WALL of WORRY

                                                                    MARKET FOR MONDAY: 21st March 11

Dear Investors

On Friday markets closed with a big fall in Nifty and Sensex

Taking it below the psychological level of 5400 for Nifty

And 18000 for sensex. Rising oil prices, Wikleaks reports

And Mukesh Ambani’s remarks on oil and gas production made

 traders and investors nervous.

Week- end news flow, either from National or Global fields

Are not encouraging for bulls.

National events

Political turmoil for UPA government (Wikleak Report)

Remarks of RBI about growth and Inflation

Rising commodity and oil prices

Fresh news flow across the globe….

 The UK, US and France have attacked Libyan leader

Col Muammar Gaddafi's forces in the first action to

UN-mandated and Gaddafi attacking rebel strong holds.

Radiations from tsunami affected atomic fumes infecting

Food and milk in Japan

Rising crude oil and commodity prices in international

Market …… and so on 

All this has created a ‘Wall of Worry’ for Investors,

Analysts and speculators in Indian Stock market

On Friday

Nifty Open: 5475 / High: 5483 / Low: 5366 /Close: 5373

Sensex; Open: 18251/ High: 18259 /Low: 17849 /Close: 18878

What Next?

Fast developments in India and across the Globe

Has made analyst’s and market pandit’s job of assessing

And predicting market movements very difficult.

Unless there is stoppage to the adverse news flow across

The globe, volatility in financial market will not die down.

In such circumstances the only helping parameter is, Technical

Analysis of different components of stock market (Index, Stocks

And Commodities)

Friday’s close below 5400(with high volume) has created a question mark in the Minds of ‘Bulls’ regarding so-called on going ‘Up move’

For last few weeks market was moving in strict range (Nifty) of 5400(5371) and 5600(5608)

Friday’s close has opened a possibility of moving towards a new range on lower side, 5380/5177, unless something new and

Positive event takes place, locally or globally, we are headed

For 5330 and below, to test previous low of 5177

Levels to Watch

UPWARDS: 5420/5480/5530

DOWNWARDS: 5330/5220/5171

Technical View

Pivot for Nifty: 5407

R1 (First resistance) is @ 5448(sensex: 18141)

R2 (Second resistance) is @ 5524 (sensex: 18405)

R3 (Third resistance) is @ 5565(sensex: 18551)

Significance

Pivot (5407) will be the first hurdle for Nifty

In given ground situation R1 (5448) will pose stiff resistance

It will be tough task for traders and manipulators to move

Nifty above R2 (5524)

All long positions can be carried up to 5480/5500 levels

And booked around it

Short traders can carry their positions till 5500 with a stop

At 5505/5515 level

S1 (First support) is @ 5331(sensex: 17731)

S2 (Second support) is @ 5290 (sensex: 17585)

S3 (Third support) is @ 5214 (sensex: 17321)

Significance

In a down move one has to keep watch on support

Levels than resistances, as supports can be washed

 One after another in panic situations

So all long positions must be guarded with trailing

Stop losses or till Nifty settles at some range no

Long positions should be created

This is not the time and situation to trade long in

Market.

Once Nifty breaks below S1 (5331) then it may slide

Down to, 5200/5177 level. S2 (5290) may provide a

Flimsy support

VXI (Volatility Index)

Pivot is @ 25.39

Significance

Once more volatility is playing a major role in Indian

Markets. It has gone above 25 and as long as it

Is above that, market will move in ‘intra day swings’ on

Both the sides.

IN SUCH CIRCUMSTANCES, BETTER TO TRADE

WITH STOP LOSS AT EVERY SMALL VALUE

DMAs( Day moving average)

5 DMA @ 5476(sensex: 18257)

20DMA @ 5466(sensex: 18248)

40 DMA @ 5479(sensex: 18286)

50DMA @ 5547(sensex: 18512)

200 DMA@5676 (sensex: 18910)

50 Day Exponential average @ 5554(sensex18530)

200 Day Exponential average @5598(sensex: 18669)

Significance

Nifty has closed below all the moving averages indicate

a short term bearishness.

As long as 5DMA/40DMA are not cleared by Nifty on

Closing basis, it looks to be in a ‘Bearish Zone’

Comments

Friday’s closing and events occurring around the world have taken

Indian stock markets in a bearish zone.

 Nifty has immediate resistance at 5400/5380 and only sustaining

Above it will move towards 5480. While immediate support is at

5330/5220 levels, closing below this will create a panic situation,

Which will result in markets gravitating to a new range, 5060/4880

On the weekly as well as daily scale, it is showing   a sharp weakening. it has already indicated sharper move towards lower level

Last 2 day’s price action and dropping on volume is indicating that we are likely to break the barrier of range in downward way.

Traders and speculators should execute caution in trades and go with

Strict stop loss to cut your losses

Long term investors are advised to watch the events and movements in INDICES (Nifty and Sensex) for an emergence of a definite trend. It is wise to trade with the trend, than going against it.

. Wait for any long term investments till market consolidates in   range

Stock Specific

One can trade but trade with the trend for that,

Do not create positions for first thirty minutes

Trading calls

ACC

Ambuja Cement

Lupin

Raymonds

RIL

Reliance Cap.

Reliance Comm.

Bharti

Crompton greavs

HUL

Momentum and positional trades can be initiated with

Strict stop loss in

S.Kumar Natiom

IRB Infrt

Globus spirit

Amtec auto

Shree cement

Prism cement

Canara Bank

EMCO

Voltas

Blue Star

Celestial Lab

GMDC

Artson Eng.

These can be converted in to long term portfolio

And added at every dip in market

IMPRESSIONS

Back to square one

Thanks

Dr. Vasant Bele

All the views are personal; invest after consulting your experts

Read market for ‘Next week’ as a separate article