Archives : CRITICAL RESISTANCE AT 16786 AND 17172 - 28/03/2008

CRITICAL RESISTANCE AT 16786 AND 17172 - 28/03/2008.

 What a week, it was. The market proved us right once again, when we said the market is near its bottom and asked you to buy and see how much the Sensex has gained in this week, almost 1377 points. Just when everybody turned overtly pessimistic, market started to move up. But please remember that we are still not out of the woods, Sensex rally will halt between 16786 and 17200. 

  1. SHOCKING: Inflation Breaches 6%, Highest in 12 months
  2. Tata Motors Acquires Jaguar Land Rover for US$ 2.3 billion
  3. WATCH OUT FOR BOSCH CHASIS, SADBHAV ENGG. & REI AGRO.
  4. SENSEX.                 
  5. NIFTY.
  6. HOW TO TRADE?
  7. LAST WEEK S RECOMMENDATIONS:
  8. THIS WEEK S RECOMMENDATIONS:


  SHOCKING: Inflation Breaches 6%, Highest in 12 months 

Inflation number announced was shocking to say the least, way above what the market expected. Tremendous increase in prices of metal and food items pushed inflation rate growth by 6.68 per cent, the highest ever in the past one year, dashing hopes of a softer interest rate regime in the near future. After remaining close to 4 per cent in recent months, inflation has begun moving sharply upwards. Metal prices continued to move up in line with the global trend. The other main culprit was increase in prices of vegetables, rape seeds and mustard oil. The government will now to take some stringent fiscal measures to contain the rampaging inflation, which will definitely have an impact on the growth of the economy. Also the rise in inflation may not let RBI to go for a soft monetary stance and we will have to continue to stay in tight interest rate policy. Inflation control but at the expense of Growth. 

Tata Motors Acquires Jaguar Land Rover for US$ 2.3 billion 

After nine months of negotiation, Tata Motors finally bagged luxury brands Jaguar and Land Rover (JLR) from Ford Motor for $2.3 billion, the largest acquisition by an Indian company in the automobile business. The purchase price is less than half what Ford paid ($2.5 billion each) to acquire the two brands. The deal is intended to catapult Tata Motors into the global big league of auto majors. The acquisition also marks Tata Motor’s leap forward into the global high end luxury car segment. Tata Motors has announced plans to raise $4 billion of funding, which is expected to help finance the Ford deal and the manufacture of the Nano, which it unveiled in January. The deal comes at a time when the credit-market crisis has raised borrowing costs and deterred deal-making across the globe. However the challenge is how quickly and how well they integrate these luxury brands in their portfolio.

WATCH OUT FOR BOSCH CHASIS, SADBHAV ENGG. & REI AGRO.

Bosch Chasis closed at 717, and is now in a new territory. Strong upmove is possible and will have target of 748 and 809, keep a stop loss of 694. REI AGRO is also at an all time high and has closed at 1496 and will have targets of 1554 and 1683, keep a stop loss of 1450. It will be interesting to note that this stock was not at all affected by the fall in the market. Sadbhav Engg has closed at 1288 and will have targets of 1340 and 1364, keep a stop loss of 1247. 

SENSEX. 

Sensex opened the week at 15093, made a high of 16452, low of 15056 and closed the week at 16371. The net gain on a weekly basis was 1377 points. The four year trendline is at 16473 and will provide resistance going forward. First priority will be to close above this to continue upward journey. The trendline support is at 15934 and 15180. The trendline resistance is at 16783 and 17172. The Sensex has a falling gap between 17227 to 17258, which will provide strong resistance on the upside. If we consider this to be a technical bounce of the fall from 18995 to 14677, then retracement levels are 16786 and 17284. If we consider the entire fall from 21206, then the retracement levels are placed at 17171, 17942 and 18712. There is strong trendline resistance at 16783, which is coinciding with retracement level and hence 16783 will be a strong hurdle going forward. In the same manner the first retracement level of the entire fall is at 17171, which is coinciding with the 200DMA and 50DMA which are at 17183 and 17175 respectively. Also the strong trendline resistance at 17172 will prove to be a big hurdle for the market to cross. Thus any rally towards 17171 will have to halt there. For the week ahead resistance is at 16683-16786-17183. The support is at 16050-15869-15612-15180. 

NIFTY.

Nifty opened the week at 4576 made a high of 4970, low of 4539 and closed the week at 4942, thus registering a weekly gain of 369 points. The trendline resistance falls at 4956 and 5160. The trendline support is at 4867, 4713 and 4611. The four year trendline support falls at 4719, which will provide strong support in case of a downfall. It will be critical that the Nifty stays above this trendline support. Nifty OI PCR is at 1.44. Also lot of call writing has happened at the strikes of 5000 and 5100, which will act as a strong resistance. Lot of put writing is visible at the strike of 4800 and 4700, which will provide strong support. For the week ahead, resistance is at 5019-5085-5160. Support is at 4866-4769-4719-4611.

HOW TO TRADE?

BUY ITC 206 FOR A TARGET OF 221 AND HEDGE WITH NIFTY FUTURE. ONE CAN ALSO USE COVERED CALL STRATEGY FOR ITC.

LAST WEEK S RECOMMENDATIONS:

ONCE AGAIN 100 %, ALL TARGETS ACHIEVED.

THREE CHEERS TO OUR READERS.

GAIL @ 416 TGT was 437 reached 448.

PNB @ 461 TGT was 490 reached 534.

INDIAN HOTEL @ 109 TGT was 114 reached 117.

BHARTI @ 777 TGT was 822 reached 847.

CAIRN INDIA @ 223 TGT was 232 reached 234.

TECH MAH. @ 657 TGT was 689 reached 732.

THIS WEEK S RECOMMENDATIONS:

·        ADLABS: 682 SL 669 TGT 727-778.

·        BHEL: 2093 SL 2071 TGT 2138-2200.

·        ACC: 838 SL 822 TGT 872-885.

·        TATA TEA: 834 SL 804 TGT 874-895.

·        ITC: 206 SL 202 TGT 213-221.

·        TECH MAHINDRA: 724 SL 705 TGT 748-777-814.

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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