(C)rude shock

Dear Investors

It was ‘(C)-RUDE SHOCK’ secondary to the disturbances in Middle East and some part of North Africa, led to the fears of Cutting Oil supplies led to spike in oil prices in last few days. The Libyan upheaval is also particularly significant to oil markets because it has disrupted supply and although the amount affected so far can be replaced, concern has grown about how far it will be contagious The almost unthinkable scenario would be disruptions from Saudi Arabia, which supplies around 10% of the world's oil and also holds most of the world's spare capacity.

 Surging oil prices and popular revolutions that have already toppled two presidents created panics in most of the Asian markets. Oil prices of well above USD 100 a barrel are beginning to threaten economic growth. US markets (Yesterday it was close because of holiday on account of ‘Presidents Day’) Today US markets were also closed with heavy losses, Dow down 177.

Indian markets were supported by the big boss RIL, on account of the RIL-BP

(British Petroleum) deal. RIL was up by 5% which kept Indian indices at reasonable fall.

Market opened with small fall at 5504. Discussions regarding RIL-BP deal kept

Traders and speculators busy during early part of the day. Once the euphoria of the RIL-BP deal was over, market was taken over by ‘Volatility’, Nifty fell down to the level of 5437, a significant support level (5440). During trading hours Nifty tried to test upper levels of 5515, only to fall to the closing levels of 5460.

At the end, Sensex closed at 18296, down by 142 points and the Nifty stood at 5469, lower by 49 points.

What Next: CAUTION

Nifty could manage to remain above 5400 level. This has given ‘Bulls’, one more chance to knock at 5600. Indian markets are in ‘Short term up move’, but Global Turmoil is keeping it in suppressed state.

It is difficult to predict on the back drop of fall in US markets , last evening , in addition to that  of ‘Expiry’ of F&O and Budget(Railway and General) how far bulls will be able to push ‘Nifty’ on upper levels. All this will keep volatility at its peak.

 Nifty has to remain above   water levels of 5400/5380 for survival of Bulls. It looks difficult for traders and Speculators to hold the fort and fall below 5330 looks eminent in given Domestic and Global conditions. Once 5330 is broken, testing of 5200/ 5180 is on the cards only question is, when? Before budget or after  Budget?

Immediate resistance for Nifty is at 5515./5557 levels , which looks to be an Up heal task for bulls. Traders and investors should watch levels of 5380/5330 in short to medium term.

Levels to watch

Upward: 5515/5557

Downward: 5400/5380/5330

Technical View

PIVOT FOR NIFTY: 5475

R1 (First resistance) is @ 5513

R2 (Second resistance) is @5557

R3 (Third resistance) is @ 5595

Significance

Nifty must maintain above Pivot level of 5475 to prevent further fall. In a given situation R1(5513) becomes most important level to be watched for survival of Bulls.  Bears should close all the shorts if Nifty is above 5513. Aggressive short or profit booking is advisable below 5475, addition of fresh long positions can be done once Nifty is above 5513.

S1 (First support) is @ 5431

S2 (Second support ) is @ 5393

S3 (Third support) is @ 5349

Significance

In given conditions support levels have become more significant than resistance levels, so watch for 5431/5393, till they are maintained, long positions can be carried, once 5380 is taken off, all the longs should be booked and fresh shorts can be built till 5200/5180 as a stop loss.

VXI (Volatility Index)

Pivot is @ 26.63,

Volatility pivot is well above 24 indicating very high periods of uncertainty all the day. Traders are advised to keep strict stop losses

DMAs(Day Moving Averages)

5DMA; 5495

20DMA:5450

50DMA:5725

200DMA:5640

Significance:

Unless 5DMA is taken off, short term trend will remain down. Breaking of 20DMA ON CLOSING BASIS will be leading to a down trend with a support at 5330. In view of extreme volatility all these supports and resistance levels can be taken out in a flash. In such conditions ‘Closing’ levels are to given high importance.

COMMENTS

As long as ‘Global’ conditions are in a state of ‘Turmoil’ and Events like Expiry and Budget are not over, one is advised not to take large trading positions unless you are a ‘Compulsive Trader’. But then all (long and short) positions should be with strict stop loss on both the sides  (Profit and Loss).No greed please.

Long term investors can use ‘Big Panic’ falls to buy large cap stocks only, wait for mid cap purchases till lower levels get stabilized. One must not rush to built complete portfolio because market is not going to ‘Run In Hurry’ to higher levels, so hold ‘Cash’ and ‘wait on sidelines’.

Impressions

Slippery conditions ahead

Stock Specific

No calls today

Thanks

Dr. Vasant Bele

All the views are personal please invest after consulting experts