Archives : MID-CAPS JOIN THE PARTY - 05/09/2014.

MID-CAPS JOIN THE PARTY – 05/09/2014.

ROUNDING BOTTOM TARGET ACHIEVED.

Both the Sensex and Nifty completed the Rounding bottom target of Sensex 27081 and Nifty 8145 this week. Nifty as expected, reacted from that level and has managed to close the week below 8100. Interestingly, the rally until now was a narrow rally, has now turned broad based as the mid-caps and small-caps joined in the party. The mid-cap index went up by more than 4% this week but still has a lot of catching up to do; thus promising an interesting next week.

 

 


MID-CAPS JOIN THE PARTY – 05/09/2014.

ROUNDING BOTTOM TARGET ACHIEVED.

Both the Sensex and Nifty completed the Rounding bottom target of Sensex 27081 and Nifty 8145 this week. Nifty as expected, reacted from that level and has managed to close the week below 8100. Interestingly, the rally until now was a narrow rally, has now turned broad based as the mid-caps and small-caps joined in the party. The mid-cap index went up by more than 4% this week but still has a lot of catching up to do; thus promising an interesting next week.

TECHNICALLY SPEAKING.

Sensex opened the week at 26733, made a high of 27225, low of 26732 and closed the week at 27026. Thus it closed the week with a gain of 388 points. At the same time the Nifty opened the week at 7990, made a high of 8141, low of 7984 and closed the week at 8086. Thus the Nifty closed the week with a gain of 132 points.

The Deliberation pattern formed last week required a confirmation this week, in the form a bearish candle; which did not materialize. This week formed a Bullish Opening White body Marubuzo which suggests bullishness. Whereas on the daily charts, last three days formed small black body candles almost like neutral formations. Thus candlestick analysis suggests bullishness to continue in the near term.

This week the market opened with a gap up on Monday and that gap sustained throughout the week resulting in a weekly gap. Thus this gap between Sensex 26732-26674 and Nifty 7984-7968 will not only act as a strong support but it is also a Measuring gap. Thus, according to Gap theory, the immediate target for the current rally falls at Sensex 28174 and Nifty 8412. A weekly close below Sensex 26674 and Nifty 7968 will reverse the short term trend.

The market is constantly making higher top higher bottom formations and the medium term trend is likely to reverse if the Nifty closes below 7540 and Sensex below 25232. A breach of this support is likely to test the Support zone between Sensex 24979-24878 and Nifty 7441-7394 which is due to a confluence of the 61.8% correction level with intermittent bottoms at Sensex 24892 & 24878 and Nifty 7441 & 7422.

This week the market achieved the Rounding bottom target of Sensex 27081 and Nifty 8145. Now it is headed towards next target which is Flag pattern target, which got completed when the Sensex closed above 26530 and Nifty above 7922. The target for this pattern is at Sensex 27828 and Nifty 8304. The targets will be achieved as long as the Sensex remains above 26262 and Nifty above 7855.

On a higher scale, a very strong Support zone is formed between Sensex 23879-23729 and Nifty 7112-7067. This is a result of confluence of 38.2% Retracement of the higher rally (Sensex – 23879 and Nifty 7112), 61.8% Retracement of the immediate rally (Sensex – 23813 and Nifty 7097) and the start of the intermediate Bullish Rising Gap (Sensex 23729 and Nifty 7067). The long term trend will continue to remain bullish as long as this Support zone is held.

This week, both Sensex and Nifty have managed to remain above the short term average of 20dma (Sensex – 26373 and Nifty 7883) as well as the medium term average of 50dma (Sensex – 25940 and Nifty – 7748). Both the indices continue to remain well above the long term average of 200dma (Sensex – 23032 and Nifty – 6869). Thus the trend in the short term, medium term and long term continues to remain bullish.

MACD and Price ROC are both positive and continue with their buy signal. RSI has increased to 70, indicating it is just beginning to get overbought. ADX has increased further to 34 indicating that the uptrend is getting stronger. Directional Indicators continue in Buy mode as +DI is above –DI. OBV continues in buy mode making higher top higher bottom formation. MFI has fallen after being overbought and is now at 68 suggesting positive money flow in the market. Thus Oscillators are suggesting a bullish bias for the market.

Option data suggests that highest Put Open Interest build-up is at the strike of 8000 and highest Call build-up is at the strike of 8200. Thus Option data analysis indicates a short term trading range with support coming in at 8000 and resistance around 8200. Friday saw heavy Call writing at the strike of 8200 which indicates that the Nifty will find difficulty in surpassing the level of 8200.

Strong Trendline Support for the Sensex is at 26534. Trendline Resistance for the Sensex is at 27199.

Strong Trendline Support for the Nifty is at 7909. Trendline Resistance for the Nifty is at 8155.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7752

7855

7967

8086

8196

8304

8413

Sensex

25928

26262

26674

27026

27424

27828

28174

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Dr.Reddy

2947

3007

3010

125

Rs. 7,875

Buy OiL

615

633

647

500

Rs.16,000

Buy BheL

240

247

243

2000

Rs. 6,000

Buy PVR

680

712

734

500

Rs.27,000

Redington

105

116

119

2000

Rs.28,000

Total

Rs.84,875.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Wipro

581

568

601

622

Buy IRB

266

260

276

287

Buy HindZinc

171

167

177

184

Buy OiL

644

629

667

691

Buy NBCC

488

475

509

531

WATCH OUT FOR:

Hind Zinc

IRB

Wipro

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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