Archives : MARKET CONTINUES TO CORRECT - 22/11/2013.

MARKET CONTINUES TO CORRECT – 22/11/2013.

NIFTY BELOW 6000.

Nifty just went upto the 61.8% Retracement level and resumed the downward journey again. Currently the market is in a corrective mode and it is correcting the rise from Sensex 17448 to 21321 and Nifty 5118 to 6342. A confluence zone is formed between Sensex 19264-19444 and Nifty 5688-5738, which is likely to provide strong support to the market. One needs to keep in mind that the long term trend remains upwards, even though we may continue to correct in lower timeframe charts.

 

 


MARKET CONTINUES TO CORRECT – 22/11/2013.

NIFTY BELOW 6000.

Nifty just went upto the 61.8% Retracement level and resumed the downward journey again. Currently the market is in a corrective mode and it is correcting the rise from Sensex 17448 to 21321 and Nifty 5118 to 6342. A confluence zone is formed between Sensex 19264-19444 and Nifty 5688-5738, which is likely to provide strong support to the market. One needs to keep in mind that the long term trend remains upwards, even though we may continue to correct in lower timeframe charts.

TECHNICALLY SPEAKING.

Sensex opened the week at 20570, made a high of 20934, low of 20137 and closed the week at 20217. Thus it registered a weekly loss of 182 points. At the same time the Nifty opened the week at 6111, made a high of 6212, low of 5972 and closed the week at 5995. Thus the Nifty closed the week with a loss of 61 points.

On the daily charts, both Sensex and Nifty have formed a small black body candle which is inline with the bearish trend prevailing in the market. On the weekly charts both the indices have formed a big black body candle with long upper shadow. Thus both daily as well as weekly charts suggest a bearish bias in the near term.

The pull-back which had started last week; ended this week. Both Sensex and Nifty reacted from their respective 61.8% Retracement level. Thus this week, the prior downtrend has resumed and we are in the process of correcting the rise from Sensex 17448 to 21321 and Nifty from 5118 to 6342. Corresponding Correction levels are Sensex 19842-19385-18928 and Nifty 5875-5730-5586.

Market has a strong support zone between Sensex 19444-19264 and Nifty 5738-5688. This is a confluence zone formed by the presence of Bullish Rising Gap between Sensex 19444-19293 and Nifty 5738-5688, intermediate low of Sensex 19264 and Nifty 5700 and the 50% Retracement level which is at Sensex 19385 and Nifty 5730. Thus this is a strong Support Zone and a breach of this support zone will end the current uptrend.

The above mentioned Gap is also a Measuring Gap (Sensex 19293 – 19444 and Nifty 5688-5738) in the current upward rally (the rally which started from a low of Sensex 17448 and Nifty 5118). Then as per Gap theory, the target for the upward rally works out to be Sensex 21289 and Nifty 6308. This target was achieved when Sensex registered a high of 21321 and Nifty 6342.

This week, both Sensex and Nifty closed below the short term average of 20dma (Sensex – 20718 and Nifty – 6154) and the medium term average of 50dma (Sensex – 20378 and Nifty – 6045) but have remained above the long term average of 200dma (Sensex – 19552 and Nifty – 5863). Thus the trend in the short term and medium term has turned down, but the trend in the long term timeframe remains positive.

MACD and ROC continue with its Sell signal. RSI (42) suggests bearish momentum. MFI (24) continues to fall, suggesting money flowing out. Stochastic Oscillator continues in Sell mode as %K (17) is below %D. ADX has fallen to 16, suggesting that the market is in consolidation. The Directional Indicators continue with its Sell signal as +DI remains below -DI. OBV has fallen lower and continues in Sell mode. The Sell signal given by Bollinger Band last week, got cancelled this week because the prices closed above the mean. Oscillators suggest a bearish bias in the near term.

The Nifty O.I. PCR has reduced further to 0.81. For the current month series, highest Open interest build up is at 6300 Call and 6000 Put. This suggests that the market expects a trading range with support coming in at 6000 levels and resistance around 6300 levels. Also Friday saw large amount of Put writing at 5900 levels. This suggests that the market will find support at around 5900 levels.

The Trendline Resistance for the Sensex is at 20775. The Trendline Support for the Sensex is at 20087.

The Trendline Resistance for the Nifty is at 6156. The Trendline Support for the Nifty is at 5951.

For the week ahead, Sensex will find Support at 19826-19532-19264 and will find Resistance at 20579-20934-21321.

For the week ahead, Nifty will find Support at 5877-5786-5688 and will find Resistance at 6106-6212-6342.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5688

5786

5877

5995

6106

6212

6342

Sensex

19264

19532

19826

20217

20579

20934

21321

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy NTPC

152

158

158

2000

Rs.12,000

Buy REC

216

224

222

1000

Rs. 6,000

Buy Bata

981

1027

1056

250

Rs.18,750

TataChem

276

285

284

1000

Rs. 8,000

Buy IBReal

68

72

74

4000

Rs.24,000

Total

Rs.68,750

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell UltraTech

1815

1871

1733

1649

Sell HCLTech

1050

1078

1003

953

Sell CanBnk

237

244

225

212

Sell TataPower

77

79

73

69

Sell NMDC

128

131

123

117

WATCH OUT FOR:

 Tata Power

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