Archives : PEACEFUL EXPIRY TO A VOLATILE MONTH - 27/09/2013.

PEACEFUL EXPIRY TO A VOLATILE MONTH – 27/09/2013.

CORRECTION CONTINUES.

September witnessed return of volatility in a big way. To say that it was a very volatile month will be an understatement. Surprisingly the expiry was very quiet. Not only were the Market wide Rollovers higher than average, even the Nifty Rollovers were much higher. Stocks like Titan, Jubilant Food, McDowell and Tata Motors witnessed high rollovers, whereas banking stocks like ICICI, Axis Bank, HDFC Bank witnessed low rollovers. As expected the market consolidated this week within a narrow range with a slight negative bias. Retracement levels for the Nifty are 5751-5630-5510.

 

 


PEACEFUL EXPIRY TO A VOLATILE MONTH – 27/09/2013.

CORRECTION CONTINUES.

September witnessed return of volatility in a big way. To say that it was a very volatile month will be an understatement. Surprisingly the expiry was very quiet. Not only were the Market wide Rollovers higher than average, even the Nifty Rollovers were much higher. Stocks like Titan, Jubilant Food, McDowell and Tata Motors witnessed high rollovers, whereas banking stocks like ICICI, Axis Bank, HDFC Bank witnessed low rollovers. As expected the market consolidated this week within a narrow range with a slight negative bias. Retracement levels for the Nifty are 5751-5630-5510.

TECHNICALLY SPEAKING.

Sensex opened the week at 20060, made a high of 20199, low of 19658 and closed the week at 19727. Thus it registered a weekly loss of 536 points. At the same time the Nifty opened the week at 5945, made a high of 5989, low of 5811 and closed the week at 5833. Thus the Nifty closed the week with a loss of 179 points.

On the weekly charts, both Sensex and Nifty have formed a black body candle. If we consider last three weeks candles, it is forming a bullish Continuation pattern called Upside Gap Three Methods. On the daily charts, both the indices have formed a black body candle. Last four days of previous week saw the market consolidating in a narrow range. Upside Tasuki Gap formed last week got negated this week, when Sensex closed below 20013 and Nifty below 5916.

Currently both Sensex and Nifty are in a corrective phase. For the correction levels, one has to consider the retracement of the entire rise from Sensex 17448 to 20739 and Nifty 5118 to 6142. The corresponding Correction levels are 19482-19094-18705 for the Sensex and 5751-5630-5510 for the Nifty.

Both the indices are having an Upward Rising Gap between Sensex 19293 – 19444 and Nifty 5688-5738. This gap has not only been formed on the daily charts but also on the weekly charts, hence it will provide strong support to the market. Also the presence of 200dma for the Sensex (19396) and 50dma for the Nifty (5713) inside this gap, will add to the strength of the support.

The above mentioned Gap is also a Measuring Gap (Sensex 19293 – 19444 and Nifty 5688-5738) in the current upward rally (the rally has started from a low of Sensex 17448 and Nifty 5118). If this gap holds, then as per Gap theory, the target for the upward rally works out to be Sensex 21289 and Nifty 6308.

This week Nifty tested the long term average of 200dma (Nifty – 5841) and managed to close just below it, whereas the Sensex (Sensex – 19396) has managed to stay well above it. Both Sensex and Nifty are still above the short term average of 20dma (Sensex – 19589 and Nifty – 5784) and the medium term average of 50dma (Sensex – 19292 and Nifty – 5713). Thus the trend in the short term, medium term and long term timeframe continues to remain positive.

MACD is positive and is closing in on the signal line. ROC has turned negative on Thursday and is now in Sell mode. RSI (53) is still above the equilibrium line but the bullish momentum has reduced. MFI (46) has gone below the equilibrium line on Friday, suggesting money flowing out. Stochastic Oscillator continues with its Sell signal (%K is below %D). ADX has decreased and is at 21 suggesting uptrend has lost some strength. The Directional Indicators continue with its Buy signal as +DI remains above -DI. OBV continues in Buy mode, making higher top higher bottom formation. Bollinger band continues with its Buy signal given two weeks back.

The Nifty O.I. PCR has reduced slightly and is at 1.26. For the current month series, highest Open interest build up is at 5700 Put and 6000 Call. This suggests that the market expects a trading range with support coming in at 5700 levels and resistance around 6000 levels. Friday saw high amount of Call writing at 5900 strike which suggests immediate resistance coming in at around Nifty 5900 levels.

The Trendline Resistance for the Sensex is at 20258. The Trendline Support for the Sensex is at 18915.

The Trendline Resistance for the Nifty is at 6135. Trendline Support for the Nifty falls at 5715.

For the week ahead, Sensex will find Support at 19444-19093-18728 and will find Resistance at 20086-20443-20739.

For the week ahead, Nifty will find Support at 5738-5649-5552 and will find Resistance at 5932-6040-6142.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5552

5649

5738

5833

5932

6040

6142

Sensex

18728

19093

19444

19727

20086

20443

20739

LAST WEEKS RECOMMENDATIONS:

STOCK

Recom @

Target

Reached

Buy Glaxo

2465

2543

2492

Buy Lupin

868

892

879

Buy Gail

340

349

343

Buy CoalInd

301

310

309

Buy AppTyr

72

76

72

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy McDowell

2621

2559

2713

2810

Buy Britannia

776

764

795

815

Buy SunPharma

589

580

605

622

Buy AuroPharma

200

195

209

219

Buy TataComm

195

189

205

216

WATCH OUT FOR:

Aurobindo Pharma

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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