Market for Monday
Dear Investors
It was ‘Run away rally' in Indian stock markets on Friday
.Nifty and Sensex surged above important resistance levels of 5650
And 18500 leading to a ‘Panic short’ covering and ‘frenzied’
Buying by traders and speculators. All this led to market
Closing at higher levels of 5654/18851.
Levels on Friday
Nifty: Open: 5588, High: 5667, Low: 5560, Close: 5654
Sensex: Open: 18480, High: 18858, Low: 18480, Close: 18815
What Next
For last few trading sessions markets were trading I a
Tight range. Friday saw a sudden change in the course
Of markets , it was on the back of a small remark by an
bureaucrat from Finance ministry regarding borrowing program
By Indian Government and Warren Buffets remarks regarding
His intentions of investing in India
Good results from Accenture(a leading US IT co.)leading to a
Rally in Indian IT cos.
Barring this
There is no fundamental change in Indian economy which
Should change out look towards stock markets
Traders and investors should take all these developments with
Caution.
Because there are no positive triggers in near future, on the contrary
There are number of problems around the economies all over the
World
Like……
Debt distress in Europe
Spiraling oil prices
Disturbed geopolitical situation in Middle East
Rising Inflation
And Last
Expiry on 31st March
Watch for
Nifty levels
UPWARD: 5685/ 5700/5760
DOWANWARD: 5588/5542/5480
Technical View
Pivot for Nifty; 5627
R1 (First resistance) is @ 5694(18955)
R2 (Second resistance) is @ 5734(19095)
R3 (Third resistance) is @ 5801(19333
Significance
In an up trend, traders and investors on both the sides
should not bother resistances but keep
Watch on support levels
R1(5694)is most significant level to be watched , it is
Nearer to the 200DMA ( 5685). Market will have a stiff
Resistance at this level and will face selling pressure,
Which may lead to a substantial correction of this up
Move.
Close above R1 will give 100/150 points up move in Nifty
Which may take it to next resisatance at 5734 and 5801
Long traders are advised not to create fresh longs at and
Above R1, unless Nifty closes above 5700 traders on
long side should prefer to book part profits between 5688
and 5700.
Traders are advised not to go short in this market , Unless
Nifty closes below 5515/5480 or rises to the level of
5734.
S1(First support ) is @ 5587(18577)
S2(Second support) is @ 5520(18339
S3(Third support) is @ 5480(18199)
Significance
In an up ward trending market supports are more
Significant and should be followed
S1(5587) is the vital level of support because it is
Nearer to the 200Day Exponential average(5588)
Close below that will give first indication of correction
In an up move.
All dips up to S1 can be bought with a stop loss
At S2(5520).
Any close below S3(5480)will indicate termination
Of ongoing rally
Traders can built shorts at and below S2(5520)
With a stop loss at S1(5587)
VXI(Volatility Index)
Pivot is @ 20.02
R120.05/R221.73/R322.78
S119/S218/S3 17(Rounded)
Significance
There is drop in volatility in last few sessions
Indicating stability in markets
VXI and Nifty always go in opposite direction
When VXI is down Nifty starts moving up.
VXI at 18/19 indicates that markets is bottoming out
But
As expiry approaches there will be increased volatility
DMAs(Day Moving averages
5DMA @5430(18052
20DMA @5452(18179)
40DMA @5444(18164)
50DMA@5499(18334)
200DMA@5685(18941)
50 Day Exponential is @ 5542(18480)
200 Day Exponential is @5588(18633)
Significance
Nifty has moved above all the short term moving
Averages (5/20/40) indicating that the short term
Trend is up.
Nifty and sensex have crossed vital 50 and 200
Day Exponential averages also cofirming the
Up trend
Now is to be seen if Nifty can manage to take out
200 Day simple moving average on closing basis
There will be lot of selling pressure at 200 DMA
LEADIND TO CORRECTION in this up move
Nifty should not correct below 50Day Exp.Average
(5542) in this process, any close below 50DMA(5499)
And 50 Day Exp. Average will indicate that the up
Move was a Corrective Rally in a downtrend
Watch
5499/5542 for change in the trend
Comments
Markets have moved out of a ‘Grinding’ range with volumes.
Domestic indices rebounded this week with a spectacular
Bounce back from last week’s heavy sell-off on the back
Of bargain hunting and short covering. Investors and traders
Should watch how far this rally extends because as written above
This is not on a sound fundamental support, so in view of result
Season approaching and rising oil and commodity prices leading
To margin compression and profits of Indian Industrial may lead
To a correction in markets
Nifty has a strong resistance at 5685(200dma) , where lot of
Selling may take Nifty to lower levels. There is a confluence of
Resistances above 5700 at 5720/5760/5801, it will take lot
Of efforts for bulls to take out all these and it may correct to
Lower levels at 5588(200 Day exponential average)/ 5542(50 Day
Exponential moving average) As long as Nifty maintains these levels
On closing basis one can buy at all dips with a stop loss at 5480
Investors should not create fresh short positions as long as Nifty
Trades above 5480, avoid going against the trend
As expiry approaches there will be a great volatility in
Markets.
There are very few short positions in market, unless fresh
Buying by FII and DII in cash market takes place it looks
Difficult for markets to scale higher levels beyond 5700/6760
All long traders are advised to book part profits at every
Higher level and buy at every lower level. Avoid buying at
Higher levels
And protect your profits with proper stop loss.
Short traders are advised not to trade against the trend.
Do not create short positions till 5720, can go short if Nifty
Corrects below 5480/5440
CAUTION: The rally without a fundamental base can be
A simple ‘Technical Bounce’, trade cautiously otherwise
It may turn out to be a ‘Sucker’s rally’ so no Euphoria
Please, watch events and news around the Nation and
World carefully before jumping in to trades
Long term investors can start buying at every correction
In small lots
STOCK SPECIFIC
Traders and short term investors can create longs in
ICICI Bank
RIL
ACC
Fuj Ambuja
Bharti
JP Associate
IndiaCement
Reliance Cap.
Canara Bank
BOB
Ashok Leyland
Positional traders and long term investors can buy into
Indusind Bank
Federal Bank
UCO Bank
IDBI Bank
IDEA
Blue star
IRB Infra
Lanco Infra
Elecon Eng.
EMCO
Sterlite Technology
Celestial Lab
All these can be bought for long term investments also
But with small parts at every fall
IMPRESSIONS
MOVING TOWARDS WALL PF RESISTANCES
Thanks
Dr. Vasant Bele
All the views are personal, invest after consulting experts
Read ‘Market for Monday’ as a separate article
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