ANY BODY'S GAME.....!!!!!!!!!!!!!!!

Dear Investors

 (FOR MONDAY and WEEK AHEAD)

PART ONE (Week Ahead)

The Nifty has delivered a positive weekly close, which

Means that an extension on the downside seems to have

Halted. On the charts it appears it would pullback

till 5777and 5820, In case of a favorable situation

it can swing to a high of 5874.

On the lower side 5620 and 5603 are the crucial supports, close to the 200 DMA. Till these levels are held, I continue to maintain a ‘short and medium term’ upward bias

But the worrying thing is……

On the daily charts the Nifty is trading quite below

Its 20 DMA and 50 DMA levels

In view of coming events like RBI POLICY and F&O EXPIRY,

There are ‘TWO SENIAROS’ possible (Traders and Investors are advised to position accordingly)

 WORD OFCAUTION

a) POSITIONS before RBI POLICY must be with ‘STRICT STOPL LOSS’ at

    5% to 8% down the Nifty levels.

And

b) Response to RBI policy and market movement just before ‘F&O Expiry’ may totally be opposite

     So one has to be very cautious in carrying either ‘Short’ or ‘Long’ positions during this interval

Even though……

A ‘Positive Weekly’ close has changed ‘SHORT TERM TREND’ upward; EVENTS of next week can change this situation in any direction

FIRST SENIARO

,

…. It looks like, RBI’s stance will be mild, leading to small Rate hike (Repo and Reverse Repo), If there is no rate hike beyond 25 bps(basic points)( which is expected by market pundits and traders) then it will encourage ‘Bulls’ to press markets to higher levels of Nifty at 5770/5800 , once there is a substantial up move, then ‘Panic Short covering’ will lead to further gains in Nifty. In such situation, even at the level of 5770 one can go long and carry till 5880, for short term with a ‘STOP LOSS’ at 5700. One can choose beaten down sectors and stocks, like BANKS, AUTO, and REALITY etc. keep trailing stop losses at5620/5580.

 If Nifty close is above 5770/5800 before ‘EXPIRY’, then ‘Bears’ will have to close their      ‘SHORTS’, which in turn will lead to higher levels on Nifty, 5880/5903/5960.

 At this levels…….

Long positions should be booked for profits and ‘Bears’ can create fresh ‘SHORTS’ with a stop of 6003. Any close above 6003 should be looked up on as completion of on going ‘CORRECTION’ in uptrend

SECOND SENIARO:

If on the other hand

RBI hike is more than 25 or 50bps, with changes in CRR and harsh remarks on inflation, Lending and credit situation etc. Then things might become difficult for market leading to panic ‘sell off’ to test 5603/5580 levels on Nifty

In such a case ‘brave hearted’ traders should create longs in sectors like Banks, FMCG, IT, PHARMA and have nibbling in AUTO. (Where there are shorts piled in this series) There is every possibility of a ‘SWIFT AND SHORT’ Bounce before expiry, and NIFTY might scale to the levels of 5770/5800. At this level, all longs should be closed and ‘Bears’ can take positions with a stop at 5880/5903.

 Close above 5880 with minimal roll over in short positions to February series will be a good sign for ‘Bulls’5903 -5960 should be treated as a ‘NO MAN’S LAND’ zone.

Watch two sets of Nifty numbers to decide ‘positioning’ in market during next few days.

5620/5580

5770/5800

These are ‘Breakers or Makers’ of the market trend in future sessions

PART TWO (For Monday)

In the lights of the events coming in next few days and with the history of last few weeks trading pattern. It looks that……

For intraday outlook on Monday (24-Jan), technically since last few weeks it has been  a bearish trend as a running correction, in ongoing ‘Bull phase’ and I would not be surprised to see levels of 5,580-5,330 in the next few trading days. The market has been flat and has traded in a narrow range of just 100 points during last few trading weeks and has closed marginally in the green.

As we head into a truncated F&O expiry week with a holiday on 26^th Jan (Wednesday). The market during this series, so far, hasn't demonstrated any strength and so far 5,600 is a crucial support until F&O expiry, as long as that holds we could see levels of 5770/5,800 due to short covering but we need to watch crucial support of 5,603 breech of this would crack the market.

From a trading point of view traders are suggested to buy on dips until 5,600 levels for a target of 5800.Bears can short at 5800 to cover at 5620/5880

Technical view (for Monday 24^th jan.11)

Pivot For Nifty: 5695

R1(First resistance level) is @ 5716

R2 (Second resistance level) is @ 5738

R3 (Third resistance level) is @ 5759

Significance

On last trading day Nifty High @ 5717 could not cross R1 (5748) for the day.  This indicates the ‘Weak’ strength of the bulls or a ‘Cautious’ mood of the traders and Investors before coming events. Market moved in a ‘No risk’ zone of 5711-5692

S1(First support level) is @ 5673

S2(Second support level) is @ 5652

S3 (Third support level) is @ 5630

Significance

Bears too were cautious, as Nifty’s low @5674 was just short of S1 (5653) from where it moved up to close at 5694, Indicating  that ‘Bears’ too are waiting for RBI and EXPIRY of F&O   for going aggressively short .

VXI (Volatility Index) For Monday 24 th Jan 2011

Pivot is at: 20.52

R1 at 21.99

R2 at 22.95

R3 at 24.42

S1 at 19.56

S2 at 18.09

S3 at 17.13

Significance

All this suggest very high Volatility in coming days before Expiry leading to High Swings during the day

DMAs (Day Moving Averages)

20DMA@5895
50DMA@5926

200DMA@5614

Significance

200DMA IS A SUPPORT AS WELL AS A TURNING POINT

With 20 DMA @5895, far away from close on Friday @ 5694, Bulls will have to work hard or it has to be an extra ordinary event to take place to reach 5895

TRADE CAUTIOUSLY and with STOP LOSS for all the positions

Stock specific

Day Traders can take

LONG POSITIONS IN

Bank nifty (Resistance @11200, support@ 10500)

RIL

ICICI Bank

SBI

AXIS Bank

BOB

INDIAN Bank

FEDERAL Bank

UCO Bank

TCS

Sterlite

Hindalco

Bajaj Auto

M&M

Investors and Traders can go for

Punj Looyed

GMR Infra

EMCO

Graphite

Elecon Eng.

BIOCON

IPCA

Celestial Lab

Jyothi Lab

NIIT Tech

Rolta

Mphasis

Infinite Computer

Techpro systems

Petronet LNG

NTPC

Ador Fontech

Camphor and Allied

GIC Housing

Deewan Housing

Talwalkars

Ramkey Infra

Nelcast

SHARP FALL, INTRA DAY or DURING THE WEEK, SHOULD BE USED BY TRADERS TO GO LONG (To be covered at 5580 or booked at 5880)

ALL DIPS UP TO 5580 ARE INVESTMENT OPERTUNITIES FOR LONG TERM INVESTORS

CONCLUSION

For intraday outlook on Monday (24-Jan), it is going to a VOLATILE day with a bearish trend.RBI action against the expectations of market may cause steep reactions and I would not be surprised to see levels of 5,580- 5600. The market has unfolded flat and has traded in a narrow range of just 100 points the last trading week and has closed marginally in the green.

Technically we now head into F&O expiry week with a holiday on Wednesday. The market hasn't demonstrated any strength and so far 5,603 is a crucial support until F&O expiry and as long as that holds we could see levels of 5,800 due to short covering before expiry but we need to watch crucial support of 5,615

In case of Favorable action by RBI, a trading bounce to the levels of 5778/5800 is all that can be expected.

‘So on Monday, from trading point of view traders are suggested to buy on dips until 5,615 levels for a target of Rs 5,800’.

IMPRESSION

From last week’s trading pattern, it looks that ‘All bad news is ‘Discounted’

Be opportunistic but wait for ‘Right Moment’

Thanks

Dr. Vasant Bele

All the views expressed are personal, invest after consulting your expert