Archives : SOUTHWARD DRIFT CONTINUES - 15/02/2013.

SOUTHWARD DRIFT CONTINUES – 15/02/2013.

SHORT & MEDIUM TERM TREND DOWN.

During the week, market witnessed a small bounce upto Nifty 5970, which got sold into. The indices continue to trade with a negative bias as the short term and medium term trends have turned down. Minimum Correction levels for the Nifty are at 5896-5830-5763. Nifty has strong support near 5830-5815. Now for the coming two weeks, budgetary expectations will continue to drive the market.

 

 


SOUTHWARD DRIFT CONTINUES – 15/02/2013.

SHORT & MEDIUM TERM TREND DOWN.

During the week, market witnessed a small bounce upto Nifty 5970, which got sold into. The indices continue to trade with a negative bias as the short term and medium term trends have turned down. Minimum Correction levels for the Nifty are at 5896-5830-5763. Nifty has strong support near 5830-5815. Now for the coming two weeks, budgetary expectations will continue to drive the market.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19517, made a high of 19723, low of 19381 and closed the week at 19468. Thus it registered a small weekly loss of 16 points. At the same time the Nifty opened the week at 5920, made a high of 5969, low of 5853 and closed the week at 5887. Thus the Nifty went down by 16 points on a weekly basis.

Both Sensex and Nifty have formed a small black body Spinning Top on weekly charts. This is a neutral formation coming in the wake of a downtrend; hence it indicates a reduction in the bearish momentum. Similarly a small white body candle has been formed on the Sensex and Nifty on the daily charts. It is a neutral formation suggesting a slowdown in bearish momentum in the short term.

This week both the indices have continued to remain below the short term average of 20dma (Sensex – 19781 and Nifty – 5988) and medium term average of 50dma (Sensex – 19647 and Nifty – 5960) and hence the both short and medium term trends continue to be bearish. However, the indices continue to remain above the long term average of 200dma (Sensex – 18158 and Nifty – 5508). Thus the trend in the short term and medium term timeframe continues to be down, while that in the long term timeframes continues to remain bullish.

A key long term trendline starting from low of Sensex 15748 and Nifty 4770 was breached last week and as a result the market is in correction mode. If we consider the rally from Sensex 18255 to 20203 and Nifty 5548 to 6111, then the minimum retracement levels for the Sensex will be 19459-19229-18999 and 5896-5830-5763 for the Nifty.

The 50% Retracement level of both the indices is likely to provide strong support as that level is in very close vicinity of previous intermittent low (Sensex 19149 and Nifty 5823) and the 100dma (Sensex – 19198 and Nifty – 5830). Thus zone between Sensex 19229-19148 and Nifty 5830-5815 is likely to act as strong Support zone.

When the Sensex closed above 19612 & Nifty above 5965, a Flag formation on the weekly charts got completed. The Flag pole started from a low of Sensex 18255 and Nifty 5548 and the targets as per this formation are Sensex 20969 and Nifty 6382. The targets will be achieved as long as Sensex remains above 19149 and Nifty above 5823.

Both the indices had bounced back from Sensex 18255 and Nifty 5548 which is within the Bullish Rising Gap between Sensex 18062-18284 and Nifty 5447-5526. This gap has acted as a strong support for the market even before as the Sensex had bounced back from a low 18291 and Nifty 5534. This gap holds more significance because a breach of this gap will signal the end of the current rally.

On the daily charts, both Sensex and Nifty had formed a Bullish Diamond pattern and the target as per this formation was Sensex 20171 and Nifty 6192. The target has been achieved in Sensex. Also market had tested the Falling Channel Top and bounced back from there. Hence the overall long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

On the weekly charts, both the indices have been moving higher in Flag formations and it had previously completed a Flag formation and the target according to the pattern comes in at Sensex 21024 and Nifty 6415. The targets will be achieved as long as the Sensex remains above 18255 and Nifty 5548. If we take the Saucer formation which is due to the fall from Sensex 18523 to 15748 and Nifty 5629 to 4770, then the target comes in at Sensex 21298 and Nifty 6488. Hence we have a Target zone of 21024 - 21298 on the Sensex and 6415 - 6488 on the Nifty.

MACD and ROC both are negative and continue in Sell mode. The RSI at 37 continues to fall and is well below the equilibrium line, indicating bearish momentum. Stochastic Oscillator is in oversold zone at 14. MFI has moved sharply below the centerline at 21, which suggest money flowing out of the market. ADX has moved lower and is currently at 26, suggesting a reduction in the strength of the current trend. The Directional Indicators are in Sell mode as +DI continues to remain below -DI. OBV continues in its Sell mode. Bollinger Band continues with its Sell signal given last week. Majority of oscillators are in Sell mode and hence one can expect bearishness to continue in the short term.

The Nifty O.I. PCR is lower at 1.01. Highest Open interest build up is at 6100 Call and 5900 Put. On Friday there was a reduction in open interest at 5900 Put and the Put writing activity has shifted to 5700 strike. This suggests that the market expects a trading range for the Nifty with support coming in at 5700 and resistance around 6100 levels.

Trendline Support for the Sensex is at 19145.

Trendline Support for the Nifty is at 5813.

For the week ahead, Sensex will find Support at 19149-18838-18523 and will find Resistance at 19723-19986-20203.

For the week ahead, Nifty will find Support at 5815-5733-5649 and will find Resistance at 5969-6042-6111.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5649

5733

5815

5887

5969

6042

6111

Sensex

18523

18838

19149

19468

19723

19986

20203

LAST WEEKS RECOMMENDATIONS:

It was a very volatile week, but the star performer for the week was RPower which went down by around 9%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

BajajAuto

2046

1970

1953

125

Rs.11,625

DrReddy

1855

1821

1812

125

Rs. 5,375

Sell Cipla

380

372

375

1000

Rs. 5,000

Sell KtkBnk

145

139

141

4000

Rs.16,000

RPower

85

78

77

4000

Rs.32,000

Total

Rs.70,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Cairn

304

309

295

285

Sell BajajAut

1970

1996

1937

1902

Sell PunjLloyd

48

49

45

42

Sell LiCHsg

248

253

240

231

Sell IndHotel

60

62

57

54

WATCH OUT FOR:

Cairn

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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