Archives : VOLATILE WEEK ENDS FLAT - 19/09/2014.

VOLATILE WEEK ENDS FLAT – 19/09/2014.

NIFTY DIPS BELOW 8000.

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It was a very volatile week to say the least as the Nifty continued to play between 8170 on the higher side and 7925 on the lower side. Till the last week, the bulls ruled the market and were getting complacent; hence this week’s volatility has put some brakes on the bull frenzy especially in the mid-cap and small-cap arena. Nifty recovered after falling below the 8000 levels and bounced back to test the previous lifetime highs before settling slightly below that level. One needs to remember that a sharp increase in volatility at higher levels may result in the formation of an intermediate top.

 

 


VOLATILE WEEK ENDS FLAT – 19/09/2014.

NIFTY DIPS BELOW 8000.

It was a very volatile week to say the least as the Nifty continued to play between 8170 on the higher side and 7925 on the lower side. Till the last week, the bulls ruled the market and were getting complacent; hence this week’s volatility has put some brakes on the bull frenzy especially in the mid-cap and small-cap arena. Nifty recovered after falling below the 8000 levels and bounced back to test the previous lifetime highs before settling slightly below that level. One needs to remember that a sharp increase in volatility at higher levels may result in the formation of an intermediate top.

 

TECHNICALLY SPEAKING.

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Sensex opened the week at 26998, made a high of 27247, low of 26464 and closed the week at 27090. Thus it closed the week with a gain of 29 points. At the same time the Nifty opened the week at 8070, made a high of 8160, low of 7925 and closed the week at 8121. Thus the Nifty closed the week with a gain of 16 points.

 

This week, both the indices have formed a small white body candle with a long lower shadow. Long lower shadow indicates buying at lower levels. A bearish black body candle on the weekly charts would have resulted in a bearish reversal as the previous week had formed a black body Spinning Top. On the daily charts, both the indices have formed a small Spinning Top which is again a neutral formation. Hence candle formation on Monday will hold significance as it will determine the path ahead.

 

The market has already 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.

 

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.

 

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 tested the short term average of 20dma (Sensex – 26874 and Nifty 8041) and managed to hold above it on weekly closing basis. Also both the indices continue to remain above the medium term average of 50dma (Sensex – 26222 and Nifty – 7836) and also above the long term average of 200dma (Sensex – 23354 and Nifty – 6968). Thus the trend in the short term, medium term and long term continues to remain bullish.

 

MACD continues in Sell mode despite being positive. The Price ROC continues to hover near the centerline and hence the signals generated don’t hold great significance. RSI is strong at 59, suggesting bullish momentum. ADX has decreased to a level of 29 but still suggests that the positive uptrend has strength. Directional Indicators continue in Buy mode as +DI is above –DI. OBV continues to move sideways after giving a Buy signal. MFI has reduced to 46 which suggest negative money flow in the market. Thus Oscillators are showing a mixed bias.

 

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 strong resistance at the level of 8200.

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Strong Trendline Support for the Sensex is at 26548. Trendline Resistance for the Sensex is at 27397.

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Strong Trendline Support for the Nifty is at 7938. Trendline Resistance for the Nifty is at 8229.

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INDEX LEVELS:

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S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7840

7925

8035

8121

8229

8304

8412

Sensex

26190

26464

26732

27090

27461

27828

28174

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy OBC

286

296

299

2000

Rs.26,000

Buy NMDC

176

183

182

2000

Rs.12,000

UnionBnk

214

225

225

2000

Rs.22,000

Wockhardt

851

905

887

500

Rs.18,000

Buy PrajInd

67

71

71

4000

Rs.28,000

Total

Rs.1,06,000.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Grasim

3686

3624

3789

3894

Buy TechMah

2478

2426

2559

2642

Buy ITC

359

354

367

376

Buy TataElxsi

669

649

703

739

Buy DCB

90

87

95

101

WATCH OUT FOR:

Grasim

Tata Elxsi 

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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