Archives : PROFIT BOOKING @ DALAL STREET - 04/04/2014.

PROFIT BOOKING @ DALAL STREET –  04/04/2014.

NIFTY SLIPS BELOW 6700.

Market witnessed profit booking sessions on Thursday and Friday after going up for more than eight straight sessions, which caused the Nifty to slip below the level of 6700. This is a Retracement of the immediate rise and not the Correction. The relevant Retracement levels for the same are at Nifty 6645-6604-6564. One should remember that the market has witnessed a strong multi-year breakout and the target remains very high. Hence any declines will not alter the trend but will provide an entry opportunity for the traders.

 


PROFIT BOOKING @ DALAL STREET –  04/04/2014.

NIFTY SLIPS BELOW 6700.

Market witnessed profit booking sessions on Thursday and Friday after going up for more than eight straight sessions, which caused the Nifty to slip below the level of 6700. This is a Retracement of the immediate rise and not the Correction. The relevant Retracement levels for the same are at Nifty 6645-6604-6564. One should remember that the market has witnessed a strong multi-year breakout and the target remains very high. Hence any declines will not alter the trend but will provide an entry opportunity for the traders.

TECHNICALLY SPEAKING.

Sensex opened the week at 22423, made a high of 22620, low of 22253 and closed the week at 22359. Thus it registered a small weekly gain of 20 points. At the same time the Nifty opened the week at 6723, made a high of 6776, low of 6662 and closed the week at 6694. Thus the Nifty closed the week with a minor loss of 1 point.

On the weekly charts, both Sensex and Nifty have formed a small black body Spinning Top which is a neutral formation. On the daily charts both the indices have formed an Opening Black body Marubuzo which indicates some bearishness. Hence both daily as well as weekly charts suggest a pause in the ongoing rally with a slight bearish bias.

Currently the market is undergoing a Retracement of the immediate rise from Sensex 21573 to 22620 and Nifty from 6432 to 6776. The relevant Retracement levels are at Sensex 22220-22097-21973 and Nifty 6645-6604-6564.

Last week, both the indices completed a Bullish Flag pattern when Sensex closed above 22023 and Nifty 6562. The pattern has a potential target of atleast Sensex 23126 and Nifty 6912 and on the higher side Sensex 24083 and Nifty 7191. These targets are likely to be achieved as long as Sensex remains above 21573 and Nifty above 6432.

The market has left behind a Bullish Upward Gap (Sensex 21539-21525 and Nifty 6413-6403). This Bullish Gap is acting as a strong support which got validated when the Sensex reversed from a low of 21573 and Nifty from 6432. Also the Bullish Gap mentioned above is also a Measuring Gap and as per Gap theory the target falls at Sensex 23101 and Nifty 6886.

Pattern formation is a dynamic process and this week witnessed completion of Rising Wedge formation in weekly line chart. Rising Wedge has a natural tendency to give a bearish breakout but here it has given a bullish breakout and hence one can expect a strong upmove towards a potential target of Sensex 24429 and Nifty 7326.

When the indices closed above the previous top, both the indices completed a Bullish pattern in the intermediate term and the targets as per that falls at Sensex 23003 and Nifty 6897.

Thus as per Gap theory and Pattern analysis, Sensex seems headed towards a target of 23003-23126 and Nifty 6886-6912 in the intermediate term.

When the market overcame the previous top and made fresh lifetime highs, it marked the end of six year consolidation. On the weekly charts both Sensex and Nifty have completed a Bullish Saucer formation and the targets as per that will fall at Sensex 24799 and Nifty 7454 on the lower side and Sensex 27081 and Nifty 8145 on the higher side. The targets are likely to be achieved over a period of next 20 months.

Current rally has started from a low of Sensex 19963 and Nifty 5933. Hence it becomes imperative that this support level holds so that the indices can move towards higher targets. Thus a breach of Sensex 19963 and Nifty 5933 will derail the current bullish rally.

This week, both Sensex and Nifty managed to remain above the short term average of 20dma (Sensex – 22056 and Nifty – 6589), the medium term average of 50dma (Sensex – 21241 and Nifty – 6325) and the long term average of 200dma (Sensex – 20362 and Nifty – 6058). Thus the trend in the short term, the medium term and the long term timeframe continues to remain bullish.

MACD and ROC are both positive and continue with its Buy signal. RSI (70) continues to remain overbought territory since last two weeks. MFI (70) suggests positive money inflow for the market. Stochastic Oscillator %K (85) is in overbought zone and has signaled a Sell as it went below %D. ADX (42) has increased further, suggesting that the uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Since the Oscillators are in overbought territory, one can expect some weakness in the short term and if that happens, then one should use that as an opportunity to buy into the market.

The Nifty O.I. PCR is at a level of 1.30 which points towards bullish bias prevailing in the market. For the April series, highest Open interest build up has shifted to 6600 Put and 6900 Call. This suggests that the market expects a trading range with support coming in at 6600 levels and resistance around 6900 levels. On Friday strong Call writing was witnessed at the strike of 6900. Thus if the Nifty continues to remain positive then it will face strong resistance at the level of 6900.

The Trendline Support for the Sensex is at 21291.

The Trendline Support for the Nifty is at 6346.

For the week ahead, Sensex will find Support at 22040-21725-21483 and will find Resistance at 22620-22855-23125.

For the week ahead, Nifty will find Support at 6575-6481-6406 and will find Resistance at 6776-6859-6940.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

6406

6481

6575

6694

6776

6859

6940

Sensex

21483

21725

22040

22359

22620

22855

23125

LAST WEEKS RECOMMENDATIONS:

Only Reliance Capital and REC managed to reach their targets but the rest of the Recommendations are still positive and can reach their respective targets in the near term. The Star performer of the week was REC which went up by around 6%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Grasim

2859

2935

2922

125

Rs. 7,875

ReLCap

345

353

358

1000

Rs.13,000

Buy REC

226

237

238

1000

Rs.12,000

Buy IDBI

65

69

67

4000

Rs. 8,000

Buy Exide

123

128

126

2000

Rs. 6,000

Total

Rs.46,875

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy JsW StL

1064

1043

1094

1125

Buy IRB

112

109

117

123

Buy RPower

71

69

75

79

Buy PatelEng

66

64

70

75

Buy RCF

34

33

37

41

WATCH OUT FOR:

IRB

RPower

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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