Market for Monday (4th April 2011)
Dear Investors
After 8 days non stop run markets have taken a breather.
Indices moved relentlessly from the lows of 5177(Nifty) to
The level of 5870(Intra day) and closed above 5800.
Market have discounted all the worst news, events and
Actions all over the world.
Nifty closed at 5826 after testing higher level at 5860
And lower one at 5810 , it has been moving above all
The Moving averages and Important resistances with
Volume. For few days the breadth was not so good
But during last few sessions it was a wide spresd buying.
FFI were net buyers while DII were sellars.
Levels on Friday:
Open: 5835(19463)
High: 5860(19562)
Low: 5810(19362)
Close: 5826(19420)
What Next
Markets have moved unidirectional for last 8 trading
Sessions, a rare phenomenon,
Valuations have discounted all the
‘Good (Budget, world cup
Euphoria)
Bad (Oil, Tsunami, Middle East unrest…) and
Ugly (Scams, Political dramas, price manipulations)
Events to move from strength to strength.
Now is the real test of Bulls …. After a rest, how it moves and
Where it takes the market is a real question
Market has crossed all the important resistance levels
Like
5690/5750/5850,( it will be attempting to move ahead
With a target of 6000,) but with few corrections between
All the dips can be bought
Technical View
Market had moved 960 points from the closing high of 6275 on
Nov. 10.2010 to a closing low of 5310 (Intra day low of 5177)
on Feb 11 .2011(sensex: 21109 to 17296)
We are nearing the 61.8% retracement of that at 5880(19650)
This may prove to be the next resistance level for market
Once Nifty takes away 5880 on closing basis the next
Resistance will be at 5903/5950.
And we may correct to nearest support at 5750/5690
(5740 is 5DMA while 5699 is 200DMA)
One has to exercise caution in creating longs above 5880
Markets will try to consolidate in near term (Which is essential)
In certain range, say 5730 (100 Day Moving average) and 5636
(100 Day Exponential Moving Average).
Investors and traders should watch these levels while going
Long or short in days to come
Pivot for Nifty; 5832(19454)
R1 (First resistance) at 5845(19527)
R2 (Second resistance) @ 5882(19634)
R3 (Third resistance) @ 5904(19707)
Significance
As discussed above all long positions should be booked at
R2(5882) and or Fresh shorts can be created with a stop at
5950 with a target at 5636.
Friday’s close and Pivot are close to each other indicative of
A critical stage, no positions should be created at and around
These levels
S1 (First Support) @ 5804(19347)
S2 (Second Support) @ 5782(19247)
S3 (Third support) @ 5754(19167)
Significance
Close below S3 (5754) be indicative of correction of the
On going rally. No positions should be created between
S2 and S3( 5782/5754)
All longs should have a stop loss at 5754 while fresh shorts
Can be created at and below 5754
VXI(Volatility Index)
Pivot at; 20.79
Significance
VXI and Nifty always run opposite to each other, If VXI drops
Nifty Rises and vise versa
We are having least volatility in markets , indicative of the
Strength of the on going rally and trader and investor’
Confidence.
Any rise above 24 will be significant.
S1@19/S2@18/S3@17(rounded)
DMAs( Day moving averages)
Important:
As has been written in last few columns, in an up move
Nearing to mature (on technical base) resistance levels
Will give a correct guide to book profits and stop positioning
In markets till another trend emerges
Moving averages are the best indicators of the change in a
Trend in short as well as long term period
Since last few days/ weeks I have started including
100Day simple and 100 Day Exponential moving averages
So as to get an early and precise indication of a change in trend.
(Even though there are clear differences between simple
moving averages and exponential moving
Averages, one is not necessarily better than the other.
Exponential moving averages have less lag and are
therefore more sensitive to recent prices - and recent
price changes. Exponential moving averages will turn
before simple moving averages. Simple moving averages,
on the other hand, represent a true average of prices for the
entire time period. As such, simple moving averages may be
better suited to identify support or resistance levels).
better suited to identify support or resistance levels).
5DMA @5739(19123)
10DMA @ 5585(18587)
30DMA @ 5505(18361)
100DMA @ 5730(19105)
200DMA @ 5699(18985)
5Day Exp. @ 5764
100 Day Exp @ 5636(18790)
200 Day Exp @ 5593(18985)
Significance
One can decide stop loss , resistance and support
For his long or short positions from above levels
Moving average can signify change in trend at the
Earliest level.
For Example:
Any close below 5Day Exp(at 5764) will indicate that
market is trying to correct from the current levels
While close below 5DMA (5739) will confirm and
100 Day Exponential (at 5636) moving
Average will set in the same.
Use your stop losses and targets according to Nifty
Moving average levels , even for specific stocks it
Will guide you because after all stocks move according
To the trend
COMMENTS
Market has moved with a great speed and volumes in
Last 8 trading sessions. It will take some time to ‘Digests’
The gains. All vertical moves will always correct to a logical
Level and consolidate for certain period before making
A next move, either in same direction or opposite. If it
Does not happen then one must look at the trend as a
‘Pathological’ change.
It is expected that Indices will correct downwards to
The nearest support levels and depending up on next
Trigger will move up or down.
The immediate triggers for market are
Q4 Earning results, starting from April first week
Crude oil prices
Results of the 5 State elections
Any new developments in 2G case filing
Inflation and Interest rate.
Global Market movements
FII flows and DII attitude
Out of all these, it will be the ‘Result season’ which will
Matter the most, all further moves in market will be
Based on what happens to Industrial Profit Margins
And effect of high commodity prices along with high
Cost of credit, all these will be reflected in the results
Of Indian industrial houses. In turn it will give an indication
Of Growt number in coming quarters
Till major results are out , markets will take a breather
And depending on them will continue or change ist direction.
So it is advised to wait for long term investments.
You Can trade with daily momentum with stop losses.
Any how the bias is up so do not have large and long
‘Short positions’ in market.
All dips can be utilized to pick up good companies
Stock Specific
ICICI Bank
RIL
M&M
Ashok Leyland
Biocon
L&T
TISCO
Sterlite
Hindalco
TCS
S.Kumar @55 Hexaware @66
Arvind@ 65 Polaris @ 188
Suryalata spinning @ 150 Elecon Eng.@70
LIC Housing @ 219 Artson Eng.
Indai Glycol @ 130 Joyti Structure @84
NMDC @ 290 Praj @ 73
GMDC @ 135 Nelcast @ 90
Petronet @ 122 Tilaknagar @58
Empee distilleries @112 Ador fontech@ 88
V Guard @ 168 Sterlite Tech @55
Financial Tech @882 E. Kanto @ 78
All the above stocks can be bought as long term
Investment buys, preferably at all dips
IMPRESSION
FINDING A BOTTOM TO BOUNCE BACK
(Read market for Next week as a separate Blog Post)
Thanks
Dr. Vasant Bele
All the views are personal, invest with expert advised
I myself and my relations may have positions in market
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