So near So far

Dear Investors

 On Friday market snapped the winning streak of the Nifty and Sensex to close in red.

Nifty lost around 85 points after reaching important resistance level of 5600.At one moment it was thought that Nifty is going to test the 200DMA(5635) but events after 5600 made us  to realize that it is ‘So near so far’

Vital support level at 5440, Market closed nearer to the days low at 5458. The intensity and volume of selling was ‘Catastrophic’ and disturbing for Bulls. The close wasn’t good for the Nifty, as it just about managed to close above  5450 level. But it looked very vulnerable and shaky in the last half an hour to 45 minutes. In fact stocks were falling in a very sharp fashion the moment  Nifty broke  5500 level and started trading below that.

What Next

On Friday

There was a sudden sell off after Nifty reached 5600 with high volume and poor

Breadth

It’s too premature to say it’s the end of the pull back rally but certainly

has created a question mark , is this the ‘Failed Break out?’ in the minds of

 Traders and investors regarding, the so called ‘Fresh Break Out’ at 5515

                                         

Now for Monday all depends on Government’s stand on formation of JPC, reaction

 of markets to The ‘Rate Increase’ by China (It was declared after market close)

and various budgetary speculations like fear of Excise increase OR Formation

 of Infrastructure Capital Fund, Subsidy Allocations etc.

There is every possibility that Nifty will try to bounce from sharp fall of Friday.

One has to watch how far the bounce will be. The next immediate resistance

 is at 5515/5557 level. If Nifty manages to take out 5580 it will try once again

to Knock at the doors of 5600 and subsequently 200DMA at 5635(Sensex at 18772)

.In case Nifty does not sustain the rise above 5515/5557 and starts downward

journey, it has to hold the immediate support at 5440/5400/5380. Breach of

the last support at 5380 will take Nifty to the low of last fall at 5180.

Levels to watch:

UPWARD:       5557/ 5600/ 5635 (Sensex: 18501/18690/18772,)

DOWNWARD: 5440/5400/5380 (Sensex: 18150/17801/17430)

Technical View :

PIVOT FOR NIFTY: 5499

R1 (First resistance) is @ 5557

R2 (Second resistance) is@ 5657

R3 (Third resistance) is @ 5715

Significance

Nifty has to cross the pivotal level 5499 to keep upward trend intact. Bears

Should take this as a stop loss for short positions

R1 (5557) is the crucial level for market once it is taken away Nifty will make

A mark at 5600/ 5635(200DMA). Fresh long positions can be created at this level

Or even above 5515

R2 (5657) well above the 200DMA, will indicate an established up trend and will

make a mark above 5700 .

For near term R1 at 5557 is most vital, failure to cross this will signal re

Emergence of ‘Bears’

S1 (First support) is @ 5399

S2 (Second support) is @ 5341

S3 (Third support) is @ 5241

Significance

S1 (5399) should be the stop loss for long positions, any close beyond

That will drag Nifty to the levels of 5380/5330.

S2 (can be used by bears to create fresh short positions to be covered at 5200

/5180 level

S3 (5241), Long built up can be attempted at this level to be covered at 5180

Long term investors can start nibbling at and around S2 (5341)/S3 (5241)

VXI (Volatility Index)

The Indian VIX which is currently at 24.18 and it was up by 1.61 points or 7.13 %. It indicates

 that the market will continue to volatile in the short term.

Significance

Very high volatility indicates the uncertain sentiment in the minds of all, The Bears,

 Bulls and the Long term investors. As long as volatility is high ‘Stop loss’ becomes

Mandatory for all types of trades

DMAs(Days Moving Average)

5DMA@5485
20DMA@5472

40DMA@5620
50DMA@5738
200DMA@5637

Significance

Most significant thing is , Market  has closed  below 5DMA(5485) and 20DMA(5472)

Suggesting a short term threat to the up trend or ‘Pull Back’ rally

Once Nifty starts trading above 5DMA/ 20DMA levels it will be in an upward trend to

Test the 40DMA and will lead to higher levels signifying ‘Bullish Upward Pattern’ on

Charts

COMMENTS

As the volatility will be very high during next few trading sessions, things can happen in a flash giving no time for
traders to cover their positions, keeping all this in mind, all participants should keep their positions on lighter side, with strict stop loss

The breadth was quite terrible and the volumes were high at Rs 2.1 lakh crore today. So it’s a high volume poor breadth sell off suddenly after the Nifty approached 5600. It’s too premature to say it’s the end of the pull back rally but certainly has created a lot of doubts on its continuation next week.

.

It’s not been a good closing for the week. However, the weekend could be important because you could get some developments on the political front. Answers to whether the budget session will happen, JPC formation also on the Chinese situation because, China raised rates after the markets closed on Friday. So all of that goes in favor of ‘Cautious Trades’ on Monday

 Stock Specific

ICICI Bank

RIL

TISCO

Sterlite

Century Textile

Raymonds

GMR Infra

LANCO Infra

Yes Bank

IDFC

Indus ind Bank

ARSS Infra

Celestial Lab

Sun Pharma

Ador Fontech

Artson Eng.

Arvind

Polaris

Ramkey Infra

STOP LOSS IS A MUST

Impressions

Choppiness is the theme, Caution is the Key

( FOR WEEKLY ANALYSIS READ THE BLOG 'FRAGILE and UNPREDICTABLE')

Thanks

Dr.Vasant Bele

All the views are personal, please trade with experts opinion