Archives : WATCH OUT FOR NIFTY - 5971 - 26/04/2013.

WATCH OUT FOR NIFTY - 5971 – 26/04/2013.

TREND TURNS UP.

The Pull-back continued this week as the market continued to move higher. Interestingly the Nifty has managed to close above the crucial 61.8% Retracement level of 5869, but the Sensex has yet not managed to cross that level (19416) and is below it. Even as the indices continue to examine the 61.8% Retracement levels, the Trend in the short, medium and long term has turned upwards. Once again we draw focus on the critical level of Nifty 5971 and Sensex 19754, which if crossed can negate the Bearish Head and Shoulders pattern.

  


WATCH OUT FOR NIFTY - 5971 – 26/04/2013.

TREND TURNS UP.

The Pull-back continued this week as the market continued to move higher. Interestingly the Nifty has managed to close above the crucial 61.8% Retracement level of 5869, but the Sensex has yet not managed to cross that level (19416) and is below it. Even as the indices continue to examine the 61.8% Retracement levels, the Trend in the short, medium and long term has turned upwards. Once again we draw focus on the critical level of Nifty 5971 and Sensex 19754, which if crossed can negate the Bearish Head and Shoulders pattern.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18989, made a high of 19434, low of 18989 and closed the week at 19286. Thus it registered a weekly gain of 270 points. At the same time the Nifty opened the week at 5789, made a high of 5924, low of 5789 and closed the week at 5871. Thus the Nifty went up by 88 points on a weekly basis.

Both the indices made an Opening White Body Marubuzo on the weekly charts, but this weeks candle body is smaller. On the daily charts, the last two days have formed a Bearish Harami. This is a Bearish Reversal pattern which requires a confirmation on the next day. Hence only if we get a confirmation in the form of a bearish candle on Monday, will we say that there is a Bearish Reversal in the short term timeframe.

The Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447 was tested many times in the last two weeks and the gap has proved to be a strong support for the market. In fact this gap has consistently provided support to the market. This gap holds more significance because a breach of this gap will signal the end of the current rally.

The Pull-back rally started last week after both Sensex and Nifty again took support at the Bullish Rising Gap as mentioned above. The levels for the Pull-back rally were 18930-19173-19416 for the Sensex and 5719-5794-5869 for the Nifty. Market is poised at an interesting juncture as the Sensex has tested the 61.8% Retracement level of 19416 but has not managed to conquer it; whereas the Nifty has closed above the 61.8% Retracement level of 5869. If the Sensex manages to stay above 19416 and Nifty above 5869, we can say that the correction is over.

This week both the indices stayed well above the short term average of 20dma (Sensex – 18739 and Nifty – 5674), medium term average of 50dma (Sensex – 19074 and Nifty – 5765) and even the long term average of 200dma (Sensex – 18703 and Nifty – 5673). Thus the trend in the short term, medium term and the long term timeframe has turned upwards.

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 had completed a Bearish Head and Shoulders pattern, the targets for which were 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 in Buy mode and has also turned positive. ROC too continues with its Buy signal. RSI (58) indicates that the bullish momentum continues, besides showing positive divergence. Stochastic Oscillator has just given a Sell signal as %K (94) has gone below %D. MFI (67) is under Buy mode and also showed a positive divergence which signals money flowing into the market. ADX has moved lower to 23, suggesting that the current trend has lost lot some of its strength. The Directional Indicators continue with its Buy signal as +DI maintains itself above -DI. OBV has gone above the previous minor top and signaled a Buy. Bollinger Band has signaled a Buy this week as the prices have closed above the upper Bollinger Band. Thus, majority of the Oscillators point towards continuation of bullishness in the short term.

The Nifty O.I. PCR is at a reasonable level of 1.15. For the current series, highest Open interest build up is seen at 5800 Put and 6000 Call. This suggests that the market expects a small trading range for the Nifty with support at 5800 and resistance around 6000 levels. Lot of Call writing was seen at the strike of 5900 on Friday, which suggests an immediate resistance at that level.

Trendline Support for the Sensex is at 18982. Trendline Resistance for the Sensex is at 19738.

Trendline Support for the Nifty is at 5821. Trendline Resistance for the Nifty falls at 5971.

For the week ahead, Sensex will find Support at 18973-18683-18393 and will find Resistance at 19612-19884-20203.

For the week ahead, Nifty will find Support at 5777-5679-5583 and will find Resistance at 5971-6069-6181.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5583

5679

5777

5871

5971

6069

6181

Sensex

18393

18683

18973

19286

19612

19884

20203

LAST WEEKS RECOMMENDATIONS:

Majority of the recommendations did well, but the Star performers of the week were Financial Technology and Reliance Capital which went up by around 9% each!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

FinTech

754

809

825

250

Rs.17,750

ReLCap

339

358

369

1000

Rs.30,000

UnionBk

236

243

246

1000

Rs.10,000

DenaBk

94

98

97

4000

Rs.12,000

Buy Bhel

185

195

195

1000

Rs.10,000

Total

Rs.79,750

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Maruti

1673

1633

1737

1803

Buy L&T

1540

1521

1572

1604

Buy BajAuto

1895

1868

1935

1977

Buy Cipla

409

403

417

426

Buy OFSS

2557

2516

2620

2685

WATCH OUT FOR:

Maruti

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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