Archives : DEEPAWALI SPECIAL - NIFTY HEADED TOWARDS 10462 - 17/10/2014.

DEEPAWALI SPECIAL.

NIFTY TARGET 10472 - 17/10/2014.

Wishing all my readers a very Happy Deepawali and a Prosperous New Year. May you all have a super successful trading year ahead.

BRIGHT FUTURE PROSPECTS.

It was the ‘Modi Magic’ at work which helped our stock market to come out of long term consolidation. For the first time in many years, suddenly ‘India’ has become the flavour of the season, as the world now looks at India with renewed optimism. Brand ‘Modi’ has become synonymous with growth and development and now with Mr Modi in command at the centre; there is every reason to be optimistic about the country’s future prospects. The market has already gone up substantially on ‘hope’ but now future progress of the market will be directly linked to the ability of this Government to push key policy reforms and managing the fiscal discipline.

 

Please Note there will not be new weekly article update on 24/10/2014.

 

 


DEEPAWALI SPECIAL.

NIFTY TARGET 10472 - 17/10/2014.

Wishing all my readers a very Happy Deepawali and a Prosperous New Year. May you all have a super successful trading year ahead. 

BRIGHT FUTURE PROSPECTS.

It was the ‘Modi Magic’ at work which helped our stock market to come out of long term consolidation. For the first time in many years, suddenly ‘India’ has become the flavour of the season, as the world now looks at India with renewed optimism. Brand ‘Modi’ has become synonymous with growth and development and now with Mr Modi in command at the centre; there is every reason to be optimistic about the country’s future prospects. The market has already gone up substantially on ‘hope’ but now future progress of the market will be directly linked to the ability of this Government to push key policy reforms and managing the fiscal discipline.

SENSEX GAINS OVER 6300 POINTS.

In March this year, both the indices finally managed to knock off the life time high levels of Sensex at 21308 and Nifty 6357.  Breakout marked the end of five year consolidation for the market and signaled the resumption of Super long term Bull market. The market moved from strength to strength as the Nifty gained an astonishing 2000 points and Sensex around 6300 points from last Deepawali to this.

BULLISH CUP & HANDLE FORMATION

When the Sensex and Nifty surpassed their previous life time highs of 21308 and 6357 respectively, both the indices completed a Bullish Saucer formation which had a target of Sensex 27081 and Nifty 8145, which were easily attained this year. But besides this Bullish Saucer pattern, both the indices also completed a Bullish Cup & Handle formation in over five years time period. The targets as per this pattern fall at Sensex 34500 and Nifty 10472. These targets are likely to be achieved within a period of next 18 to 24 months.

NIFTY 6791-6781 : STRONG SUPPORT ZONE.

Corrections are an integral part of a Bull market, which not only cuts off the excesses but also provides an excellent opportunity to buy good stocks at a bargain. We find a very strong support emerging between Sensex 22786-22687 and Nifty 6791-6781 which is due to a confluence zone formed due to 61.8% retracement from the immediate bottom i.e. Sensex from 19963 and Nifty 5933, 38.2% from an intermediate bottom from Sensex 15135 and Nifty 4531, and 23.6% from the long term bottom which is from Sensex 7697 and Nifty 2252. Thus one can expect strong support at this confluence zone.

For the year ahead, Sensex will face Resistance at 28332-30772-33007 and Support will be at 24068-22277-19963.

For the Year ahead, Nifty will face Resistance at 8527-9261-9824 and Support will be at 7172-6638-5933.

YEARLY INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5933

6638

7172

7779

8527

9261

9824

Sensex

19963

22277

24068

26108

28332

30772

33007

THIS YEAR’S RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy LiCHsg

333

275

449

571

Buy BEL

2000

1701

2697

3407

Buy DSKulkarni

96

74

130

168

DEEPAWALI RECOMMENDATION:

LIC Rectangle

DSKulkarni

WEEKLY ARTICLE.

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BEARS IN CONTROL – 17/10/2014.

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CORRECTION SETS IN.

.

Bears seem all set to welcome Deepawali in their own inimitable style as the market continues to grind lower week after week. Market is now battling not only global weakness but also is facing stagnancy in action on the policy front. Due to this the market now has entered into a correction mode which is not exactly bad for the market. Correction is not only healthy as it removes excess from the market, but is also extremely desirable for the long term bull market to continue.

.

TECHNICALLY SPEAKING.

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Sensex opened the week at 26275, made a high of 26550, low of 25910 and closed the week at 26108. Thus it closed the week with a loss of 189 points. At the same time the Nifty opened the week at 7831, made a high of 7928, low of 7723 and closed the week at 7779. Thus the Nifty closed the week with a loss of 80 points.

.

Once again this week both the indices have formed a black body Spinning Top. This is the third week when a similar formation has been observed but the key is indices moving lower on weekly basis. On the daily charts, both Sensex and Nifty have formed a small white body candle which is forming a Thrusting pattern on daily charts, which is a bearish continuation pattern. Hence candlestick pattern suggests bearishness in the near term.

.

Both the indices continue their downward journey this week after completing a bearish breakout to the Rising Channel formation formed over last five months. As per this breakout, Nifty is now headed lower towards a potential target of 7381.

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The markets are correcting the upward rally from an intermediate low of Sensex 22277 and Nifty 6638 to a high of Sensex 27354 and Nifty 8180 and the relevant Correction levels are at Sensex 25415-24816-24216 and Nifty 7591-7409-7227.

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On the lower side, there exists a critical Bullish Rising gap on the daily charts between Sensex 25437-25406 and Nifty 7598-7592 which aided by an intermediate bottom (Sensex 25232 and Nifty 7540) and 38.2% Retracement of the intermediate rally (Sensex 25415 and Nifty 7591), forms a strong confluence zone. Thus this confluence zone formed between Sensex 25437-25232 and Nifty 7598-7540 will act as Support Zone.

.

Both the indices continue to remain below the medium term average of 50dma (Sensex – 26480 and Nifty – 7917) and the short term average of 20dma (Sensex – 26561 and Nifty – 7942). However, both the indices continue to remain well above the long term average of 200dma (Sensex – 23799 and Nifty – 7103). Thus the trend in the short and medium term is bearish while that in the long term remains bullish.

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MACD and ROC both are negative and continue with their Sell signals. RSI (41) continues to remain below the equilibrium line, suggesting bearish momentum. MFI continues to move lower and is at 30, suggesting money flowing out. ADX has reduced to 22, suggesting a further decrease in the strength of uptrend. Directional Indicators continue in Sell mode as +DI remains below –DI. OBV is in Sell mode and is making lower top lower bottom formation. Bollinger band continues with its Sell signal given three weeks back. Thus Oscillators are suggesting a bearish bias in the short term.

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Option data suggests that highest Put Open Interest build-up has shifted from strike of 7800 to strike of 7700 and highest Call build-up is seen at the strike of 8000. Thus Option data suggests short term trading range with support coming in at 7700 and resistance around 8000. On Friday, 7900 Call has seen strong Open Interest buildup which suggests immediate resistance at the level of 7900.

.

INDEX LEVELS:

.

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7484

7592

7678

7779

7869

7972

8049

Sensex

25044

25437

25735

26108

26394

26688

26920

.

LAST WEEKS RECOMMENDATIONS:

.

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

UltraTech

2481

2301

2297

125

Rs.23,000

Sell HDFC

1006

967

975

250

Rs. 7,750

BharatForge

761

728

712

500

Rs.24,500

Sell M&M

1317

1210

1210

250

Rs.26,750

HindZinc

155

149

152

2000

Rs. 6,000

Total

Rs.88,000.

.

THIS WEEKS RECOMMENDATIONS:

.

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy LIC Hsg

332

324

344

357

Buy Bhel

226

221

234

243

Buy UnionBnk

217

212

225

233

Buy IndusInd

660

643

685

711

Buy TVSMotor

229

224

237

245

.

WATCH OUT FOR:

LIC Hsg

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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