Nifty Watch:- On Monday, the first day of the week, the Nifty opened at 5400. Right from the start, the Nifty showed some efforts for a base building process. The Index moved in a narrow range, probably getting ready for a big move which ultimately did not come about today. In the process, the Index made an NR7 today – the narrowest range in seven days. We can expect a breakout / breakdown tomorrow. The Nifty closed at 5406 with a high at 5444 and a low at 5378. The good news is that the Nifty finds its support at 5380. We have to wait and watch to find out if the support holds..
Trend:- Today’s market shows us an intermediate downtrend. Market is trading below its 200 days and 50 days moving average. TA Insync(55-5) is now oversold. It is possible for this oversold condition to persist with the Index making new lows. But, sooner or later, we can expect a relief rally / consolidation.
Level:- Looking for support first at 5380 and then at 5130. The resistance comes at 5460, then 5500. Summary:- Nifty finds a strong support at 5380 in a bearish market. The trading range of the nifty is 5380 to 5500. If it breaks below 5380 then the decline will continue and a strong breakout at 5500 may see a big rally also.
Monday, February 7, 2011
Market Outlook for 08 02 2011
Market did not do much as indices stayed almost unchanged in the end. But there was volatility during the session. Nifty struggled to sustain above 5400 and the GDP numbers also didn’t help much. Nifty did find some rebound after the GDP announcement but late selling in key heavyweights again pushed it back to around 5400. It was a mixed session as some stocks did find some value picking at lower levels. Heavyweights like Hero Honda, ITC, NTPC, RIL and OMCs were amongst those attracting buyers. But, on the other hand there was selling in banking counters, infra counters, ABB, Jet Airways, Lupin, Cipla, Ranbaxy, Wipro, HDFC, TCS and L&T. Uncertainty about the governance still seems to be the topmost issue and the meeting scheduled for tomorrow to discuss parliament imbroglio might play a crucial role in deciding the short term direction of the market. Anything that favors a smooth functioning of parliament could trigger a sharp rebound in the markets as we are already trading in an oversold zone. But anything that prolongs the uncertainty could be a big negative in the short term. Technically, we are in an oversold market and there is crucial support at 5350. Immediate resistance is likely around 5450-70 and then a crucial one is placed at 5550-60.
Sunday, February 6, 2011
Stock to trade on 07 02 2011
- REC Ltd :- NR7 bar pattern in RECL. Buy above 269, Sell below 260.
- BEML :- TA Turtle downside breakout in BEML 30 mins charts. Sell with stop loss above 823.
NIFTY DECLINE CONTINUES, GIVES UP 8 MONTHS OF GAINS
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.
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.
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.
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