SEARCHING THE BOTTOM........

Dear Investors

As expected  (From Global data, Events in Egypt, Domestic macro and micro situation) Nifty opened with a ‘Yawning Gap’ at lower levels  5452 and went on to test 5416 low for the day before closing at above important support level of 5500(5505). Testing levels below 5480 was important bearish event , though Nifty at the end recovered above 5500 due to short covering, the days move has damaged the ‘Sentiment’ creating a ‘Question’ in the minds of traders and investors…’WHERE IS THE BOTTOM?’

It looks like, every bounce is utilized by Bulls to book ‘profits’ or to create ‘Shorts’ by Bears, this is creating great intra day Volatility’.

What Next?

Is the real question in the minds of every one related to stock markets? To find an answer to this one has to look into events in and around stock market

A)      Nifty (market) is trading below all the short and long term moving averages (5,20,50&200)

B)      Nifty is forming ‘Lower Tops’ and Lower Bottoms’ with volume high while going down and thin when going up, indicating selling at all bounces.

C)      Volatility has been extreme , and has crossed beyond important level of 24VXI

D)      Macro and Micro situation at ground levels are becoming weak, as the ‘Earning Season is coming to an end, and the picture is not very satisfactory, this is creating doubts regarding ‘Growth’

E)      Global flows to Emerging markets are getting dried up; there is no participation of Domestic Institutions as well as Retail Investors.

F)      Threat of ‘Egypt Factor’ is creating scares, regarding ‘Oil’ and ‘Exports’ from Asian countries( Just an Information: Egypt controls the ‘Suez canal’ through which Oil

Transportation takes place, and export from Asian countries to Europe is routed, so political situation there is important)

Summing up of all these Negatives, brings me to the conclusion, that ‘The ‘Wishful’ thinking, by Traders, Investors and Analysts, of ‘Nearing the bottom’

May not be true. So wait for markets to get stabilized at certain ‘Bottom Range’, till that time ‘Search for Bottom’ will be on

Till that time the advice is:

Use all the bounces up to 5690/5700 to sell and or ‘Go short’ with a stop loss at

5770

Use all the dips below 5620 to create short term ‘Trading Longs’ with a stop loss at 5449

Use any fall below 5420, to the levels of 5372, to create investment buys with a stop at 5328

Watch for the levels: Upside:       5585/5600/5690

                                   Downside:  5515/5480/5372

Technical View

PIVOT FOR NIFTY: 5482

R1 (First resistance) is @ 5548

R2 (Second resistance) is @ 5592

R3 (Third resistance) is @ 5658

Significance

Use level R3 (5658) as a stop loss for short positions

And/or to create fresh long positions with a stop loss at5548

S1 (First support) is @ 5438

S2 (Second support) is @ 5372

S3 (Third support) is @5328

Significance

Break below S1 (5438) on closing basis will be suggestive of short term down trend.

R2 (5372) and R3(5328) can be used by long term investors to Buy as Long-term Investment’

Break below 5328 on closing basis with good volume will be trend decider, ‘Bearish’ one

DMAs(Day Moving Averages)

          5DMA@5611
          20DMA@5783
          50DMA@5879
          200DMA@5623

Significance

Nifty is below all the ‘Moving Averages’ Indicating a ‘Bearish Trend’ in near term

. To change the course of markets , Nifty has to close above 200DMA(5623)

In such situation one can go long till R2(5879).

COMMENTS

With earning of the cos. not very much satisfactory, Inflattion not getting controlled and money flowing back to ‘Developed’ countries’ with sporadic events like ‘Egypt’ Indicate that, Indian stock markets  will be in the ‘Grips’ of ‘Bears’ till it consolidates in some lower range for few weeks / months. Near term out look is Negative and all bounces are to be used to book profits or go short,  investors should buy for long term, only above 5960 or below 5380 levels for Nifty

Stock specific

Short term traders can use ‘Dips’ and ‘bounces’ to trade with stop losses. One can trade in momentum stocks and beaten down sectors like......

BANKING

ICICI

SBI

Canara

Indusind

Yes

UCO

AUTO

M&M

Maruti

Telco

FMCG

HULITC

METALS

Tata Steel

Sterlite

Hindalco

AND

DLF

HDIL

REC

For short term trades on both the sides, use  STOP LOSS

Investors should wait for desired levels to be achieved for long term purchases in......

Textile     (Arvind, Alok,Bombay Rayan Fashion,Suryalata Spinning)

Infrastructure    (GMR, LANCO, ARSS)

Others    (Graphite, EMCO,Artson Eng.,Vikas WSP,Sujana Towers ,NIIT Tech ..)

WAIT FOR RIGHT TIME and RIGHT OPERTUNITY

Thanks

Dr. Vasant Bele

All the views are personal, invest after consulting experts.

'SIGN OF BAD OMEN'...............

Dear Investors

 On Friday Nifty closed at 5512(S2 was at 5509for the day) after testing a low of 5459

.( Nearer to S3 @5424 for the day, read previous blog)The days high,5614 was below the 200DMA and close of the day too was far below 200DMA indicating that, At last ‘BEAR SHADOWS’ have started becoming ‘LARGER’ on Indian stock markets.

Continued downward momentum with closing below significant moving averages (5DMA, 20DMA, 50DMA&200DMA) is definitely a ‘Sign of Ill Omen’ for Bulls’

5DMA:5649

20DMA:5814    

50DMA; 5889

200DMA:5622

(For all non technical friends: Moving averages are the indicator of price movement for that period, indicating trend of the price movement in a specified period.. They do not predict price direction, but rather define the current direction. A simple moving average is formed by computing the average price of a stock over a specific number of days, weeks…. Most moving averages are based on closing prices. A 5-day simple moving average is the five day sum of closing prices divided by five. These are indicative of the trend in immediate future, short term, medium term and long term period. DMA form a good ‘support level’ or’ Resistance level’s indicator for market movements, so are important)

This, at least for short to medium term’ looks like ‘Bears are taking hold of the markets’

One more significant sign is, Volume movement during the day, It has been observed that whenever Nifty used to Bounce from the lows the ‘Volumes’ were on lower side while subsequent fall in Nifty was with ‘Heavy Volumes’ Indicating predominance of either sellers or profit takers at every higher level.

What Next ?

The Answers are:

  

A)          Wait and watch

One is advised to wait to see if Nifty breaks the 5500 levels decisively on closing basis or moves in one more ‘Down Range’ of say 5480- 5600 and then with an event like ‘Budget’ in near term makes a ‘Bounce’ to the levels of say 5620 5700/5777-5800. Chances of Nifty forming higher bottom in near future are to be observed carefully ((Present rally had started from 5330/5362, April 5^th 2010, to reach at 6312 /6330 on Nov.1^st 2010)

 As that may give a bleak chance of reversal, for Nifty has to form a higher bottom (Than 5330) at and around 5400/5420

Level and maintain up ward journey with breaking of   immediate higher tops

B)          Sell On Rise

As long as market, Nifty, does not move above     200DMA on closing basis and remains above that with good volumes  ,investors are advised to ‘Book Profit’ AT ALL HOGHER LEVELS up to 5880  Bears can create short positions at higher levels only to be covered at and above 5880. The close above 5880/5906 will be the signal for ‘Bulls’ to enter the ring otherwise it will be ‘Bear Strength’ market

 C) Invest for Long term

 All long term investors are advised to do ‘Creeping’ buys at all the levels below      5440/5330 till 5330 is broken on closing basis. Breech of 5330/5280 will be signaling ‘Medium term ‘’Trend reversal’ to Bear Market

IMPRESSION:

For last few trading sessions Nifty is forming a series of ‘lower tops and lower bottoms’, and I think a good example is what happened to that 5690-5770 band because we rebounded from that range number of times in the last two months but in next trading sessions we kept on lowering the trading ranges indicating that Nifty is getting weaker and weaker, and eventually it broke down the 200 DMA a couple of days back. So yes I think unless the market really moves down to major supports which I see around 5400-5440 I don’t see too much of a change in market sentiment

Technical View:

On Friday Nifty again closed below 200 days moving average (DMA). The Market sentiment is ‘Negative’ and it is expected to trade negative bias. A bounce back from the day's low is cannot be ruled. For Monday market is likely to trade in a range of 5,400 to 5,580. For Nifty the next major support may find at 5420 and 5380. Resistance could find at 5610-5690 levels.

Technically nifty is in oversold position but that does not mean that the bounce back is going to happen even if it happens in early trading hours one should wait for creating any positions.
Let things get settled

NIFTY PIVOT: 5528

R1 (First resistance level) is @ 5597

R2 (Second resistance level) is @5683

R3 (Third resistance level)is @ 5752

Significance

Because of oversold conditions Nifty may ‘Bounce’ to R1 (5597) levels indicating ‘Short covering by ‘Weak Bears’ and /or ‘Bottom Fishing’ by ‘Adventurous Trades’ Any close above R3(5752)should be looked up on seriously.

S1 (First support level) is @ 5442

S2 (Second support level) is @5373

S3 (Third support level) is @ 5287

Significance

S2 (5373) is to be taken as most important support for nifty to remain in Medium term’ bullish trend. Any close below S3 (5287) SHOULD BE TAKEN SERIOUSLY as trend change to’ DOWN’

Ward direction.

VXI (Volatility Index)

PIVOT IS@ 22.70

Previous close is @ 22.09

Last trading Days Top was @ 23.79

R1 23.66

R2 24.75

R3 25.71

S1 21.61

S2 20.65

S3 19.56

Significance

On the volatility front the Indian Volatility Index (VIX) has ended with gains of 2.22% at 22.58 indicating volatility has increased in the markets.

Any close of VXI above 24 will be signaling a great volatility in markets.

Refreshing the Values:

Nifty values                                                            

                                                                                                               

Low        2584 on OCT 20 2008                                                              

High      6312 ON NOV 1 2010                                                               

---------------------------------------------------------------------------------------------------------------

SHORT TERM

LOW 5362 (July 15,2010)        HIGH 6312(Nov.01 2010)                            

        

5DMA@5649

20DMA@5814

50DMA@5889

200DMA@5622

Significance

Market has closed below all the DMAs indicating short term trend ‘Negative’

Bounce back to the levels of 5 DMA (5649) and even 20 DMA (5814) can be used to book profits

Persistent close below 200DMA (5622) is to be taken as ‘Negative’ for markets in coming days to weeks

CONCLUSION

Wait,  Wait and Wait if not possible

 

‘Meditate’ on side lines or Pray ‘God’

STOCK SPECIFICS

Day traders can take long positions for ‘Quick’ profits at lower levels, 5420 and book out at ‘Bounce’

ICICI BANK

SBI

RIL

TISCO

STERLITE

HINDALCO

Mphasis

GMR Infra

Punj looyed

Suzlon

DLF

HCC

REC

POWERGRID

NTPC

ARVIND

ALOK

TALWALKARS

GLOBUS SPIRIT

CELESTIAL LAB

ANDHRA BANK

CENTRAL BANK

Keep strict stop loss for large cap stocks, and book profits.

 Impression

 

BEARS GETTING STRONG a 'Sign Of Bad Omen'

Thanks

Vasant Bele

All the views expressed are personal, invest after consulting your expert.

'CLIFF HANG' (a suspenseful situation)

Dear Investors

On 27^th Nifty opened on a flat note without much gains even though it was an expiry. As trading advanced, Nifty could not maintain the morning levels and drifted down to the important support level at 5600, there was heavy selling and rollovers were not much.After trading at lower levels for entire day, Nifty closed just above crucial support of 5600 (5604) which was S2 (5601) for the day, indicating a ‘CLIF HANG’ situation for the markets.

What Next?

Nothing but ‘CLIFFHANG’ situation at the crucial level of 5600, Nifty has broken 200DMA after 4 months , which is not a good sign for bulls. Any close below 5580 will definitely be a bearish sign and Bulls should start preparing to withdraw the remaining positions.  Markets are in an undecided territory, and can move in any direction at any given time … But the  ‘Ground Reality’, at Domestic Macro and Micro levels, F&O carry forwards, indicate a ‘DOWN TREND’ to the level

Of, 5580/5515/5424 levels, in coming days. . On upper levels Nifty may bounce to the levels of 5700/5777 with some bottom fishing and short covering , but beyond that the SITUATION  IS NOT CONDUCIVE FOR ‘BULLS’

Technical View

Nifty Pivot:  5641

R1 (First Resistance level) is @ 5688

R2 (Second resistance level) is @5773

R3 (Third resistance level) is @ 5820

Significance

Bulls should watch for Nifty levels of 5640/5688(R1) any move towards it should be treated as a ‘Dead Cat Bounce’ and not as a reversal of short term trend. One can create shorts at these levels to be covered if Nifty close above 5770/5773 levels. Trend still will be down in short term, till Nifty gets pass 5820/5880

S1 (First support level) is @ 5556

S2 (Second support level) is @ 5509

S3 (Third support level) is 2 5424

Significance

Persistent testing of anything below 5580 will be the first indication of the ‘Bears’ getting on top, and short term trending getting changed to ‘Down’ Next levels which ‘Bulls’ should watch are 5556/5509 any thing below that on closing basis  will test 5420/5380/5330 ON DOWNSIDE.

DMAs(Moving Averages)

5DMA@5689
20DMA@5844
50DMA@5899
200DMA@5620

Significance

For bulls to be encouraged Nifty has to close above 5844 otherwise the support for ‘Bull Trend’ is at 5620 (200DMA) below which there are hardly any hopes to expect up ward move

CONCLUSION

Breaking of 200DMA and 5600 support on which market was in ‘Suspended Situation’

Has given a clear indication that we are in a ‘SHORT TERM’ ‘Down trend’ Traders are advised not to take any positions for short term , while Investors should start doing ‘Homework ‘ for their long term strategies to be executed in next ‘Panic’ Bears can go short at any bounces to be covered at 5880 .

 WAIT DO NOT JUMP, WATERS ARE SHALLOW   

Stock Specific

No calls today

Thanks

Dr. Vasant Bele

All are my personal views, invest after consulting the experts  

TOUGH TASK AHEAD

Dear Investors

The most awaited and discussed RBI Policy was out with a ‘Rude shocks’, in spells, to Bears and Bulls, causing ‘Collateral Damage’

Nifty after a stable opening remained subdued till ‘Rate Hike’ effect pushed ‘Bears’ for cover to reach Nifty at 5800.

But

The Haunting remarks regarding, Inflation, Liquidity, GDP and Industrial growth took away the effect of ‘Expected’ 25bps rate hike, causing hard landing for BULLS. ‘The remarks regarding ‘Economic’ situation pushed BULLS to the corner causing panic fall to levels of 5680.

 Nifty never recovered from ‘Inflammatory Shock’, additional fuel was added by HUL results .Nifty closed the day near low of the day, 5687

What Next

Nifty closed below 5700 yet again on the 25th after an extremely volatile session that saw over 100 points of trade both ways. The big question is, what next.

The answer is ‘VOLATILITY’

Being an expiry day, possibility of a ‘Battle Field’ effect for day traders and speculators

Is the likely outcome

Sensible traders are advised to ‘Keep Away’ from markets, book profits, and cover shorts

And wait on side lines watching the game.

Bargain hunting is advisable if the prices collapse to the desired levels for bulls below the support level @ 5600. And carry till Nifty remains above 5523. While BEARS’ can create shorts if the Nifty zooms to the resistance level of 5800/5820 to be covered at 5880 and above

Long term investors should not indulge in any bottom fishing till definite trend emerges. Expiry day is not the day for ‘INVESTMENT BUY’

So keep your eyes on screen and hands on pocket

Expected Range

5770/5800/5843 on upper end

5603/5580/5523 on lower end

Watch for moments in the ‘Beaten’ down sectors like Banking, Auto but not REALITY (as there is still some pain left)

Technical View

As the most of Fundamental and Financial’ news flow is coming to an end , markets are likely to move ‘Technically’ till ‘Budget’

PIVOT FOR NIFTY: 5722

R1 (First resistance level) is @ 5765

R2 (Second resistance level) is @ 5843

R3 (Third resistance level) is @ 5886

Significance

High on 25th was at 5801, which was nearer to R2 (5791) for the day indicating ‘BULLS’ were able to push Nifty near 5800. But R2(5843) for today seems to be an uphill task for traders.R3 is most important resistance  level where there might be lot of supply and addition of fresh ‘Shorts’. Long traders should keep R3 as profit booking level.

S1 (First support level) is @ 5644

S2 (Second support level) is @ 5601

S3 (Third support level) is @5523

Significance

Low (5680) on 25^th was just below the S1 (5708) for the day indicating a strong support at 5700

Market should hold S2 (5601) on closing basis, which is nearer to 200DMA, if taken out

Then S3 (will be the turning point for the market trend.

VXI (Volatility Index)

Volatility will be the ‘Key Trend’ for the day.

VXI closed at 20.78 on 25^th after touching low of 18.93 after touching high level of 21.10

PIVOT FOR TODAY IS @ 20.71

DMAs (Day moving average)

5DMA@5706
20DMA@5866

50DMA@5909
200DMA@5619

Significance

Nifty has to move above 5DMA (5706)  to maintain upward trend alive

While any move above 50DMA (5909) will be strong positive for bulls

200DMA (5619) is ‘The’ support for the ‘Bulls’ to remain in market.

CONCLUSION

Book profits at all higher levels. Do not keep longs open if Nifty breaks 200 DMA

(5619)

If lower levels at 5620 are sustained do create longs with a stop at 5580/5543.

STOCK SPECIFIC

No stock specific calls for the day.

Thanks

Dr. Vasant Bele

These are personal views, take your investment decisions after consulting expert.