Archives : 5971 - CRITICAL SUPPORT FOR NIFTY - 15/03/2013.

5971 – CRITICAL LEVEL FOR NIFTY – 15/03/2013.

NIFTY TAKES SUPPORT AT 5795 - 5790.

This week was marked by lot of turbulence as the tussle between the bulls and the bears intensified. Even though the Nifty managed to close above the 61.8% Retracement level for a day, it could not close above the critical level of 5971. 5971 has to be given more significance because if this level gets breached then not only it will mark the end of Bearish pattern but also give birth to a Bullish Reversal pattern. The Nifty made a high of 5971 before retracing downwards again. This time the Nifty took support at the second Rising Gap between 5795-5790. If this support is breached then Nifty will move towards the intermittent low of 5663.

VOLATILITY INCREASES.

Since the Budget day, volatility has been on the rise and each day is forming bigger candles. The increase in volatility is pointing towards the fact; there will be a decisive move soon. A sharp move down will be seen if the Nifty breaches the low of 5791, while a break of 5971 on the upside, will lead to strong Bull move.

  


5971 – CRITICAL LEVEL FOR NIFTY – 15/03/2013.

NIFTY TAKES SUPPORT AT 5795 - 5790.

This week was marked by lot of turbulence as the tussle between the bulls and the bears intensified. Even though the Nifty managed to close above the 61.8% Retracement level for a day, it could not close above the critical level of 5971. 5971 has to be given more significance because if this level gets breached then not only it will mark the end of Bearish pattern but also give birth to a Bullish Reversal pattern. The Nifty made a high of 5971 before retracing downwards again. This time the Nifty took support at the second Rising Gap between 5795-5790. If this support is breached then Nifty will move towards the intermittent low of 5663.

VOLATILITY INCREASES.

Since the Budget day, volatility has been on the rise and each day is forming bigger candles. The increase in volatility is pointing towards the fact; there will be a decisive move soon. A sharp move down will be seen if the Nifty breaches the low of 5791, while a break of 5971 on the upside, will lead to strong Bull move.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19679, made a high of 19754, low of 19179 and closed the week at 19427. Thus it registered a weekly loss of 256 points. At the same time the Nifty opened the week at 5946, made a high of 5971, low of 5791 and closed the week at 5872. Thus the Nifty went down by 73 points on a weekly basis.

Both Sensex and Nifty have completed a Bullish Engulfing pattern on the daily charts on Thursday. But on Friday, both the indices have formed a black body candle, suggesting a Bearish Harami formation. But a Bearish Harami pattern is formed in an uptrend, which is not the case here. As far as the weekly chart goes, the story remains the same. The formation is a Bearish Harami pattern, but it cannot be classified as one, because it has formed in a downtrend. Thus candlestick analysis is giving mixed signals.

The market could only briefly stay above the medium term average of 50dma (Sensex – 19608 and Nifty – 5935) before moving below it. On the way down the short term average of 20dma (Sensex – 19332 and Nifty – 5845) was tested three times successfully before moving up from there. Also, the indices continue to remain above the long term average of 200dma (Sensex – 18455 and Nifty – 5597). Thus the trend in the short term is up but the medium term trend has turned bearish, while that in the long term timeframe continues to remain bullish.

While moving lower both the indices have filled the last of the three bullish Rising gaps i.e. between Sensex 19477-19465 and Nifty 5883-5878. Also both the indices have taken support at the second Gap between Sensex 19195 - 19164 and Nifty 5795 – 5790 as the low recorded during the week was Sensex 19179 and Nifty 5791. Thus this second Gap will continue to support the market.

If we consider the current fall from high of Sensex 20203 and Nifty 6111 to a low of Sensex 18760 and Nifty 5663, then the retracement levels for the Sensex will be 19311-19482-19652 and 5834-5887-5940 for the Nifty. For the uptrend to resume, both Sensex and Nifty need to stay above the 61.8% Retracement level i.e. Sensex 19652 and Nifty 5940. Only then can one say that the correction is over and the uptrend has resumed.

Both Sensex and Nifty had completed a Bearish Head and Shoulders pattern two weeks back. Considering the current pull-back, if Sensex were to close above 19742 and Nifty above 5971, then this Bearish Head and Shoulders pattern will stand negated. This week both Sensex and Nifty tested that level but could not close above those levels and hence Bearish Head and Shoulders pattern continues.

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 weekly charts, both the indices 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, despite being negative, continues with its Buy signal. ROC too is positive and continues with its Buy signal. RSI (49) has just dipped below the centerline and is suggesting an increase of bearish momentum. Stochastic Oscillator continues in Sell mode as %K (69) is below %D. MFI (53) has moved higher and just crossed the centerline and given a fresh Buy signal. ADX has moved lower to 22, suggesting that the current trend has lost most of its strength. The Directional Indicators have signaled a Sell as +DI has gone below -DI. OBV too is moving sideways and is yet to register a higher top higher bottom trajectory. Oscillators are presenting a mixed picture with no decisive signals in the short term.

The Nifty O.I. PCR is steady at 1.39. Highest Open interest build up is at 5700 Put and 6000 Call. This suggests that the market expects a trading range for the Nifty with support at 5700 and resistance around 6000 levels. On Friday there was reduction in Open Interest for the 5800 Put, which is not exactly a bullish sign.

Trendline Support for the Sensex is at 18835. Trendline Resistance for the Sensex is at 19759.

Trendline Support for the Nifty is at 5680. Trendline Resistance is at 5971.

For the week ahead, Sensex will find Support at 19179-18930-18679 and will find Resistance at 19723-20036-20323.

For the week ahead, Nifty will find Support at 5791-5712-5629 and will find Resistance at 5971-6069-6181.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5629

5712

5791

5872

5971

6069

6181

Sensex

18679

18930

19179

19427

19723

20036

20323

LAST WEEKS RECOMMENDATIONS:

Except for Asian Paints and Dena Bank, none of the other recommendations reached their targets. But the Star performer for the week was Asian Paints which went up by around 8%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

AsianPnt

4666

4867

5025

125

Rs.44,875

ABNuvo

1067

1100

1084

250

Rs. 4,250

Buy ONGC

325

333

330

1000

Rs. 5,000

Buy Bhel

207

213

208

1000

Rs. 1,000

DenaBk

95

98

98

4000

Rs.12,000

Total

Rs.67,125

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Lupin

609

602

622

636

Buy Siemens

574

561

594

615

Buy Dabur

137

135

141

146

Buy Polaris

122

120

126

131

Buy Satyam

129

127

134

140

WATCH OUT FOR:

Lupin

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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