RED ALERT .........at 5749

Dear Investors

Friday was the day of negatives, the sentiment of the traders, FII, results

by major index companies, advance decline ratio … everything was in

Negative mode. Nifty opened flat and went on loosing till it nearly touched

5700. Market was under the pressure of FII selling all the week, Unsatisfactory

Results so far, fear of RBI policy and rising Inflation. All this with new series

Has given a ‘Red Alert’ signal for traders and investors, for the days to come

Levels on Friday:

Nifty: Open: 5782 / High: 5804 /Low: 5706 / Close: 5749

Sensex: Open; 19292 /High: 19356 /Low: 19015 /Close: 19135

Advance: Decline: 821: 1925

What Next

Next weak is the ‘Acid Test’ for Indian stock markets. Major results

On Monday, Hero Honda, Bharti, RBI policy on Tuesday and attitude

Of FII towards Emerging markets, all this is going to be the factors

Which will test the ‘Bull's strength. Nifty looks like to be in a Short

Term ‘Down trend’. Though it has not broken 5700, threats of going

Below that, are 'Looming’ during next week.

Traders and investors have to exercise extreme caution during this week

And next few trading sessions till, all the events get out of the way and

 A clear trend emerges after the volatile periods ahead

Nifty has closed at 200 DMA (5749) , which is a strong support for the

On going rally. Close below 200 DMA and 5700 for successive 2/3

Days will change the course of market and take Nifty in a new down

Range of 5660-5550, to avoid all this Nifty must remain above 5880.

Levels to watch

UPWARDS: 5804(19320)/5850(19501)/5898(19660)

DOWNWARDS: 5720(18980) /5690(18800)/5650(18600)

Technical View

PIVOT IS AT: 5753 (19168)

Nifty is poised at crucial level of 5749, closing at 200DMA (5749)

Is very significant for further moves in market, either up or

down

Nifty is trading below all the short term moving average, like

5DMA @ 5814, 20 DMA @ 5838 indicative of a near-term weakness

In market.

Nifty’s closing  and maintaining above 40 DMA @5681

And 40 Day Exponential @ 5728 is keeping hopes of the on going

Up move intact

But it has to be seen how far the ‘eventuality’ will be supporting 

‘Technical’s to ride markets above water levels of 5700-5660.

Break below 200 Day exponential average @ 5618 will be a serious threat

For the on going rally and need to be watch carefully.

Nifty charts are not very encouraging to trade with adventure so it is

Advised to exercise extreme caution during next few days and Monday.

Watch for

Immediate resistance at 5800

Unless Nifty moves above 5850 we are in a short term down move

 Close below the important support at 5655 will take markets to a

fresh down move to 5606/5550 range.

Critical levels to watch are

5850

5702

5660

5618

VXI (Volatility Index)

Pivot at 19.59

Remember Nifty and VXI move in opposite directions, so any

Rise in VXI above 22/24 will be a bad sign for markets.

COMMENTS

-Rising Inflation

-FII selling during the week

-Fear of more than 25 Bps in rates by RBI

-Below expectation results by RIL, TCS Wipro Etc?

-Rising crude

And

-2G

All these have kept markets under pressure and depressed, FII

Sentiment has changed from buyers to sellers aided in addition

By better US and Europe markets at ‘Multi Month High’

Indian markets need some ‘mood elevator’ precisely from Indian

Corporate and Long term investors, like DII (Domestic Insti. Investor)

And HNI (High net worth Individuals),

If results during next few days are below expectations and RBI

Increase rates above 25bps then market will be taking a fresh

 ‘Down Move’

Market was moving on supply of liquidity across the border and

Hopes of good performance by manufacturing sector,

It looks like, in absence of all this Nifty may gravitate to lower

Levels in coming weeks,

Technical data too indicate the same

Next week will be the trend setter for market only

-Good Results

-Fresh FFI flow and buying by DII/HNI

-Falling crude

-Falling $Index

-Fresh policy announcements by Govt.

And 
-Monsoon

Can help markets to move out of depression

According to market experts’ May is not a good month’

For Indian markets, you can decide it on your own from the

Data given below( Comparison of April and May High closing values)

2000 May was a down month (1422 high) compared to April (1624)

2001 May was an up month (1179) compared to April (1155)

2002 May was a down month (1127) compared to April (1146)

2003 May was a down month (1006) as compared to April (1031)

2004 May was a down month (1832) as compared to April (1885)

2005 May was a Neutral month (2071) as compared to April (2069)

2006 May was an up month (3754) as compared to April (3573)

2007 May was an up month (4293) as compared to April (4177)

2008 May was an up month (5228) as compared to April (5195)

2009 May was an up month (4448) as compared to April (3484)

2010 May was a down month (5222) as compared to April (5368)

Now

2011 April was 5910 top and 5729 low……………

(All the values are Nifty closing values)

  Investors are advised to decide ‘Whether to ‘Bat First or Bowl’

 On condition of the ‘Wicket’, ‘Whether’ and ‘Winning’ the toss

Market Strategy for the day

-Better keep away from early morning trades

- Follow the trend after 30 minutes of the opening

- Do not have large long or short positions

-Do not carry positions for next day

- Keep strict stop loss at 3 to 5 % lower levels for longs

- Book early profits

Stop loss for Nifty is at 5700 , below which all longs should

Be covered, Fresh longs can be created above 5830 or below

5630

Treat 5703- 5770, 5660- 5618 as ‘no trade zones’

All  long term traders/investors can do small investment buys at

Every fall up to 5580

Stock Specific

Wait till the events are over

IMPRESSION

IN ‘BERMUDA TRIANGLE’

OF

Rate

Inflation

Results

Thanks

Dr. Vasant Bele

All the views are personal, invest after consulting experts