Archives : MID-CAPS RALLY; MARKET CONSOLIDATES - 06/07/2012.

MID-CAPS RALLY; MARKET CONSOLIDATES – 06/07/2012.

DIGESTING THE GAINS.

After a strong upmove witnessed on last Friday, the entire week was spent in sideways consolidation. All the five days made small body candles while moving higher with a minor exception being Thursday. It indicates that the market is digesting its gains before resuming the upward rally. Even though the broad market was consolidating, mid-caps continued to outperform significantly. The focus will now shift to the first quarter results and hence stock specific action is likely to continue.

 


MID-CAPS RALLY; MARKET CONSOLIDATES – 06/07/2012.

DIGESTING THE GAINS.

After a strong upmove witnessed on last Friday, the entire week was spent in sideways consolidation. All the five days made small body candles while moving higher with a minor exception being Thursday. It indicates that the market is digesting its gains before resuming the upward rally. Even though the broad market was consolidating, mid-caps continued to outperform significantly. The focus will now shift to the first quarter results and hence stock specific action is likely to continue.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17438, made a high of 17562, low of 17351 and closed the week at 17521. Thus it registered a weekly gain of 92 points. At the same time the Nifty opened the week at 5283, made a high of 5333, low of 5263 and closed the week at 5316. Thus the Nifty went up by 38 points on a weekly basis.

This week, both Sensex and Nifty have registered a small white body candle which can be termed as a Star formation. This is a neutral formation which indicates a pause in the upward movement and not a halt. On the daily charts, both the indices have formed small body candles on all the days of the week with a minor exception being Thursday. This simply indicates that the market is digesting its gains before resuming its uptrend.

Both Sensex and Nifty have left behind a Bullish Rising Gap between Sensex 17134-17033 and Nifty 5189-5159. Since this gap has occurred after some consolidation, it can be termed as a Bullish Breakaway Gap. But if we consider the entire rally beginning from Sensex 15748 and Nifty 4770, then it can be a Measuring Gap and the target according to the Measuring Gap falls at Sensex 18419 and Nifty 5578. Hence in the near term, one can expect support at this gap i.e. between Sensex 17134-17033 and Nifty 5189-5159.

Both Sensex and Nifty are already above the 61.8% Retracement of the immediate fall from Sensex 18523 to 15748 and Nifty from 5629 to 4770. Hence it becomes imperative to look at the pull-back levels of the entire fall from Sensex 21108 to 15135 and Nifty from 6338 to 4531. Thus the pull-back levels are 17417-18122-18827 for the Sensex and 5221-5434-5648 for the Nifty.

Both Sensex and Nifty are above the long term average of 200dma (Sensex – 16824 and Nifty – 5083). Also the indices are comfortably above the medium term average of 50dma (Sensex – 16681 and Nifty – 5055) and the short term average of 20dma (Sensex – 17051 and Nifty – 5170). As a result, the trend in the Long term timeframe, Medium term timeframe and the Short term timeframe continue to be all Bullish.

Both Sensex and Nifty had given a bearish breakout for the Falling Wedge pattern. The target as per this breakout falls at Sensex 15728 and Nifty 4742. The lows registered four weeks back (Sensex 15748 and Nifty 4770) are very close to immediate target of the Falling Wedge pattern; hence the immediate target has been achieved. The long term target now stands negated as the Sensex has crossed 17432 and Nifty 5279.

Market is now well above the level of the Falling Channel Top which comes in at Sensex 16155 and Nifty 4887. These levels should now provide Support for the market. The overall bullish long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

There is a strong Support zone between Sensex 17134 – 17033 and Nifty 5189 – 5159, formed by the confluence of the Bullish Rising Gap, minor Trendline, and aided by the confluence of 100dma and the 20dma which all are close to each other.

MACD and ROC both continue in their Buy mode and are in positive territory. RSI has moved higher and is at 68, suggesting that the bullish momentum is likely to continue. Stochastic Oscillator continues with its Buy signal as %K is above %D, but since %K is at 95; the oscillator continues to be overbought for more than a week now. MFI (73) continues with its Buy mode by moving higher, suggesting that the money is flowing into the market. The Directional Indicators continue to remain in Buy mode as +DI is above –DI. ADX has improved and is at 31 which suggest that uptrend is getting stronger. OBV is already in Buy mode making higher top, higher bottom formation. Bollinger Band too, continues in its Buy mode. Daryl Guppy, which is a medium to long term indicator, continues with its Buy signal.

The Nifty O.I. PCR is at 1.50 which suggests that the outlook for the market remains positive. The confidence of Put writers has increased over that of the Call writers. For the July series, highest open interest buildup is seen at 5000 Put and 5400 Call. Thus the Nifty is likely to range between 5000 on the lower side to 5400 on the higher side. Also the 5200 Put has seen a huge addition in Open Interest, which suggests that in the immediate term, the market expects strong support to come in around 5200 levels. 

Trendline Resistance for the Sensex is at 17753. The Trendline Support for the Sensex is at 17034.

Trendline Resistance for the Nifty is at 5419. The Trendline Support for the Nifty falls at 5160.

For the week ahead, Sensex will find Support at 17211-16920-16636 and will find Resistance at 17890-18232-18523.

For the week ahead, Nifty will find Support at 5217-5125-5041 and will find Resistance at 5428-5531-5629.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5041

5125

5217

5316

5428

5531

5629

Sensex

16636

16920

17211

17521

17890

18232

18523

LAST WEEKS RECOMMENDATIONS:

Only Siemens failed to reach its target, while OFSS missed the target by just Rs. 5/-. However the Star Performer of the week was Delta Corp. which went up by more than 7%. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy OFSS

2537

2625

2620

125

Rs.10,375

Siemens

733

749

744

500

Rs. 5,500

Buy Kotak

592

605

607

500

Rs. 7,500

Buy IDFC

136

141

143

2000

Rs.14,000

Buy Delta

66

70

71

4000

Rs.20,000

Total

Rs.57,375

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy McDowell

757

742

781

805

Buy YesBnk

361

355

371

381

Buy ACC

1296

1277

1335

1375

Buy BFUtility

464

454

479

496

Buy IRB

137

134

142

148

WATCH OUT FOR:

McDowell

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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