NEXT MILE STONE (5636)

 Dear Investors

It was a strong session at the markets today. Nifty after a low-key start put on

 a smart rally. Nifty ended the session at 5,546 up 64 points while the 

Sensex rallied 200 points to close above 18,500. After a subdue start Nifty

 managed to test 5550 levels. Nifty has closed at three weeks high on the

back of Fall in Food inflation for two successive months. Though the

 breadth was across the sectors, volumes were low. Low for Nifty was

 at 5463.

What Next

On the back of drop in food inflation and some value buying for last three trading

Sessions Nifty managed to reach 5553 just short of immediate resisatnce at 5557.

There was buying in all the sectors, but specifically Banks (Low inflation effect).

Crossing of 5515 decisively is most encouraging for Bulls. Next immediate level

 to watch is 5580/5600. If Nifty is able to cross the vital ‘Mile stone of 200DMA’

 (Placed at 5636) in next trading sessions it will change the course for market

 from ‘corrective rally’ to ‘upward continuation’ of the original trend. If Nifty is

unable to sustain 5580/5557 levels the immediate support to be watched is at

5515/5480. For ‘Momentum’ to continue Nifty should not drop below 5400, which

looks remote in the light of Expiry and Budget. It looks at least till ‘Budget’ Bulls

 are going to ‘Ride the Wave’, Traders and Investors are advised to ‘Ride the Trend’ 

till 5400, till then buy at every dip with a stop at 5400

 

 Levels to Watch

UPWARD: 5557/5580/5620

DOWNWARD: 5515/5449/5380

Significance

Nifty’s projected high and low for next session is 5557 and 5449. In tomorrows session Nifty will

face cluster of resistances. Immediate major resistance is now comes at 5566. If crosses above

 5566 it will try to move towards 5580. If sustains above 5580 then it will face major hurdle at 5628.

 Only closing above 5550-5565 for a couple of days will move at least to the 200-day SMA which

 is placed at 5636. So all the longs will have A ‘Stop loss’ at immediate level of 5515/5480

. Immediate support now comes at 5515. If can not sustains again above 5566 and trades below

5510 for some time then it will retrace down towards 5480. And drifting below 5480, it will crash

down to 5420-5004 level also. All the dips up to the level of 5480/5449 can be bought with a

stop loss at 5380/5330

But the Question is…..

 A) Where and how to trade? The answer is ‘Ride the Trend’ Banks, Large caps like RIL,

 Mid cap IT, and Pharma.    

B) Will the ‘Pull Back continue?’

 At the level of 5550 16% growth is discounted so also valuations are not very

attractive as they Were at 5200,in addition to that volumes are not high and participation

 of all the Segments of investors is lacking. So there are some doubts about continuation

 of this Pull back. It looks that it will 'Carry Momentum’ till budget and further course will

 depend on ‘Budget’

 

Technical View

PIVOT FOR NIFTY AT: 5520

R1 (First resistance) is @ 5578

R2 (Second resistance) is @ 5610

R3 (Third resistance) is @ 5668

Significance

Pivotal value at 5520 should be used as immediate indication of non viability of

 up move In short term.

Taking out R2 (5610) will be significant (even intra day) in the journey of testing 200DMA

Traders can create longs if Nifty does close above 5610 with stop loss at 5520

S1 (First support) is @ 5499

S2 (Second support) is @ 5430

S3 (Third support) is @ 5398

Significance

Most important observation is, all the support levels are above 5380 (which was important

Support) indicating short term strength in market

As long as S3is not violated, long positions should be carried forward with a stop at 5380

Closing below S2 (5430) will be first signal for ‘Bulls’ to liquidate the longs

VXI (Volatility Index)

Significance

The Indian VIX which is currently at 22.57 and it was up down by 2.08 % or-0.48. It indicates that the market will continue to be volatile in the short term.

DMAs(Simple Moving averages)

5DMA@5455
20DMA@5485

40DMA@5623
50DMA@5746
200DMA@5635

Significance

Nifty is trading above 5 and 20DMA which indicates a short term bullish ness

Next move should take away 40DMA at 5623 to ‘Knock the Doors’ of 200DMA

At 5635. Crossing 200DMA (intra day) and getting close above 40DMA will be

trend changer

All the long positions should be exited once the 5DMA is broken on close.

Comments

Markets by moving above 5515/ 5540 levels has indicated the intentions

Of moving ahead before budget. It has to be seen how long this will carry

‘The Momentum’? As Non participation of FII/DII and hardly any participation

Of retail investors create doubts regarding strength of the ‘Pull Back’ rally.

Also the argument that the values are not as cheap as they were at 5200/5300

Levels, goes in favor of weakness in the current up move. Investors are advised

To book profits at regular intervals. Investment buying should be done once the

Trend is fixed till then ‘Flirt’ with the markets.

IMPRESSION

At times it is better to be away from ‘Predicting’, in such situations

‘Do not predict Just follow it’

Stock Specific

Trade In

RIL

SBI

HDFC

HUL

CENTURY TEXTILE

STERLITE

SAIL

Syndicate Bank (@114 SL 111 Tgt. 122)

UCO bank    (@105, SL 98, Tgt. 117)

United bank (@97, SL 91, Tgt. 110)

Sanghavi Movers (@146, SL 141,Tgt. 158)

NIIT Tech (@197.SL 193, Tgt.211)

TUTIS Tech.(@23.50, SL22, Tgt. 28)

 ARVIND (@62, SL 59, TGT 69)

Longs can be created in

Sanjivani Parenterals

Comluage Info

Piramal Glass

Suryalata Spinning

Ador Fontech

Sumeet Ind.

EMCO

Elecon Eng.

Polaris

Hexaware

Trade with caution

Thanks

Dr. Vasant Bele

All the views expressed are personal, investment should be done with

Consultation of experts