The Nifty closed at 5380, almost at a significant support level, lower for the week, as well as lower for the day. Friday was marked with a one sided move, when the Index opened at 5537 (near to previous day's close), made a high at 5565 then it started a decline for the rest of the day. The Index saw a decline of 209 points from its high to the low of the day, closing with a decline of 157 points to it's today open. On the daily chart, TA Insync(55-5) continues its decline, now coming close to the minus 45 level which is an oversold area. But, in weak markets, the indtcaor can simply keep on getting more oversold. Thus, we should expect a relief rally, but we cannot say when this will come about. It is possible that there may be more declines in between now and a rally.
Earlier, we had identified two significant support levels for the Nifty - 5380 and 5130. The Index has reached 5380. We now have to be patient and watch if the market will find support at current levels or continue down towards 5130.
Level:- Looking for support first at 5380 and then at 5130. Resistance comes at 5500.
Summary:- The Market is in an intermediate downtrend. So far, there are no signs of any change of trend.
Traders should take most trades on the short side.
Sunday, February 6, 2011
Market Outlook for 07 02 2011
Friday session put paid to all expectations of bottoming out as benchmark indices nosedived. It looked like for first four days of last week as if 5400-5450 would prove to be a formidable support zone but one-sided move on Friday was enough to push even the hardcore bulls in a corner. Nifty lost over 130 points to slip below 5400 while Sensex shut shop just around 18k. This was the worst close in around 6 months. Carnage was seen across sectors as sentiments turned hugely negative towards the later half. On weekly basis, it was the relatively safe sector, FMCG was the worst impacted. BSE FMCG index lost over 6% during the week as investors sold heavyweights like ITC and Levers. Realty, Auto and the IT were the other ones that suffered the most, losing around 3% each. BSE metal index managed to eke out marginal gains on a relatively better show by Hindalco, NALCO and Tata Steel. Again, the global backdrop was positive as US indices moved to new post-Lehman highs. Local issues continued to bother investors.
Our expectations that Nifty might have seen a credible low around 5400 and we could see a sustainable rebound came to nought on Friday. The sheer momentum of the fall was unnerving as Nifty collapsed almost 185 points from its intraday high of 5556. Fall was aggravated due to weekend unwinding as traders rushed to square off any long positions. The fact that the worst impacted stocks were the ones that had held on relatively well suggest that investors and traders are in a panic mode now. The momentum is usually at its highest closer to the peaks as well as bottoms. Again, despite the sharp fall on Friday we do believe that Nifty might be closer to bottoming out though the momentum suggests otherwise. We have already seen correction of around 15% from November top and usually the normal corrective moves are of 12 to 17%
magnitude. Then as already suggested on earlier occasions also Nifty provided stiff resistance between 5350 and 5500 when we were trying to move higher. As an INVESTOR with at least 6 months view it would be advisable to invest a part of investible funds in companies that have shown good quarterly numbers. As a trader the momentum is still down and it would be better to wait for some bottoming out patterns to emerge before attempting long positions. Nifty now has immediate resistance around 5440-5450 while immediate trend would change for better only on a sustained breakout beyond 5550.
Our expectations that Nifty might have seen a credible low around 5400 and we could see a sustainable rebound came to nought on Friday. The sheer momentum of the fall was unnerving as Nifty collapsed almost 185 points from its intraday high of 5556. Fall was aggravated due to weekend unwinding as traders rushed to square off any long positions. The fact that the worst impacted stocks were the ones that had held on relatively well suggest that investors and traders are in a panic mode now. The momentum is usually at its highest closer to the peaks as well as bottoms. Again, despite the sharp fall on Friday we do believe that Nifty might be closer to bottoming out though the momentum suggests otherwise. We have already seen correction of around 15% from November top and usually the normal corrective moves are of 12 to 17%
magnitude. Then as already suggested on earlier occasions also Nifty provided stiff resistance between 5350 and 5500 when we were trying to move higher. As an INVESTOR with at least 6 months view it would be advisable to invest a part of investible funds in companies that have shown good quarterly numbers. As a trader the momentum is still down and it would be better to wait for some bottoming out patterns to emerge before attempting long positions. Nifty now has immediate resistance around 5440-5450 while immediate trend would change for better only on a sustained breakout beyond 5550.
Thursday, February 3, 2011
Stock to trade 04 02 2011
- Titan :- TA Insync overbought in Titan Industry. Sell with stop loss above 3640.
- Dish TV :- NR7 pattern in Dish TV. Buy above 61, Sell below 59.
Nifty Watch :- BULLS HAVE THE DAY, MARKETS IN TRADING RANGE
While the bulls were in complete control today, the Nifty remains in a trading range between 5420 and
5550. This is a narrow 130 point range which has been established over a period of four days. It is quite narrow to sustain for any length of time. Then, we can expect a breakout/breakdown from the range, any day. A close above 5550 will tell us there is more upside. A move below 5420 will give suggestions of
significantly more downside.Support comes in around 5480. A dip to 5480 may be considered as a buy on dip. Of course, keep a stop. A breakout above 5550 should be used to initial / add new long positions. Of course, below 5420 all buying should be suspended.
The bank Nifty remains in a consolidation, just like its big boss - the Nifty. The Bank chart has an Insync indicator which is much above the minus 45 oversold area. This could mean any one of the two options: (a) Banks are outperforming with the indicator remaining high up OR (b) The Insync indicator has lot of room to fall as it goes towards the minus 45 oversold level. It is not easy to determine which of the two options may work out. To keep trading simple, a breakout from the trading range is a buy.
5550. This is a narrow 130 point range which has been established over a period of four days. It is quite narrow to sustain for any length of time. Then, we can expect a breakout/breakdown from the range, any day. A close above 5550 will tell us there is more upside. A move below 5420 will give suggestions of
significantly more downside.Support comes in around 5480. A dip to 5480 may be considered as a buy on dip. Of course, keep a stop. A breakout above 5550 should be used to initial / add new long positions. Of course, below 5420 all buying should be suspended.
The bank Nifty remains in a consolidation, just like its big boss - the Nifty. The Bank chart has an Insync indicator which is much above the minus 45 oversold area. This could mean any one of the two options: (a) Banks are outperforming with the indicator remaining high up OR (b) The Insync indicator has lot of room to fall as it goes towards the minus 45 oversold level. It is not easy to determine which of the two options may work out. To keep trading simple, a breakout from the trading range is a buy.
Market Outlook FOR 04 02 2011
Finally, we witnessed a rally that was able to sustain for a whole session. Nifty opened on a slightly positive note and kept on building momentum as the day progressed. It was a mix of buying in some stronger counters like Hindalco and short covering in highly oversold counters like DLF and others. Heavyweights like SBI, L&T, RIL and Tata Motors witnessed some interest at lower levels and for a change this interest persisted for the whole day. Bharti was the biggest gainer amongst the index heavyweights as it gained over 5%. Some of the other big gainers were Polaris, DLF, HDIL, JP Associates, Syndicate bank, Renuka, REC, Bata, IVRCL Infra, Hindalco, Sintex, HCC, Adani and Exide. But , there were a few that remained on the selling list. The list includes Sobha, Cummins, Voltas, OFSS, Ashok Leyland, IOC and HCL Tech. Nifty managed to close above 5500.
Nifty faces immediate resistance at around 5540-50 but as stated earlier also we believe that the rebound has some more legs to it and Nifty could inch up towards 5650-5680. The efforts to break below 5400 have been unsuccessful despite strong negative sentiments. It seems that combination of short covering and value buying could sustain Nifty and should it take it higher. Even the weaker stocks/ sectors like realty and infra could also move higher on short covering. The stronger stocks are Hindalco, Bharti, Sterlite, TCS and Tata Steel. Banks have seen consolidation for past 7-10 sessions and could now move higher. The better looking charts in the short term are SBI, ICICI, Syndicate bank, Indusind Bank and Union bank. Bank Nifty might move above 11000 in coming sessions. Hindalco has given a break out above 240 and one can accumulate it for next technical target of around Rs 265.
Nifty has immediate support around 5465-70 while above 5550 it could move to around 5620-30.
Nifty faces immediate resistance at around 5540-50 but as stated earlier also we believe that the rebound has some more legs to it and Nifty could inch up towards 5650-5680. The efforts to break below 5400 have been unsuccessful despite strong negative sentiments. It seems that combination of short covering and value buying could sustain Nifty and should it take it higher. Even the weaker stocks/ sectors like realty and infra could also move higher on short covering. The stronger stocks are Hindalco, Bharti, Sterlite, TCS and Tata Steel. Banks have seen consolidation for past 7-10 sessions and could now move higher. The better looking charts in the short term are SBI, ICICI, Syndicate bank, Indusind Bank and Union bank. Bank Nifty might move above 11000 in coming sessions. Hindalco has given a break out above 240 and one can accumulate it for next technical target of around Rs 265.
Nifty has immediate support around 5465-70 while above 5550 it could move to around 5620-30.
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