Archives : SAMVAT 2068 - OPENING ROUND TO BULLS - 28/10/2011.

SAMVAT 2068 – OPENING ROUND TO BULLS – 28/10/2011.

TRADING RANGE BREAKOUT FINALLY.

Deepawali did not disappoint the bulls as the market finally witnessed a trading range breakout i.e. Nifty 4720-5170. This breakout came after a consolidation period of nearly three months. Eventual target for Trading Range breakout is Nifty 5631 and Sensex 18692. The market surged on the first trading day of the New Year Samvat 2068 by almost 500 points on the Sensex. The gain can mainly be attributed to extremely strong global markets and which in turn sparked off a short-covering rally in our market.

200DMA - KEY LEVEL TO WATCH.

The market was trapped in the Nifty trading range of 4720 to 5170 and when the breakout was witnessed during Deepawali, the Nifty flew to reach the level of 200dma which is around 5400. Nifty tested the 200dma four times in July 2011, but was not able to surpass it and this was its fifth attempt. 200dma holds the key for the long term outlook for the market. Last Deepawali the market made a top of Nifty 6338 and fell and this Deepawali the market has given a much wanted trading range bullish breakout.

 

 

 


SAMVAT 2068 – OPENING ROUND TO BULLS – 28/10/2011.

TRADING RANGE BREAKOUT FINALLY.

Deepawali did not disappoint the bulls as the market finally witnessed a trading range breakout i.e. Nifty 4720-5170. This breakout came after a consolidation period of nearly three months. Eventual target for Trading Range breakout is Nifty 5631 and Sensex 18692. The market surged on the first trading day of the New Year Samvat 2068 by almost 500 points on the Sensex. The gain can mainly be attributed to extremely strong global markets and which in turn sparked off a short-covering rally in our market.

200DMA - KEY LEVEL TO WATCH.

The market was trapped in the Nifty trading range of 4720 to 5170 and when the breakout was witnessed during Deepawali, the Nifty flew to reach the level of 200dma which is around 5400. Nifty tested the 200dma four times in July 2011, but was not able to surpass it and this was its fifth attempt. 200dma holds the key for the long term outlook for the market. Last Deepawali the market made a top of Nifty 6338 and fell and this Deepawali the market has given a much wanted trading range bullish breakout.

 

TECHNICALLY SPEAKING.

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The Sensex opened the week at 17011, made a high of 17908, a low of 16898 and closed the week at 17804. The Sensex gained 1019 points on a weekly basis. Similarly Nifty opened the week at 5114, made a high of 5399, a low of 5084 and closed the week at 5360. The Nifty too closed with a strong weekly gain of 311 points.

Both Sensex and Nifty have formed a big White body candle on the weekly charts. The big White body candle formed in the direction of the breakout affirms the continuation of the upward price movement. On the daily charts Nifty has formed a small white body with a big upward gap. Interestingly this gap coincides with the bearish breakaway gap formed in August 2011. It falls short of being called an Island Reversal because of the presence of so many candles between these two gaps. Ideally Island is usually smaller than the main body and in this case it is a text book case of Trading Range breakout.

 

Both the indices were moving within a well defined trading range i.e. between Sensex 15745 to 17211 and Nifty 4720 to 5170 for a period of more than three months. The top and bottom end of the trading range had been tested four times without getting breached. Finally this Trading Range was breached and the target for this Trading Range Breakout falls at Sensex 18692 and Nifty 5631.

 

Both Sensex and Nifty have continued to remain above the short term average of 20dma (Sensex – 16754 and Nifty – 5038) and medium term average of 50dma (Sensex – 16658 and Nifty – 5005). As a result the short and medium term trends remain up. This week both the indices went up and are now just below the 200dma (Sensex – 18018 and Nifty – 5408). As a result the long term trend continues to remain down but will be tested in the coming week.

 

Since last Deepawali, both the indices have been moving lower in a Falling Channel and the top end of the Falling Channel falls at Sensex 18227 and Nifty 5468. This level should act as good Resistance level. On a longer term timeframe the Bearish Head & Shoulders on the weekly charts still stand, as long as the Nifty remains below 5740.

 

MACD and ROC both are in Buy mode and in positive territory. RSI continues to remain in Buy mode and is at 65 suggesting momentum ahead. Stochastic Oscillator is overbought as %K is at 94. ADX is quite low at 18 suggesting that the index is almost trendless or in sideways mode. Directional Indicators continue in Buy mode as +DI is way above -DI. OBV after a long time has signaled a Buy as it has moved above the previous top. Money Flow is overbought at 81, which warns of an impending intermediate top.

 

Nifty OI PCR is high at 1.51. 5000 strike is having highest Put buildup and highest Call writing is seen at 5400 strike price. Thus Nifty can be expected to move in a range of 5000 to 5400.

 

Trendline Resistance for the Sensex is at 18227. Trendline Support for the Sensex is at 17333.

 

Trendline Resistance for the Nifty is at 5468. Trendline Support for the Nifty will be at 5152.

 

For the week ahead, Sensex will find Support at 17425-17047-16669 and will find Resistance at 18072-18358-18636.

 

For the week ahead, Nifty will find Support at 5238-5127-5011 and will find Resistance at 5443-5529-5616.

 

 

INDEX LEVELS:

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 S3S2S1CLOSER1R2R3
Nifty5011512752385360544355295616
Sensex16669170471742517804180721835818636

LAST WEEKS RECOMMENDATIONS:

All the recommendations reached their targets with ease. But the Star performers of the week were Bajaj Auto and Dr. Reddy which went up by a whopping 11% !!!

STOCKReco. PriceTgtReachedLot SizeProfit
Buy Dr.Reddy153015741684250Rs.38,500
Buy BajAuto164116781823250Rs.45,500
Buy AxisBnk112711611194250Rs.16,750
Buy TVSMot6669704000Rs.16,000
Buy BalChi5356564000Rs.12,000
    TotalRs.1,28,750
 

THIS WEEKS RECOMMENDATIONS:

STOCKCMPSLTgt-1Tgt-2
Buy BFUtility486475506529
Buy FedBnk411405421433
Buy REC184180191199
Buy IVRCL40384347
Buy Omaxe146142152159
 

WATCH OUT FOR:

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IVRCL
...
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Omaxe

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