Archives : BREXIT - A REALITY; MARKET TUMBLES - 24/06/2016.

BREXIT – A REALITY; MARKET TUMBLES - 24/06/2016.

REXIT TO BREXIT.

The week was extremely news heavy, starting from Rexit to BRexit; the Indian stock market had to deal with high degree of uncertainty and Volatility. The market was taken by surprise on the issue of UK exit, which it had not discounted for. As a result, there was bloodbath on the streets as the Sensex lost more than 1000 points in intraday before recovering more than 450 points from the lows of the day. The indices have taken support at the Bullish Gap between Sensex 25941-25897 and Nifty 7948-7941. Any closing below this Gap will open the doors for further fall.


BREXIT – A REALITY; MARKET TUMBLES - 24/06/2016.

REXIT TO BREXIT.

The week was extremely news heavy, starting from Rexit to BRexit; the Indian stock market had to deal with high degree of uncertainty and Volatility. The market was taken by surprise on the issue of UK exit, which it had not discounted for. As a result, there was bloodbath on the streets as the Sensex lost more than 1000 points in intraday before recovering more than 450 points from the lows of the day. The indices have taken support at the Bullish Gap between Sensex 25941-25897 and Nifty 7948-7941. Any closing below this Gap will open the doors for further fall.

TECHNICALLY SPEAKING.

Sensex opened the week at 26497, made a high of 27060, low of 25911 and closed the week at 26397. Thus it closed the week with a loss of 228 points. At the same time the Nifty opened the week at 8115, made a high of 8285, low of 7927 and closed the week at 8088. Thus the Nifty closed the week with a loss of 82 points.

On the weekly charts, both Sensex and Nifty have made a small Black Body Spinning Top with large shadows almost like a Juji. Juji is a neutral formation, which is a sign of increased uncertainty and volatility. Further directional movement in such a case depends on next weeks candle formation. On the daily charts, Nifty has formed a small white body candle with a long lower shadow, whereas Sensex has formed a Taguri Line formation. This is a Bullish Reversal pattern belonging to the family of Hammer. Thus daily as well as weekly candlestick patterns suggest Bullishness in the near term.

Taguri Line formation on the Sensex is a signal to Buy. Nifty has formed a similar pattern. Thus both Sensex and Nifty can move further up into the Bearish Falling Gap recorded on Friday between Sensex 26435-26736 and Nifty 8100-8188. The above levels will be crossed as long as Sensex survives the low of Friday which is at 25911 and the relevant level for the Nifty is at 7927.

In the fall witnessed on Friday, both Sensex and Nifty found strong Support at the Bullish Gap between Sensex 25941-25897 and Nifty 7948-7941. Both the indices launched a strong recovery after taking support at the above mentioned Gap.

Both the indices are undergoing a Retracement of the entire fall from Sensex 30024 to 22494 and Nifty 9119 to 6825. Market is facing strong hurdle in the form of 61.8% Retracement level for the Sensex which is at 27148. It has been observed that Nifty has closed above its 61.8% Retracement level (8243) twice, but Sensex has not been able to do so. Thus any closing above Sensex 27148 will mark the end of Correction phase and will signal a move towards testing life highs of Sensex 30024 and Nifty 9119.

MACD and Price ROC both continue in Sell mode. RSI (48) has given a fresh Sell and indicates bearish momentum. Stochastic Oscillator %K (61) is in Sell mode as it is below %D. ADX has dropped to 19, which suggest that the prior uptrend has lost all its strength. Directional Indicators have given a fresh Sell as +DI has gone below –DI. MFI (55) suggests Positive Money Flow. Thus majority of Oscillators are suggesting a bearish bias in the near term.

This Friday, both the indices tested both the short term average of 20dma (Sensex – 26725 and Nifty – 8191) as well as the medium term average of 50dma (Sensex – 26086 and Nifty – 7993). Both indices bounced back after finding support near the 50dma but were unable to close above the 20dma. However, both the indices continue to remain above the long term average of 200dma (Sensex – 25535 and Nifty – 7775). Thus the trend in the short term timeframe has turned bearish, whereas the trend in the medium term and the long term timeframe continues to remain Bullish.

India VIX went up by more than 8% on a weekly basis. On Friday, India VIX increased sharply by more than 18% before closing lower at 18.65. Options data for June series indicate highest Call Open Interest build-up remains at the strike of 8400 and highest Put build-up still remains at 8000. Thus Option data suggests a trading range with resistance coming in at 8400 and support at 8000.

LAST WEEKS RECOMMENDATIONS: 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy IGL

618

640

633

1100

Rs.16,500

Petronet

286

297

293

3000

Rs.21,000

CanaraBk

202

210

217

2000

Rs.30,000

Buy HDiL

102

107

108

6000

Rs.36,000

Buy NHPC

25

27

25

27000

Rs. -

Total

Rs.1,03,500.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7715

7820

7948

8088

8186

8262

8359

Sensex

25181

25519

25941

26397

26752

27105

27479

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajAuto

2678

2614

2775

2874

Buy BPCL

1013

988

1051

1090

Buy Titan

390

382

403

417

Buy GodrejInd

378

370

391

405

Buy AllahabadBk

65

63

69

74

WATCH OUT FOR:

Titan

Bajaj Auto

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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