WEEK-END BONANZA

NEXT WEEK  

                                    

Dear Investors

Indian stock markets rallied on Friday to intercept

 6 to 8 weeks ranged trading .It was a ‘Buffet Bonanza’

.Both Nifty and Sensex ended the week above 200Day

 Exponential  moving average

Nifty gained 132 points to end above an important resistance

Level of 5600 at 5654 and sensex after gaining 465 points

Ended above 18800 at 18815

There was across the sector buying , specifically IT, Banking

And Cap good sector saw great amount of short covering

And long built up.

Volumes were good and FII bought 1446 corer Rs worth stocks

On Friday.

Levels on Friday:

Nifty: Open: 5588/High: 5667/ Low: 5560

Sensex: Open: 18480/ HGH: 18858/Low: 18480/Close: 18815

What Next

Though market on Friday has broken out of a range and gone

Beyond resistance levels of 5600 and 18000 with good volume

Traders and investors should not be either Euphoric (Long Traders)

Or Get in to Panic (Short traders). There were certain positive

Developments during the week which boosted the sentiment.

Though according to analysts all bad news is in the valuations, one

Should take this ‘Sudden Spurt’ with caution because

There is no fundamental change in last few days so as to

Make markets bullish

It was some news and comments which created a sense of

Bullishness  leading to a frenzy in stock markets….

Comments by finance ministry sources regarding less

 Borrowing Target by Government

Banks ending March with less mark to market losses

 leading to short Covering and fresh buying in banks stocks

Declaration of good results by Accentura, a leading US IT

 co. changed the Sentiment in Indian IT sector

leading to rally in Infosys, HCL,TCS and others

As Nifty and Sensex crossed certain resistance levels there was a

Panic in short   traders to cover their positions which  added

 additional fuel In market leading to cross the

50 and 200 day Exponential Average.

There were fresh long created by FII in certain sectors like Banking

And Cap goods which lifted the sentiment of markets

Indian currency not falling, indicating that FII have not withdrawn

From Indian Markets

There are certain worrying factors which market participants

Should not ignore during next week, like…..

Debt distress in Europe

Downgrade of Portugal

Spiraling Oil Prices

Rising Inflation

Slow Disinvestment process

And

Expiry on 31^st March

And

Earning season will be on in next month

During next few days one has to see how a mix of all these factors

Work in the minds of traders and investors .

Market had teste March low at 5340 on 21^st , from there

Nifty rallied during next 5/6 trading sessions to cross the

Important resistance leve of 5600 and went on to close the

Week at 5667 , a gain of 371 points in Nifty in 5 trading sessions

Nifty and sensex has crossed all the short term simple moving

Averages like 5/20/40 and 50 indicative of a short term up trend

Even 50/200 Day Exponential averages are taken out by Nifty

And Sensex ,

Now the next resistance comes at 200 Day Simple Moving Avrage

Placed at 5685/18941

This will provide stiff resistance to market leading to selling

By traders and investors , any correction will take Nifty to

200Day Exponential average at 5588 or below that at 50 Day

Exp. Average at 5542.

As long as Nifty remains above these levels all the dips should

Be bought with a target of 5700/5760 in mind.

It is advisable not to  built shorts, unless Nifty breaks below

 5542/5480 on closing basis

 Next Week watch the levels

UPWARD: 5688/5700/5760

DOWNWARD: 5588/5542/5480

COMMENTS

Events like Derivatives expiry and sales number of Auto

 And Cement firms will determine market direction for next

 Week. Developments in the world's third largest economy

 - Japan and Portugal’s debt crisis, may continue to remain

 a concern. Crude oil prices will also remain in focus owing

 To unrest in the Middle East and North Africa

Also keep track of PCR (Put call ratio) and VXI (volatility),

There are certain significant technical developments like…

Reduction in Put call Ratio (PCR), indicating long built and short

Covering.

VXI (Volatility index) has dropped below 20 and getting

Settled at lower levels, One has to remember that VXI

And Nifty go in opposite directions. If VXI is down Nifty

Rises and vise versa. As VXI starts settling market gets

Bottomed out

As the expiry is nearing there will be rise in Volatility, short traders

Will not be rolling their positions leading to less shorts in the

System in April series, so market direction will be decided by

Fresh long in F and O as well as cash base buying by FII/DII.

In April Indian industrials will start earning season.

Earnings are likely to be affected by oil prices and commodity

Prices.  

So even though markets are surging ahead with great speed

And expectations, there are important ‘Road Blocks’ ahead

Traders and investors should play market with caution, safety and

Without euphoria. Have trades with stop loss and or

Buy with small lots at every dip.

SECTOR SPECIFIC

Traders and Investors can think of buying in

Banking

Cement

Capitol Goods

Construction and Infra

Mid Cap IT

Avoid

Autos

Pharma

Fmcg

Reality

IMPRESSIONS

Bullish Bias with caution at higher levels

Thanks

Dr. Vasant Bele

All the views are personal, invest after consulting experts.

Read Market for Monday’ as a separate article