go down all the way to the starting point of the rally.
  • The indicators like RSI, MACD and ROC are all in Sell mode. The OBV has also given a Sell signal. 
  • Nifty O.I.PCR has reduced and is at 1.12. Strong CALL writing is visible at strike of 5100 which is acting as strong resistance. Some PUT writing is seen at 4800 strike which should act as support.
  • For the week ahead, Nifty will face Resistance at 5051-5106-5138. Nifty will find Support at 4932-4861-4816.
 
  • INDEX LEVELS:
 
 S3S2S1CLOSER1R2R3
Nifty4816486149324987505151065138
Sensex16288164941660616719169431709817275
 
  • LAST TIMES RECOMMENDATIONS:
 
PAIR NO.STOCKRec.priceTgt Reached Lot sizeProfit
1BuyJindal Steel744758746960Rs.1,920
SellICICI Bank864831804350Rs.21,000
2BuyBajaj Auto172517651799200Rs.14,800
SellHDFC269526052561150Rs.20,100
3Buy Bharat Forge2732832782000Rs.10,000
SellLIC Hsg811796770425Rs.17,425
      ProfitRs.85,245
 
  • THIS WEEK’S RECOMMENDATIONS:
 
PAIR NO.STOCKCMPSLTGT - 1TGT -2
1SellDLF357371344331
BuySintex247242254261
2SellAxis Bank934947918894
BuyMphasis725716736747
3SellMcDowell1227124911981158
BuyDr.Reddy1207118412371268
  
  • WATCH OUT FOR:

 
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