DO NOT BE EUPHORIC .........

Dear Investors

January 12 th was again a day of ‘Great Volatility’, Market opened with ‘Gap Up’ levels on Nifty at 5800 and continued till IIP (Index of Industrial production) numbers were out , though it was expected to on down side ‘Bears’ took the chance to Bully Bulls’ . Nifty tested the low of 5711 creating fear of breaking important support level of 5690. With positive opening of European markets Nifty got the strength and rallied to immediate Resistance at 5831(Read 11^th Jan Blog)to reach high of the day at 5874. At the end Nifty closed just short of the days top at 5862, breaking last 5/6 days downtrend.

WHAT NEXT?

 Investors should be cautious as this rally may be due to ‘Short covering’ by the bears and ‘Bottom fishing’ by investors at lower levels

.Traders can take long positions for short term gains till nifty doesn’t break yesterday’s low of 5711 and ride on longs. Still there are plenty of shorts in the system.

Both investors and traders should avoid to be ‘euphoric’, as there is a stiff resistance to Nifty at 5921 / 5990/and 6030 levels to call it as ‘ Continued up trend’ or ‘bottoming out’ at 5700 levels.

Traders should carry long positions with strict ‘Stop loss’ at 5700/5690 and wait for break above 5921/ 5960 to call it ‘End of the corrective ‘ fall

For markets to resume its ‘Up Trend’ there has to be ‘Consolidation’ during opening hours of the day plus maintain yesterdays gains without volatile trades.

Trigger for the day

 Infosys Results and Good closing of US markets might act as ‘A trigger’ for markets to test 5921/5960 levels , to go above this ‘Bulls’ will have to do lot of hard work as the fear of ‘PORTUGAL DEBT AUCTION’  threat is looming bulls head, it will give chance for bears to raise their head.

Any surprise from Infosys results on either side will swing markets accordingly so either do not create positions till the results are out or keep stop loss for the positions created.

TECHNICAL VIEW

PIVOT FOR NIFTY: 5861

R2 (First resistance) is @ 5921

R2 (Second resistance) is @   5979

R3 (Third resistance) is @   6084

SIGNIFICANCE

Traders should use pr Infosys result R1 as important level to watch for the day, R3 should be the trend changer for both Traders and Investors.

I f Nifty does not march beyond R2 level and closes below that , even after Infosys results are satisfactory, then it indicates that the ‘correction’ is still on.

S1 (First support) is @ 5758

S2 (Second support) is @ 5653

S3 (Third support) is @ 5595

SIGNIFICANCE;

If markets, even after dissatisfying results from Infosys, does not break S1 (5758) and hour’s around that to close above last days low of 5711, one can take 5711 as temporary bottom.

S3 (5595) is nearer to the 200DMA (Days moving average). closure or intra day test of this will indicate that the correction is still on, close below S3 will change the trend to ‘ Downward’ direction.

20DMA@5989
50DMA@6003
200DMA@5602

STOCK SPECIFIC

RIL

HINDALCO

TATA MOTORS

INFOSYS

HCL TECH

DEPENDING ON INFOSYS RESULTS

POLARIS (with stop loss on Nifty level)

NIIT TECH (with stop loss on Nifty levels)

INVESTMEN BUYS

BIOCON

CIPLA

GLENMARK

LONG TERM INVESTMEN SUGGESTIONS AT CURRENT VALUES OR AT DIPS

CELESTIAL LAB

JYOTHI LAB

EMCO (at all dips0

GRPHAITE

PETRONET LNG

EVEREST KANTO

Avoid getting in to Rate sensitive sectors, like Banks, Auto, Reality till RBI comes out with policy at the end of January.

I KNOW….

‘IT IS HARD NOT TO BE EUPHORIC WHEN STOCK PRICES……….ZOOM……But…….

COOL DOWN TILL CHANGE IS ON YOUR SIDE

Thanks

Dr. vasant Bele

These are individual views. Investors should take their own decisions; writer will not be responsible for losses

 Written and posted on 12th Jan. 2011