NEXT WEEK (17th June to 1st July 11)
Dear Investors
Last week was a ‘Weak of Surprise’ to Analysts, Traders and
Investors. It was a week of ‘Tussle’ between Strong bear and
‘Weak Bull. For last few days and on first day of the weak
bears were far ahead on points, while bulls were on the verge
of leaving the ‘Ring’, but It was a ‘Punch’ on last day of the week which
Knocked down the bear and had to move for cover
.At least Bulls have succeeded in winning this round
Week had started with a threatening fall on the news of
‘Indo- Mauritius
During all the days except on Friday
Nifty was moving between 5250-5330 range, The fall
In crude below 105/91 and the most awaited news of EGoM
(Empowered Group of Ministers) meeting on Friday for
Oil and Gas price policy, turned the tables for Bears and Nifty
Moved beyond important level of 5400. There were heavy
Shorts in the system, move above 5400 made bears to run for
‘SHORT COVER’ while Bulls got courage to add substantial long
Positions to take Nifty above 5450. Friday’s ‘Somersault’ by Nifty
Has opened the possibility of a new wave of up move and an
End to the on going correction.
All depends on News flow and Events during next week
like...
Indian Situation
-Governments stand on raised prices
-What happens to inflationary effect of the price rise
-Progression of Monsoon
-FII activity
-New policy actions from Government on Capital Expenditure
FDI in retail etc.
And
-Expiry on Thursday
Global Situation
-Though European majors have decided to bail out Greece
It will help Greece Greece
Defaults, irrespective of help from Germany/France and IMF, it
May not be out of woods because….
t they will never be able to repay their debt under current conditions because
their economies are not competitive globally, Therefore, these countries must
, and in my judgment will, refuse (repudiate), disobey and or disown, their debt
. Indeed, looking at Greece
impossible to imagine another alternative.
Default, for how ugly the connotation is, remains the least painful option in what
will be an painfully long path back to prosperity for Greece
The main problem with default, of course, is that it will lead to a financial crisis.
European banks with exposure to Greek debt will face capital shortfalls and have
to go to market to raise money, driving up interest rates. American banks with
exposure to the European banks will face the same fate as the US
with its own debt and deficit crisis.
The fear is that, Greece
QE2 (Quantities Easing)
Last summer, stocks turned higher, shortly after Fed Chairman Ben Bernanke
first pushed QE2 in late August. Under the program, the Fed was to purchase
$600 billion in Treasury securities, which in theory drove risk asset prices
higher and held rates lower. Ironically, what QE2 did was create a lot of risk
and liquidity and sort of a asset bubble we’re still living with a lot of them.
I don't think the Fed can say that QE was successful. It raised equities prices
and commodity prices but never pushed growth. Fed has decided not go for
Further easing, "If the recovery continues and is done without QE3, then a year
from now the market should have a lot more confidence in the recovery,
This is worth giving a thought
ECONOMIC DATA NEXT WEEK
The Federal Reserve in last week gave a bleak outlook on the
economy, lowering its forecasts for GDP growth for both
2011 and 2012. And Fed Chairman Ben Bernanke found it hard
to explain the sources of a so-called economic "soft patch" that
seems to have some unnerving effect on US
-Budgetary discussion on Monday
-Weekly jobless claims numbers
-Housing and manufacturing data
-ISM Number
-Treasury Auction
Will attract the most attention next week.
The sources of the recent decline,
In Indian market
-Like, Inflation, Interest rates, slowing down of growth, Margin
Compression for industries, Policy paralysis on Government
Front and Slowing down of FII flows
And Globally
-Greece
- Weak US
-Creeping deadline to lift the US
Are far from being resolved, so one should take
every rally or bounce with a ‘Pinch of Sault’
All in all next week might prove to be extremely volatile one, in
Such a scenario traders and speculators should take technical
Data as an important support while positioning in market.
Technical
Indian Market:
-Nifty had moved higher up to 6338/21108(Nov 2010)
from the low of March 2009 at 2539/8047
-Since then it Nifty is in fairly serious long term correction
Is in progress that is retracing the entire up move (2539-6338)
With corrections and up moves in between Nifty to reach
6000/20000 range but could not sustain and corrected to lower
Levels
-In medium term it had tested 5959/19811 and corrected back to
5880/18600.
Since then Nifty is moving in a lower bottom and lower top
On weekly charts Since April the trend was decisively down
Which took Nifty just short of vital support level at 5177(5196 intra day)
On Monday 20th June 2011(5177/17296 was intra day low on Feb 11.
-Nifty has smartly bounced on Friday and closed above 5450
Now:
-To maintain an up move Nifty has to close above 5499/18300 for
Two/three trading sessions.
-The next resistance will be @ 5517(18404)and @ 5578(18562)
-The up move may continue up to 5601/5650(18857) levels.
Unless Nifty moves beyond this the resumption of an ‘Up trend’
Towards 5900/5959 is not in sight.
-If Nifty starts correcting from 5500/5558 it will have strong support
@ 5440/5380(18108/17900) levels.
-If Nifty slides below 5310(17728) on closing basis then it will turn in to
Fresh bear move leading to test 5177 and then 5050
There is some dependency on US markets also, so one has to
Take in to consideration movements of DOW and S&P
On Friday
Dow: -115 (11934)
S&P: -15(1268)
After three straight days of declines, the S&P 500 fell 0.24% for the
week and finished at 1,268.45 -- its seventh decline in the last eight weeks.
The Dow industrials lost 0.58% for the week, closing on Friday at 11,934.58
Dow and S&P have been testing lower levels since last few trading sessions.
It is S&P which is more important that Dow and
The 200-day moving average for S&P now stands at 1,263.
less than 0.4 percent below the S&P 500's close on Friday.
This is significant because
Every time you test a resistance or support level, you make it weaker,
it’s almost like a piece of metal. Every time you hit it, it grows more
fragile and that's why people are really worried the third or fourth time.
So will suggest keeping watch on US
Coming week
So technically markets are trying to move beyond resistances to
Reach previous high but fundamentals are not ‘Ripe Enough’
To make it. I will suggest traders and investors to be cautious at
Every higher level, try to co relate all up moves with
‘Fundamental change and Technical levels’ so as not to get
Trapped.
Levels to watch
-Short Term Trend Change @ and above 5517
-Resistance @ 5559/5630/5659
-Support @ 5440/5380/5310
S&P Watch the level of 1262(200DMA)
Market strategy for the week:
-Go long above 5480 with a stop loss at 5420/5380
-Do not short at this level
-Cover all shorts at and above 5517
-Fresh shorts can be created at and above 5558
-Wait for long term investments
-Try to square all the positions around Expiry on Thursday
Stock Specific
Bnaking: SBI,Axis bank,ICICI Bank
Canara Babk, Yes Bank, Indus Ind Bank
Oil and Gas : ONGC, RIL, GAIL,CAIRN,HPCL
Capitao Goods:l&t, Punj Lloyed, Syzlon
IT: Infosuys, HCL Tech, TCS, Satyam
ADAG: R.Com, Rel.Infra
Telecom: Idea
Pharma:Ranbaxy, Cipla,
Others
V-Guard Patel Engg.
Ramkey Infra GMDC
Blue Star Adani Enterprises
Sharp Ind
Celestial Lab Jyothi lab
Arvind Ador Fontech
Talwalkar Compuage Info
Loveble Lingeri Tecpro systems
All the positions should have strict stop loss at Nifty Levels
And positions should not be carried forward beyond Wednesday
As Thursday is Expiry day.
Read Market for Monday as a separate article
Thanks
Dr. Vasant Bele
All the views are personal, invest with caution and
After consulting experts
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