Dear investors
Friday was a day of ‘painful reversal’ for ‘Bulls’. After opening on a
Positive note market lost on the way, to end of the day, to close at support
Level of 5500(5516)
It was a ‘Double ended’ trade as markets moved during
The early part of the trade to test 5600 and moved rapidly down to
Test the other end at 5500. It was large cap stocks like TCS, HDFC
, Tata Motors, ITC, SAIL, Axis Bank, Sun Pharma, BHEL, Hindalco,
Sterlite, DLF, Ranbaxy and Dr Reddy's Labs led the way down the
Line, while RIL disappointed with a ‘Sloppy’ AGM to stamp the last
Fall in Nifty. Rumor, of EGoM getting postponed, dragged oil and gas
To the list of looser. However, buying continued in L&T, Power Grid,
Infosys, Wipro, Sesa Goa, M&M, Bajaj Auto and ADAG Group of
Stocks. It was really a nervous trade for both bears and bulls,
Who are fighting for supremacy on Indian stock market.
Data for the day
Indices
Open: 5565(18554)
High: 5604(18672)
Low: 5507(18345)
Close: 5516(18376)
Advance Decline: 1306:1485
Turnover: 1, 16,000 cr.
Gold: 1541$/oz (22400apr)
Silver: 36$/oz (54500apr)
Crude: 100$/brl
$ Index 74.20
On Friday
Dow closed 97 points lower
NASDAQ 40 points lower
What Next:
There is something called ‘Hanging Man’ theory in Japanese
Candles stick analysis; ‘word by word’ it gives exact description
Of present state of Indian stock market. Both Bears and Bulls are
Hanging on the side lines for the right opportunity to pull markets
On one side. This was very well exhibited in Friday’s trade.
Moves are dependant on local and global events in coming days
Friday’s US data
Falling consumer interest (remember 70%accounts
For US
And Stagnant ISM,(Industrial Supply Management Index)
Is not encouraging.
At the same time Indian ‘Industrial, Economic and Political
Conditions are not supportive to a rise in markets. Even though
Valuations are attractive, fear of uncertainty is not allowing
Traders and investors to take long term positions in market.
It is responsible for the ‘Daily Volatility’
Nifty has closed at a crucial support level of 5500(5516)
Slide below 5480 will take it to the lower end of the range
At 5420/5380, from where one can expect it to bounce back
To test 5600, which is proving to be the stiff resistance
Levels to watch
UPWARD: 5530(18420)/5581(18613)/5617(18729)
DOWNWARD: 5480(18256)/5420(18100)5380(17800)
Technical view
Pivot at: 5542(18464)
Nifty has closed,ust at the 20 Day Exponential
moving averages @ 5516 and above 10 Day Expo.Avr.
But it has closed below 5DMA and 5 Day Expo. Average
@ 5530/5525 indicating some weakness in near term
For near term ‘up move’, Nifty has to move beyond
40 Day Exp. Arg @ 5558(18534) and 200 Day
Expo.Avr. @ 5584(18619)
Unless Nifty moves above 5650/5710 levels, on closing basis
Markets will not be out of woods.
5600 is proving to be a stiff resistance for the up moves
While 5500/5480(18256) is giving short term supports.
If markets break the vital level of 5420 (18100) on downside
It will gravitate to the lower supports at 5330(17600).
Watch for 5420 / 5585 during the day
Market strategy
-No trade for first half an hour
-Trade the trend with strict stop loss
-Have small trades and book early profits
-All existing short positions should have 5581
As a stop loss
-Fresh shorts can be created at 5590 with a
-Stop loss at 5635 and a target of 5420
-Fresh long p[positions are advised at and above
5617 with a target at 5698 and below 5420 with
stop loss at 5330 and a target of 5517 on bounce.
-Long term investors are advised to look for
Collecting fundamentally sound stock at every
Fall below 5420/5330 from 12 to 18 months perspective.
Stock specific
RIL
Bharti
Idea
HUL
ITC
Clogate
Sterlite
Infosys
TCS
HCL Tech.
Coal India
Zee Entertainment
Ranbaxy
Yes Bank
Federal Bank
Indus ind
Dish TV
Arvind
Hid Zinc
Suzlon
Polaris
Talwalkars
United Phospherous
Sharp Ind.
BATA
Arvind
Ipca Lab.
Hercules Hoist
Aban Offshore
Traders are advised to keep stop loss in relation to Nifty levels
Indicated above
COMMENTS
The ‘Magdeburg
Stock markets(Experiment was done by a Scientist Otto von Guericke
At Magdeburg
.Even though ‘Bulls and Bears’ are exerting equal
Amount of forces to move markets on one side of the range, it
Is ‘Vacuum of Fundamentals’ in economy and External forces of
Events and news, in and out side India
In, any one direction. (Do not take this theory in its scientific definition,
It is mentioned only to show the similarity of situation)
On one side
On one side
Traction of lower valuation, lower ownership in stocks, cash rich
Retailers and Funds, Falling crude prices and lower commodity prices
Are working to pull markets out of the wood
While,
Discouraging US economic data, along with the Fear of Double Dip Recession
Indian Governments apathy, Involvement of number of high profile
Individuals in 2G scam, Rising inflation and fear of slowing growth
Are acting against the driving forces, on up move in market.
This is leading to ‘Zero Effect’ trades for last few trading sessions
(Economists And Analysts call it ‘Range bound’, ‘Consolidating’ market)
The main question is what will break the ’Dead Lock’?
Will global situation improve? But the report on manufacturing, housing
And the consumer, all point to slowing in demand, and
Economic softness, Data clearly indicate a slow down in US economy.
All in all neither Global factors nor Local situation is helping stock market
To move higher. Apart from first one or two days trade on higher side in
June market direction looks like to be down.
“Going ahead, it is likely that markets will trade in a small trade
With lot of volatility with a downward bias.
One has to see how far this state of ‘Suspended Animation’ lasts
IMPRESSION
SUSPENDED ANIMATION
Thanks
Dr. Vasant Bele
All the views are personal, invest with caution and after
Consulting experts
(Read weekly market analysis as a separate blog)
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