What Next ?

Dear Investors

Tuesday was a day of sluggish trade, market trades in a small range

Of 40 Nifty points between 5480 and 5520,It was higher inflation

Number which took Nifty to low at 5484. Financials, capitol goods

Power,FMCG,TELECOM,ADAG cos. supported market to close in

Green. TCS,ICICI Bank L & T ,BHEL,ITC were few f the gainers

While RIL,Tata Motors HDFC,Hindalco were the looser amongst

Large caps.Sensex was up by 43 point and Nifty by 18 points to close

At a psychologically important level of 5500

Data for the day:

Indices

Open: 5485(18276)

High: 5520(18380)

Low: 5484(18261)

Close: 5500(18309)

Advance: Decline: 1625:1204

Turnover: 90,000cr

INFLATION: 9.06% against 8.66%

Gold: 1526$/oz (22300/10gm)

Silver: 35.54$/oz (52300/kg)

Crude: 99.46/brl

$ Index: 74.40

Dow: +123 @ 12076

S&P: + 16@ 1287

Global markets were positive except Hang eng

What Next:

Market participants are waiting for the RBI Policy event to take place

It will, probably, decide ‘Where do we Go’ From here’. Till that time

Market will move in a small range with low volumes and sector

Rotation. Nifty has closed at 5500, depending on Global news and

RBI stand it can move in either direction in coming days. There are

Two possibilities

 Either, it breaks below to test 5400/5300 range

Or moves up to test 5600/5650 range. Till that time one should trade

Within the limits of technical levels.

UPWARD:5518(18371)/5554(18490)/5580(18601)

DOWNWARD:5460(18190)/5420(18060)/5350(17820)

Technical view:

Pivot at: 5501(18316)

Nifty has closed above short term averages like

5 DMA @ 5495(18299) and 5 Day Expo.@ 5499(19309)

Indicating that short term is positive

Immediate resistance is at

5540/18463 which is 40 Day exponential average

And

5580/18600 which is 200 Day exponential average, unless

This is taken out on closing basis markets will not be out

Of this range to test 5601/18700(100 Day Expo.aver.)And

Move upwards to test important level of 5650.

Unless Nifty moves beyond 5758/19184(200 DMA) it will not

Be out of the ‘Corrective Down Trend’

Nifty has a strong support at

5420(18060)/5380(17900)/5328(17786) band of 100 points.

For any possible up move Nifty has to remain above

5328(17786) which was the low on 25th May 2011, if not then

Markets may succumb to the lower support range of 5310/5177

Market strategy:

-As long as the event, RBI policy, is not over

 Traders should avoid to trade or

-Take small positions on either side

-Keep strict stop loss and book immediate profits

-Continue existing long positions with a stop at 5420 and

 Target at 5580

-Fresh longs can be created up to 5580 with a stop loss at 5440

 And target of 5617

-Avoid shorts at 5500

-Go short above 5530/5554 with a stop loss at 5580 and a target

 Of 5420

-Long-term investors should wait for ‘Investment’ buys till market

 Moves above 5650 or dips below 5400

Stock specific

SBI

ICICI BANK

AXIS BANK

ITC

HUL

Ranbaxy

Biocon

R.Com@94

Hcl Tech @508

HDIL@174

Yes Bank@298

Loveble Lingeri @every fall

Pacific Ind.@167

Celestial Lab@36

Sumeet Ind@36

Sabero organic@125

NIIT Tech@188

V Guard @224

Sharp Ind @66

BOSCH@7010

IDEA@73

Talwalkar @256

Ador fontech@130

Keep proper stop loss in relation to Nifty levels indicated

COMMENTS

As markets are nearing RBI policy, it is loosing momentum

Gathered in last week’s trade, volumes are getting low with

Low turnover. Market has taken support at 5436 and

moved back to 5500, now is the real question what will

come first, 5600 OR 5300?

All depends, temporarily’ on RBI policy, Governor’s remark

On Inflation, Growth and further tightening.

 Temporarily, because

There is no ‘Ground level’ change in fundamentals of Indian

Conditions like

Inflation, which is on rise

Infrastructure spending, still no policy changes

Policy matters like OIL&GAS, Fertilizer rates, Sbcidy,Retail FDIetc

Political weakness

FII Flows, they are net sellers

Retail participation, they are still on sidelines

And

June 22nd Federal government meeting and views on

QE2 termination and possibility of QE3

All in all Indian Economy is still not in a position to change

The Gear, and so also markets

Even though experts and analysts are very much hope full

Of markets moving towards 5600/5700, the main question will

Be, will it sustain higher levels?, the answer is ‘NOT POSSIBLE’

Then the next question is will it succumb to lower levels of

Sub 5300/5200, the possibility is very high because except

Monsoon there are no ‘Positive Triggers’ insight

The hope is

US markets getting in to a ‘Down Turn’ (after QE2 termination)

And FII changing their direction to EMs(Emerging Markets)

And India.

These are IFsand BUTs, till all this happens we will be moving

In to a Time correction with a ‘Grinding’ range

IMPRESSION

SEARCHING (for direction)

Thanks

Dr. Vasant Bele

All the views are personal, invest with caution and after

Consulting experts