Archives : 4496 - Last Life Line OR ??? - 06/06/2008

4496 – LAST LIFE LINE OR ??? - 06/06/2008.

Once again we hit BULL’s EYE for our Bearish target as Nifty achieved our downside target of 4569, especially when many analysts in the print and television media were misguiding the investors and traders about possible dead cat bounce. Our readers have got addicted to our market analysis so much that they treat our analysis as sacrosanct. Markets always obeys our levels and it is for everyone to see, just check what happened to the markets last week. Market crashed like nine pins and was down by 843 points for the Sensex and Nifty achieved all our TARGETS ON THE DOWN SIDE. We are happy that we have guided our readers correctly and certainly they must have made lot of profits despite the bearish sentiment of the market.

  •  4496 – LAST BASTION FOR BULLS.
  • FINALLY FUEL PRICE HIKE HAPPENS.
  • WHAT SHOULD INVESTORS/ TRADERS DO?
  • SENSEX.
  • NIFTY.
  • HOW TO TRADE? 
  • LAST WEEK S RECOMMENDATIONS:
  • THIS WEEK S RECOMMENDATIONS:


 4496 – LAST BASTION FOR BULLS.

            Bulls have their last hopes pinned on the level of 4496. If this level is broken then the market will be bleeding as the prices will fall as if there is no bottom. The entire bull market correction will come into focus, i.e. right from 920 to 6357 for the Nifty and the corrective levels are 4280-3630-2997. For the Sensex the correction will be of the entire rise from 2904 to 21206 and the correction levels are placed at 14215-12055-9896.

FINALLY FUEL PRICE HIKE HAPPENS.

            After long wait the government decided to hike Petrol and Diesel prices by Rs. 5 and Rs.3 respectively. In a further bold move, the government hiked the prices of LPG by Rs 50 per cylinder. The hike was implemented so that the life of loss making Oil marketing companies can be increased somewhat. But in this case, the Oil marketing companies have only got a few more breaths of life, but the end result of their bankruptcy cannot be ruled out. But the government will have to face public fury as inflation in double digits become reality. This will only increase the problems for the government as the election becomes a reality in the near future.

WHAT SHOULD INVESTORS/ TRADERS DO?

            First one should understand that this is a ferocious bear market and the bull market is over. One of the most peculiar thing in a bear market is, all stocks are available at low prices. But after sometime the same stocks are available at cheaper rates than before. So the prices keep on forming lower bottoms. Investors having a view of more than 3 years, should look out for stocks which have growth stories intact.

            Traders should stay away from such markets as the prices keep making new lows. If the traders are able to trade by selling first, then there is a good chance of making profits. But it is difficult to do it in the cash market, so one has to do it in the derivatives segment.

            Portfolios will get their prices reduced daily, so it will be necessary to hedge one’s portfolio by using different hedging techniques. Or else the portfolio will become a fraction of what it is presently.

SENSEX.

            Sensex opened the week at 16591, made a high of 16632, low of 15314 and closed the week at 15572. Thus weekly loss for the Sensex was 843 points. The MACD indicator has given a Sell signal and is now in the negative. The ROC too has given Sell signal and is showing more downward momentum. The important Trendine resistance is at 16193. The Trendline support comes in at 15363 and 15026. Sensex is on very shaky grounds and if the level of 15000 is taken off, then we may well be on our way to test 14215-12055. For the week ahead, Resistance is at 15702-15992-16193. Support is at 15363-15026-14677-14215.

NIFTY.

            Nifty opened the week at 4869, made a high of 4908, low of 4536 and closed the week at 4627. Thus weekly loss was 243 points on a weekly basis. The Trendline resistance for the Nifty is at 4741-4789-4972. Last critical Trendline support for the Nifty is at 4496. The Nifty OI PCR is at 1.53, which has decreased from over 2.0 at the start of the June series. Lot of call writing is visible at the strikes of 4700 and 4800. These levels will be difficult to breach. Nifty future has closed at a discount of more than 19 points, indicating good amount of short build up. Technical Indicators and chart pattern suggest continued weakness. In the wake of this ongoing bear onslaught, chances are that the Nifty may well be on its way to test the levels of 4280 and 3630. Please watch out.

HOW TO TRADE? 

Buy OTM put for RIL and NIFTY as both are looking extremely bearish. One can also construct a Bear Spread for Bharti Airtel.

LAST WEEK S RECOMMENDATIONS:

Inspite of the bearish market sentiments, most of our recommendations did fairly well. All stocks given for shorting, achieved their targets like RPL and Maruti.            

Divis Lab @ 1481 Tgt 1549 Achieved 1573.

Bhushan Steel @ 909 Tgt 970 Achieved 948.

Mindtree @ 467 Tgt 480 Achieved 476.

RPL @ 173 Tgt 165 Achieved 162.

Maruti @ 764 tgt 751 Achieved 731.

THIS WEEK S RECOMMENDATIONS:

  • SELL BHARTI 802 SL 823 TGT 776-730.           
  • SELL DLF 518 SL 541 TGT 490-460.           
  • SELL EDUCOMP 3501 SL 3586 TGT 3375-3280-3120.           
  • SELL L&T 2680 SL 2749 TGT 2638-2610-2551.           
  • SELL RIL 2238 SL 2280 TGT 2175-2147.           
  • SELL TATA POWER 1276 SL 1316 TGT 1194-1115.
  • BUY SHREE ASHTAVINAYAK 459 SL 444 TGT 481-490.

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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