Archives : SUPPORT ZONE HOLD FOR NOW - 12/04/2013.

SUPPORT ZONE HOLDS FOR NOW – 12/04/2013.

INFY’S DISASTROUS SHOWING.

As expected the market took support at the Support zone pointed out in the previous week’s article i.e. between Nifty 5526-5441. The much awaited Relief rally also started to take shape, but alas the poor show by Infosys played a spoilsport. The market thus went down by around 1% on Friday, while Infosys registered a staggering fall of more than 21% on closing basis. Infosys not only missed out on the expectations on the Revenue front and Margin front but also on the Guidance front. The Guidance Range was too wide and half of the industry estimates. This has spoiled the Relief rally for now.

5441 - 5610 – SHORT TERM RANGE FOR NIFTY.

Strong support is seen around 5441 levels and the Relief rally will resume only if Nifty breaches the 5610 level on the higher side. If the Nifty moves above 5610, then the Pull-back levels will be 5719-5794-5869. On the lower side, a breach of 5441 will lead the Nifty lower towards the Bearish Head and Shoulders pattern target which falls at 5204. Thus a decisive move will be seen only if Nifty breaches the short term range of 5441-5610.

  


SUPPORT ZONE HOLDS FOR NOW – 12/04/2013.

INFY’S DISASTROUS SHOWING.

As expected the market took support at the Support zone pointed out in the previous week’s article i.e. between Nifty 5526-5441. The much awaited Relief rally also started to take shape, but alas the poor show by Infosys played a spoilsport. The market thus went down by around 1% on Friday, while Infosys registered a staggering fall of more than 21% on closing basis. Infosys not only missed out on the expectations on the Revenue front and Margin front but also on the Guidance front. The Guidance Range was too wide and half of the industry estimates. This has spoiled the Relief rally for now.

5441 - 5610 – SHORT TERM RANGE FOR NIFTY.

Strong support is seen around 5441 levels and the Relief rally will resume only if Nifty breaches the 5610 level on the higher side. If the Nifty moves above 5610, then the Pull-back levels will be 5719-5794-5869. On the lower side, a breach of 5441 will lead the Nifty lower towards the Bearish Head and Shoulders pattern target which falls at 5204. Thus a decisive move will be seen only if Nifty breaches the short term range of 5441-5610.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18455, made a high of 18599, low of 18173 and closed the week at 18242. Thus it registered a weekly loss of 208 points. At the same time the Nifty opened the week at 5550, made a high of 5610, low of 5477 and closed the week at 5528. Thus the Nifty went down by 25 points on a weekly basis.

Both the indices made a Spinning Top formation after a gap down opening on Friday. Last three days have formed small body neutral formations which almost resemble a Bearish Tri-Star formation. But a Bearish Tri-Star is formed in an uptrend, whereas here the pattern has formed in a downtrend. Hence one cannot classify the formation as Bearish Tri-Star. On the weekly charts, the Nifty has formed a small black body Spinning Top formation while the Sensex has formed a real black body candle. Thus candlestick formations are not conclusive.

The Relief rally started last week was thwarted by the poor showing by Infosys. Now the Sensex needs to cross 18599 and Nifty 5610 to resume the relief rally. The levels for the Corrective rally will be 18948-19188-19428 for the Sensex and 5719-5794-5869 for the Nifty.

The indices continue to be below the short term average of 20dma (Sensex – 18798 and Nifty – 5664), medium term average of 50dma (Sensex – 19192 and Nifty – 5794) and even the long term average of 200dma (Sensex – 18631 and Nifty – 5651). Thus the trend in the short term, medium term and even the long term timeframe is down.

This week, both the indices tested and took support at the Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447. This gap has acted as a strong support for the market even before. This gap holds more significance because a breach of this gap will signal the end of the current rally.

If we consider the entire rally from low of Sensex 15135 and Nifty 4531 to a high of Sensex 20203 and Nifty 6111, then the retracement levels for the Sensex will be 18267-17669-17071 and 5507-5321-5134 for the Nifty.

If we consider the intermittent rally from the low of Sensex 15748 and Nifty 4770 to a high of Sensex 20203 and Nifty 6111, then the relevant correction levels for that will be at Sensex 18501-17976-17450 and 5599-5441-5282 for the Nifty.

On closer inspection we find that the 38.2% Retracement level of the entire rally i.e. Sensex 18267 and Nifty 5507 is very close to starting point of the Bullish Rising Gap (Sensex 18284 and Nifty 5526) and 50% of Intermittent rally i.e. Sensex 17976 and Nifty 5441 is very close to the lower end of the Bullish Gap (Sensex 18062 and Nifty 5447); thus forming a strong support zone between Sensex 18284 - 17976 and Nifty 5526 - 5441.

Both Sensex and Nifty have completed a Bearish Head and Shoulders pattern, the targets for which Sensex 17250 and Nifty 5204. This is secondary pattern which has evolved from the smaller primary Head and Shoulders pattern. Only if the Sensex were to close above 19754 and Nifty above 5971, then the Bearish Head and Shoulders pattern will stand negated.

MACD continues with its Sell signal besides being negative. ROC too is negative and continues with its Sell signal. RSI (34) too continues to show bearish momentum. Stochastic Oscillator is in Buy mode as %K (22) is above %D. MFI (39) is under Sell mode and signals money outflow. ADX has moved higher to 29, suggesting that the current down trend is now strong. The Directional Indicators continue in a Sell mode +DI continues to be below -DI. OBV continues in Sell mode besides making a lower top lower bottom formation. Majority of the Oscillators with exception of Stochastic are suggesting bearishness to continue in the short term.

The Nifty O.I. PCR, though not oversold, is at a reduced level of 0.87. The lower value suggests that the Put writing has reduced and if it falls further, then it can reach oversold conditions. For the current series, highest Open interest build up is seen at 5700 Call and 5500 Put. This suggests that the market expects a trading range for the Nifty with support at 5500 and resistance around 5700 levels.

Trendline Support for the Sensex is at 17875. Trendline Resistance for the Sensex is at 18561.

Trendline Support for the Nifty is at 5376. Trendline Resistance for the Nifty falls at 5578.

For the week ahead, Sensex will find Support at 17972-17677-17418 and will find Resistance at 18568-18873-19137.

For the week ahead, Nifty will find Support at 5447-5348-5260 and will find Resistance at 5611-5733-5815.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5260

5348

5447

5528

5611

5733

5815

Sensex

17418

17677

17972

18242

18568

18873

19137

LAST WEEKS RECOMMENDATIONS:

Majority of the recommendations did well, but the Star performer of the week was Jubilant Food which went down by around 7%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Grasim

2715

2675

2666

125

Rs. 6,125

Sell ICICI

998

972

981

250

Rs. 4,250

Sell M&M

838

819

816

500

Rs.11,000

JubFood

1148

1096

1070

250

Rs.19,500

Sell NMDC

125

120

121

2000

Rs. 8,000

Total

Rs.48,875

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HDFCBnk

643

634

657

672

Buy KTKBnk

135

132

140

145

Buy RPower

66

64

70

74

Buy Hindalco

91

89

95

99

Buy UcoBnk

60

58

63

66

WATCH OUT FOR:

Karnataka Bank

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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