Difficult Day ......any body's guess

Dear Investors

On Monday markets opened with a ‘Gap Down ‘(as expected) on the back

Drop of political instability and rising crude oil prices. There was wide spread

 Selling in, rate sensitive sectors, capital goods and infra .Nifty almost tested the

Vital support at 5400(5408) and recovered as rumors of patch up between

Congress and DMK started floating in markets. But crude kept prices under

Pressure. Nifty closed at 5463. (SENSEX: Open: 18362/ low: 18059/

 High 18361/ Close 18223)  

The most important points of concern were

a)       Broad base selling  and

b)       Nifty swinging up and down in a range of 100/125 points

These are not the signs of a ‘Bullish pattern’ so all positions should be with

Stop loss

What Next

As it was mentioned in last article (7^th March Blog) Nifty has not broken 5400.

Nifty bounced from 5400 to close at 5463. As long as 5400 is maintained, bulls

Can hope of testing 5557/5600 levels in near term, all depends on ‘political

Situation and Oil prices’. As long as these things do not settle 5400- 5557

will act like a ‘No fly Zone’,

Any give away from this range will have 150 points on either

Side, If 5400 gives away Nifty may slide down to 5300/5280 level or if 5480 is

Taken out on upper side it will go on testing 5515/ 5557 levels. Traders and

Investors are advised to keep stop loss at corresponding levels for their

trades. Weak hearted traders should wait for clear breakout on upper level or

Break down to take place

Levels to watch

UPWARD 5505/5557/5608

DOWNWARD: 5420/5380/5303

Events to watch

Patch Up between Congress and DMK

Libyan situation and Spread of unrest in other oil producing countries

Crude oil prices

Rupee Dollar relation (on the backdrop of oil prices)

Technical View

Nothing has changed to great extent since Monday

Pivot For Nifty: 5454

R1 (First resistance) is @ 5500

R2 (Second resistance) is @ 5537

R3 (Third resistance) is @ 5583

Significance

Pivot will be significant level , Nifty must remain around it .Any

Close below 5454 will be signifying weak ness in markets

So immediate stop loss for long positions should be at 5454

R1 (5500) will be the next logical target indicated by F&O

Positions and should act as stop loss for short positions.

Any close above R1 can be used to create long positions

With a stop at and below 5454 and target at 5608

S1 (First support) is @ 5417

S2 (Second support) is @ 5371

S3 (Third support) is @ 5334

Significance

S1 (5417) is close to Monday’s low (5408), so it will act as

Directional level for the day and week, braking of 5400 will

Make bulls nervous leading to panic selling in market ( to be

Specific 5380 is the level). So to continue the rally Nifty should

Remain above 5400

S2 (5371) and S3 (5334) IN CASE Nifty breaks below 5400

S1 AND S2 will be taken out in a flash leading to levels closure

 To 5280. This will threaten the ongoing rally and a down trend will

Resume taking markets below previous low at 5170

VXI(Volatility Index)

Pivot is at: 24.75

There was high volatility in Monday’s trade , with give

Situation it will continue to be higher than expected

Traders and speculators should keep strict stop losses.

DMAs( Day Moving Average)

5DMA @5479

20DMA @ 5415

50 DMA @ 5641

200 DMA @ 5657

Significance

Pivotal (5454) level of Nifty is below 5DMA (5479) indicating that the

General sentiment will be nervous in short term. Once this is

Taken out, which is nearer to a significant resistance level, 5491

(Monday’s top) , market will be in an up move to test 5557 till

That time 20DMA (5417) should act as strong support for all

Long positions. It looks Bull’s will have to do lot of efforts

To reach 50&200DMA values as there is a cluster of resistances

Before that, 5515/5557 and 5599

COMMENTS

Nifty’s post budget rally will be threatened if it breaks below

5400. As long as this is maintained, up ward trend will be intact with

A target of 5599, 5608 and 5657(200DMA).

Though the 5400has not taken off in Monday’s trade, there is one

Significant change in F&O positions, There was covering of 5600

Positions and addition of 5500, indicative of’ ‘the roof of the rally’

Has been brought down to 5500.It looks, the upper level is capped at 5500,

 At least for short term and floor at 5400 .So 5380/5550 becomes

A ‘Death Trap’ zone for traders and speculators

Monday’s trading was encouraging for bulls, Nifty bouncing from

Days low to close nearer to 5480 indicating some life is still there

In on going rally, so if tomorrow there is patch up  between……

1)       General Gadaffi and Defectors( LOOKS DIFFICULT)

                                 And / or

2)       DMK and UPA Govt. ( LOOKS HIGHLY POSSIBLE)

Markets will react with a bang to test 5557 in a flash, so traders

And investors should have positions with strict stop loss on either side

Investors can start building portfolio of large cap stocks at every

Lower levels

Traders should watch

5380/ 5421 levels as support for long positions

5480/5515/5557 as stop loss for short positions

Any close above 5480 should be used to create

Fresh long positions with a target of 5557/5608

Above 5608 all the longs should be covered.

Long term investors

Long term investors can do Bottom fishing around 5380

And 5330 levels as this will be a strong support for falls

Or start picking stocks from large caps at and around 5491

Stock Specifics

There is every possibility of a patch up between DMK

And UPA, in that case there will be a strong up move

In market , so traders can built longs in anticipation (to

Avoid a feeling of being left out of the rally) in

Large cap stocks as well as some mid caps

RIL

ONGC

ICICI Bank

M&M

HDFC

NTPC

STERLITE

ITC

Indus ind Bank(239)

Ador Fontech(395)

Ador wielding(170)

Ahalcon Prenterals(62)

Albrite Davi

Geodesic(84)

Graphite India(100)

TTK health care(415)

Fortis Health care(150)

GATI(57)

Cochine Minerals(57)

Gateway Distripark(111)

Samkrag Piston(72)

Praj(68)

Artson Eng.(49)

Tutis tech(26)

EMCO(59)

GLENMARK

One can trade in these stocks   as well as use them as

Long term investments.

IMPRESSION

All depends on ‘IFs and Buts’

Thanks

Dr. Vasant Bele

All the views are personal, invest with expert’s advice