SDNIFTY

3rd Quarter Monetary Policy and its Internals.

noreply@blogger.com (sanket) — Thu, 26 Jan 2012 21:15:00 +0000

3rd Quarter Monetary Policy and its Internals.
•The GDP growth moderated from 7.7% in Q1 to 6.9% in Q2 mainly due to deceleration in industrial growth from 6.2% to 2.8%. However what is of importance is why this deceleration has happened. There was a contraction on fixed capital formation where in real fixed capital formation as a percentage of GDP fell from 31.2% to 30.5%.Fixed capital formation represents the acquisition of fixed assets by private businesses, government enterprises and households and hence in totality represents the addition of capacity in and economy. The contraction in fixed capital formation along with a slowdown in non-farm credit from 21.3% to 15.7% represents reluctance on part of companies to take up new projects and add capacity. This assumption becomes more plausible when one considers that the slowdown ion non-farm credit has been sharp in real estate, infrastructure, cement and engineering goods. This is particularly worrisome when one considers the fact that at least on the infrastructure front the India story is supposed to be insulated from the global economic slowdown. India is in dire need of infrastructure projects and needs more than a trillion dollars for investments in infra. The slowdown in infrastructure is hence not due to slowdown in the global economy but due to lack of clarity on the policy front. Eg the government being a coalition one seems to be taking one step forward and two backwards, point being the flip flop in FDI in retail. So as far as this aspect of the economy goes it can be easily solved by the finance minister by showing some courage on the policy front

. • Inflation Internals
The WPI inflation which averaged 9.7% during April October 2011 period moderated to 9.1%, however this moderation was more due to the fall in the food inflation which entered negative territory. This decline was more due to a sharp decline in the prices of vegetables and fruits, while other food articles especially protein articles showed only a marginal decline from 8% to 7.1%. The weightage of fruits and vegetables in WPI is 3.84 as compared to 2.41 for eggs fish and meat, hence as soon as winter season gets over and fruits and vegetables prices start rising we can expect a jump in the WPI as well. Even the non-food manufactured item inflation remained high at 7.9%, the fuel inflation remained high at 14.9% and considering that much of fuel consumption in India is subsidized there is a pent up inflationary pressure in these fuel items which may burst out as soon as government wakes up to the deteriorating fiscal situation and claws back the subsidies.

Considering all the factors related to the WPI we should expect the RBI to adopt a wait and watch policy as far as repo rate is concerned and if inflation continues to remain high in the medium term the much expected softening of repo rate in March may remain an elusive dream for India Inc.

• RBI cut the CRR by 50 bps to release 32k Cr in the markets.
However this seems to be more of an act aimed at loosening the tight liquidity conditions faced by the banks than one aimed at stimulating the economy. The banks have been facing a very tight liquidity condition which is seen from the fact that average borrowing from LAF facility increased from 420 Bn Rupees during April September period to 920Bn Rupees during November and further to 1170Bn rupees in December i.e. an increase of 178% which is quite worrisome.

• Pressure on Rupee may continue.
The current account deficit widened to 3.7% which is above the 3% comfort level of the finance ministry, also the upcoming demand for dollars by India Inc to repay the maturing FCCBs of around 5.8bn $ in 2012 and flight to safety of global investors towards dollar assets is likely to keep up the pressure on Rupee. Capital flows in to India will continue to be under pressure as European banks which account for 15% of all loans in Asia pacific will cut down on lending to shore up their balance sheets.

Considering all the factors the first half of 2012 is going to be increasingly challenging, however turnaround can be easily achieved on investment fronts if the government comes out with a bold budget and introduces much needed economic reforms. As far as the monetary situation goes the RBI always had this mandate of controlling he inflation and attending to stability in the money markets, after having raised the rates 13 times in last 18 months we cannot expect the RBI to let go of the stranglehold so easily. The governor will most likely wait for the lag effect to kick in and will leave the responsibility of stimulating the economy on the government.

Dr Copper

noreply@blogger.com (sanket) — Sun, 14 Aug 2011 15:41:00 +0000

Dr Copper

Copper is called as Dr Copper as it reflects the overall health of global economy. The varied industrial uses of copper means that at any point of time the movement in copper prices can act as an indicator of future movements in the equity markets. This phenomenon can be seen in the accompanying chart where most of the times rise and fall in copper prices precede similar movement in Dow jones.

Now looking at the copper chart for past one year, we find that it had attained the ascending triangle target of 58.50 to 59 which then acted as strong resistance. Since then copper has fallen rapidly followed by a fall of equal magnitude in global equity markets. There is a strong positive divergence on the chart and in last few sessions volumes on down days have been very low when compared to volumes on up days, this indicate that copper may find strong support at recent lows 50.80-50. For copper to rally from now on it has to break strong resistance at 54.50 above which it can target 55.60-56.

Below 50 copper can easily touch 49 and lower levels which will mean that Dow and SnP will break their recent lows. However a rally above 55.50 will mean a relief rally is on cards in the global equity markets.

Gold and the US debts deal

noreply@blogger.com (sanket) — Fri, 29 Jul 2011 06:29:00 +0000

Gold and the US debts deal

We know that politicians in US are still bickering over the intricacies of the debt deal which will allow US to raise its debt limit so that it can continue with its debt payment to its army, pensioners and most importantly international players holding US bonds. In an unlikely event where US government is not able to raise the debt ceiling we are likely to see US treasuries lose their prime rating as a risk free investment destination. People across the world will start to look for alternative risk free investment avenues for themselves, and gold will feature prominently in that list.

Gold has historically acted as a hedge against inflation, and now it will act as a safe haven for investments in case US defaults on its debt payments. So it’s important to look at gold chart and ponder over the effect that US debt deal will have on gold.

Any substantial debt deal which promises to cut US deficit significantly and at the same time assures that US congress won’t have to negotiate on another debt ceiling raise in the short term will put pressure on gold and we will most likely see gold fall below its important support level of 1579$.

As it is gold is showing a huge negative divergence on the charts indicating that a US debt deal will be reached in nick of time so it is good to put a trailing stop loss at 1579$ when it comes to long trading positions, however investors who are in gold for long term can continue to hold on to their long positions as globally fiscal situation is still weak and in inflation scenario in India is still not under control.

If a US debt deal is not reached and US defaults we are likely to see a strong spurt in gold as investor will rush in to safe assets and at the same time short positions will be covered up in a hurry. Even a debts deal which is short term in nature and results in credit rating downgrade will result in a further rally in gold.

Right now the most probable scenarios is US congress is able to reach a significant debt deal and we see a softening in gold prices to at least 1579 $.. It is worthwhile to assume that a debt deal will be achieved considering that the US and global economy is at stake.

Why Nifty might just survive 5320.

noreply@blogger.com (sanket) — Sun, 19 Jun 2011 09:54:00 +0000

Why Nifty might just survive 5320.
Nifty continued its fall in the last week and now stands at crucial support zone of 5400-5320. As seen in the chart support at 5400-5300 is provided by a long term trendline which has provided support in sever falls, there is a good chance that nifty might bounce from these levels itself. The OI in 5400 puts is significantly greater than 5400 calls implying put writing at 5400 and hence there is strong chance that nifty will try to go abo

ve 5400. If this trendline is broken in the coming days nifty is most likely to test its previous swing low of 5320 odd levels.
If nifty breaks 5300 then it might quickly test 5200 to 5115 as many stop loses will be triggered and traders will look to exit their long positions quickly.
The news flow in past month has been mixed; while the inflation continued to remain high the advance tax number grew by 15% over the same period last year thus signalling better corporate earnings in the coming quarter. RBI has indicated that it will go slow with its rate hiking programme amid global concerns.
Negative news flow also continued with no consensus in EU over the Greece problem, Headline inflation has increased to 9.1% in May from 8.7% in April; also the pause in policy and fiscal reforms is hurting the investment flow and is responsible for markets staying sluggish.
One of the sectors to watch out in the coming days is the Tea sectors as production in Africa is low due to draught; this has led to a rise in the tea prices with global demand staying strong. So investors can keep an eye on tea companies for outperformance.

Snp the mother of all equity markets stands on the edge.

noreply@blogger.com (sanket) — Thu, 16 Jun 2011 12:05:00 +0000

Snp the mother of all equity markets stands on the edge.
SNP the large cap based index is most probably heading towards an important support area of 1250 after the uncertainty in the global financial markets increased with EU not able to come to a consensus over the Greece problem and the republican party in US coming out with statements that a temporary technical default by US on its interest payment on bonds would be tolerable.
The SNP has shown a failed inverse head and shoulder pattern which failed to take off after breaking past the resistance and has since then fallen down to what many consider a major support area near 1250.1250 represents the 200 day moving average as well as it is a important support area on the Fibonacci retracement levels. There is this small +ve divergence on the MACD which can offer some solace to battered bulls.
Going forward there can be two scenarios which can play themselves out.
The 1st is the most probable and the best case scenario; The SNP finds a much needed support at 1250 and then bounces back to its resistance levels of 1295 and then remains range bound till US Congress comes up with a suitable solution to its Debt limit problem.
There are positive news regarding US companies earning and other macro-economic data
1. Macy’s US second largest retailer has raised its 2011 profit forecast; similarly INTEL has also raised its profit forecast.
2. Since March 2010 private employers have added 2.4 M jobs which are about 25% of the 8.8 M lost in the recession.
3. Oil has fallen to 94.95$ from 100$ and looks set to test lower levels of 92.50$, this means lower cost for corporation all over the world
4. Housing foreclosure fell yesterday, but the housing market still remains weak.
All these positive news along with technical indicator makes the 1st scenario to be the most probable one.
The 2nd scenario is where the SNP breaks 1250 and 1225 and goes on to test lower levels of 1175 which means a further fall of 6%.
This can happen if Greece defaults on its bond payments and sets off a contagion effect in the Europe which results in a rally in Dollar.
The US Congress fails to come up with a suitable solution to its debt limit problem over the next one month.
The housing market in US shows further weakness and still the fed refuses to come up with QE3 programme.

noreply@blogger.com (sanket) — Mon, 08 Nov 2010 17:41:00 +0000

noreply@blogger.com (sanket) — Sun, 31 Oct 2010 13:35:00 +0000

Ruchi Soya

noreply@blogger.com (sanket) — Mon, 06 Sep 2010 05:39:00 +0000

Had mentioned on 19th August , that Ruchi Soya has given a breakout and has good support at 105 with a target of 129 and above. The stock has touched 141 in the past week and now is in a consolidation mode, traders can book half profits at this stage. The stock from here on can enter a consolidation phase and may even correct a little to support levels of 130.

Dollar index

noreply@blogger.com (sanket) — Mon, 23 Aug 2010 06:05:00 +0000

As said in the last post about the dollar index, the index rose till 83.36 but has met resistance there. The 83 to 84 zone is a confluence of resistances containing the 38% retracement, 50 DMA and 100 DMA. The index needs to close above 84 for further momentum, however in the past few days there is a negative divergence developing on the MACD indicators which coupled with strong resistance ahead means that the index can retest its support area of 82 to 81.88. If this support area is breached then the index can retest the lows of 80.

Key levels to be watch are 83.36 to 84 on the up side, and 82 to 81.88 on the down side. Traders also need to watch the support at 80 incase the index breaks below 81.88.

NIFTY WEEKLY

noreply@blogger.com (sanket) — Sat, 21 Aug 2010 10:44:00 +0000

Here is a look at the weekly chart of NIFTY.

NIFTY has been playing beautifully within the Fibonacci levels. It has met resistance and at the same time has found support at some of the important Fibonacci levels during its journey in last three years. If we take a look at the upcoming resistance in terms of Fibonacci levels, we will find that 5580-5600 will be an important resistance. On the downside side 5400 to 5380 can be the first support, and 5170 to 5150 thereafter. It is also important to note that recent rise has not been accompanied by strong volumes. There is a negative divergence on the MACD indicator as well (not shown in the chart).

There is no point shorting the index as it is showing no sign of weakness in terms of price, instead it would be sensible to maintain existing long positions if any with an eye on the support levels mentioned earlier.

Ruchi soya

noreply@blogger.com (sanket) — Thu, 19 Aug 2010 07:15:00 +0000

Ruchi soya

The stock has been playing nicely within the fibbo levels as seen from the chart. If the stock closes above 115.50, it would have scaled a important barrier of 61.8% retracement of the recent fall, and can set it self up for a target of 123 and 129 in the coming days. On the downside good support is at 105 as seen from the chart, if this support breaks then the current rally will be in danger and then it can seek lower levels of 89.

SNP 500

noreply@blogger.com (sanket) — Sun, 15 Aug 2010 19:11:00 +0000

The SNP index has paused at 1125 which is the 50% retracement of the recent fall; it is also the 100 day moving average. The rise, till now has been accompanied by a negative divergence on the MACD indicator. Going forward the level to watch on the down side is 1060, a break of which will result in the recent lows of 1000 being retested. On the up side traders need to watch 1125 and then 1150, these two are strong resistances which if taken out by the index will add to the bullish momentum and then the index can rally towards the important high of 1200. Traders should remember that the dollar index is showing some signs of strength along with a positive divergence on the MACD indicator. If the dollar index rallies then the likely hood of SNP breaking past 1060 is more than breaking past 1125.

DOLLAR INDEX

noreply@blogger.com (sanket) — Sat, 14 Aug 2010 14:33:00 +0000

As mentioned in the previous post, the dollar index has found support near 78 to 80 levels, and after making a low near 80 it has bounced back above 82, leading to a correction in global as well as Indian equity markets.

Now in near term there are many interesting observations that one can make on the dollar index chart. There is a positive divergence on the momentum as well as the stochastic indicator. In the past such positive or negative divergence has had significant effect on the future movements of the index, so traders should watch how the current positive divergence plays out; it could lead the index to break above certain key resistance levels. Speaking of resistances there is the 38% retracement of the recent fall at 83.50, and then there is resistance at 83.60 and 83.95 provided by the 20 and 50 day moving averages respectively. Presence of these key resistances in a narrow band of 83.5 to 84 makes it a confluence of resistances, towards which the index might be attracted, leading to further correction the equity markets.

If the index is able to close above 84, then next resistance comes at 85.20 to 85.60. A rise to these levels will result in a correction in the equity markets.

The index has support in the 80 to78 zone which has been tested recently. A break of this support zone will be a good sign for the equity bulls as the index lack strong support below 78.

SnP 500

noreply@blogger.com (sanket) — Tue, 10 Aug 2010 14:08:00 +0000

Snp 500 has made a good recovery after its fall from 1200 to 1000. But the recovery now faces resistance at 1140 to 1150. 1140 is an area where potential double top could form; it is also the 61% retracement of the whole fall from 1220 to 1000. There is a negative divergence on the MACD which can things interesting.

Traders have to watch 1140 on the upside which will be a strong resistance; we should also remember the negative divergence in MACD in snp500 and the positive divergence on MACD in dollar index. On the down side traders should watch 1110-1090 levels below which the index can slip to 1040 again.

Cues from the dollar index.

noreply@blogger.com (sanket) — Tue, 10 Aug 2010 07:35:00 +0000

The dollar index has had a fall of about 10% from its highs of 89, and now has some strong support between 80-70. Let’s take a look at why the area of 80-78 can offer strong support to the index. The 80 mark is 61% retracement of the entire rally from 89 to 75 and also is an area of candle supports. As seen from the charts 78 levels also offers strong support. The accompanying positive divergence on MACD suggests that this level may hold in the coming days.

If the index holds on to these supports in the coming days it can bounce up to 83.50 and 84.60 levels, this rise if it materializes can result in some correction in the equity markets, more so in the Indian equity markets such as the NIFTY. So traders need to watch the dollar index carefully. Levels to be watched are 80-78 on the down side below which the index can fall to 75.On the upside bullish traders need to watch 84.60 which can be a resistance. A break-out above this level can lead the index back in the 86-87 regions.

SnP 500 fails to close above 1045.

noreply@blogger.com (sanket) — Wed, 07 Jul 2010 07:33:00 +0000

SnP 500

As said in the previous post about SnP 500 we needed to be careful about the +ve divergence on charts leading to sideways movement as well as flash rise , well the flash rise till 1045 did come but the rise could not be sustained and the SnP 500 gave away its gains to end lower yesterday.

The index during the last week has broken the crucial support of 1040 and has been resisted at the same level, a sign which is bad for bulls, in this fall the index has got support at 1010 odd level. This fall from 1045 shows how strong the resistance is.

As for the resistances and supports on the index they are as following.

1^st support is at 1010 and 2^nd one at 990-980. Support at 990-80 is an important support as below this the index can slide down till 950 and maybe till 900. Resistance for the index comes at 1045 which is strong resistance as can be seen from yesterday’s behavior; a close above this level can lead to a test of 1075 odd levels.

On the chart there is a +ve divergence developing which can lead to sideways movement, it also means that 990 can offer support in the coming days.

Levels to watch out on SnP 500 are.

1> 1010-990 on lower side, below 990 the index can slide down with greater momentum.

2> 1045, for bulls it is important that index closes above this level this will provide fresh strength to any possible up move.

In the view of above points and chart we can hope for a clear direction only on a close below 990 or above 1045.

GOLD is the rally in danger ?

noreply@blogger.com (sanket) — Tue, 06 Jul 2010 19:00:00 +0000

GOLD

In the last post about gold we learnt about the –ve divergence developing on the charts, effects of which can be seen in last few days. Gold has fallen of from the highs of 1265 breaking many crucial supports like 1225 and 1200 in the process.

Going forward it looks like gold is going to test its support areas of 1175-1165$, which are important ones on the candlesticks, also the 100 DMA lies between 1175 and 1165. This confluence of support is likely to be tested by bears in coming days.

Whether this dip is a buying opportunity or not? Would depend on whether gold bounces above 1200 and then above 1225$. Only then the bounce would be meaningful and traders can look forward to a meaningful follow-up to the bounce. However if gold falls off after getting resisted near 1225-30 and breaks 1165 on the lower side then the rally in gold will be in danger and it can go down to seek lower levels.

Going forward the key price levels to watch on gold are 1> “1165” below 1165 gold can slide up to 1140 and then up to 1120.2> “1225” if gold rises above this level with good volume then bulls will be back in business and will try to test the recent all time highs once again.

For traders who have or are looking to buy this dip, 1165 or 1140 can serve as a stop loss, but the most important thing for bulls is for gold to bounce above 1225.

For traders who are short 1225 can be the stop loss.

TV 18 sustains breakout.

noreply@blogger.com (sanket) — Mon, 05 Jul 2010 06:05:00 +0000

TV 18

As said about TV 18 in the last post >http://dailytrades-sanket.blogspot.com/2010/04/tv-18-breakout.html the stock has achieved its target of 90 and has sustained a breakout. Now the next resistance comes at 96, a close above 96 will set up the stock for a target of 102-110.

Support for this stock is at 85 which is a fairly strong support and a good buying area for medium to long term investors, one could also buy the stock near 90 or on a close above 96. Stop loss in all the cases will be on close below 84.

Nifty

noreply@blogger.com (sanket) — Sun, 04 Jul 2010 16:08:00 +0000

NIFTY

On nifty the 5200 level continues to be a strong support and, as seen in the chart this level has provided support quite a few times in the past and also has provided resistance on many occasions. This time is no different also on this occasion we have what a trader might call as a “bullish flag” with support at 5200-5170, below this level the pattern becomes invalid, the likely target of this pattern is 5500 and above but this only after the nifty closes above 5350 and then above 5400 with strong volumes .

If we see the chart on a slightly long term basis there is a slight +ve divergence on the nifty which can be heartening for the bulls, however a close below 5170 will lead to the failure of the bullish flag pattern as well as the +ve divergence and the index then is likely to touch 5100 and lower levels, a close above 5350 will provide momentum to the bulls and then they can try and take out 5400 and set the index up for a new rally, however for this high volumes are must.

Points to keep in mind in the coming days

1> For the short term traders amongst us who have short positions it makes sense to keep a trailing stop loss as we are near to a strong support area, the trailing stop loss can be 5 DMA or the 1000 minute moving average.

2> For traders who are looking for a long entry it might make sense to wait for a close above 5350 as between 5350 and 5200 the market are likely to be choppy.

3> For traders who already have long positions 5170 will act as stop loss also they should watch out for the 990 level on SnP 500 for support.

4> From highs of 5400 the recent correction is only of 3% which is not a significant for those amongst us looking for value bargains, at the same time it is not frightening enough for long term investors to start thinking about profit taking

SnP 500

noreply@blogger.com (sanket) — Sun, 04 Jul 2010 15:40:00 +0000

SnP 500

As said in the last post about SnP a break of 1040 lead it to the lows of 1010 and then the index bounced off the support area.

Now let’s take a look as the factors which can affect the behavior of the index in the coming days.

Monday being a holiday the US market will remain closed and hence the low volumes on Friday, consequently we need to think whether to give much importance to the bounce from the mild support areas of 1010. The volume on the day SnP fell below 1040 was very high and hence we need to take 1040 as a strong resistance, also it was a strong support quite a few times before. The bull will surely try to nudge past 1040 once again however they will need large volume for it to be a convincing rise. On the other hand once 1010 is broken 990 can act as a support on the downside.

A cautionary note to the bears amongst us, a positive divergence seems to be developing in the last few days on the SnP 500 which cold lead to a sideways movement if not an outright rise.tis +ve divergence will act as a momentum booster only if the index manages to close above 1040-45 with good volumes.

Economic news we must consider.

US jobs data.

Private employers added jobs for the fifth consecutive month, however the pace of job addition decelerated and the work hours fell from 34.4 hrs per week to 34.1 hrs. The momentum in the housing market has started to taper off recently thus dampening the mood on the Wall Street.

Thus the levels we the traders need to watch are.

1> 990 on the down side below which the fall will gain more momentum and this scenario looks more likely as of now.

2> 1045 on the upper side, a close above this level will provide much needed respite to the bulls and then they will try to target 1075 levels.

3> The short term traders amongst us who have short positions need to watch out for the positive divergence which can lead to sideways movement as well as flash of rise in the markets.

4> Traders who are seeking to enter the markets on long side better do so only on a bounce above 1045 which is accompanied by good volumes.

5> For those amongst us who are seeking value in the market, the correction till now has been of more than 15% and at 990 it will be more than 18% correction from the tops, so one can try and pick stocks which have out performed the index till now and put a miniscule amount of money in them.

What the bond market is thinking

noreply@blogger.com (sanket) — Thu, 01 Jul 2010 09:31:00 +0000

What the bond market is thinking

This is a chart of a bond index fund which tracks the 20 year Treasury bond. Symbol is “TLT” in stockcharts

It moves in inverse relation with the stock markets like Dow Jones etc as seen in the chart labeling.Whenever the index rallies DOW falls and vice versa.

Now let’s see what this thing is up to recently .the index has broken out of a long range bound period of activity and is headed towards its previous highs with good volumes being traded, the next set of resistance lies at 103.5-104 above which it can go to 110-115 which will be bad for the equity markets. On the down side the index has supports at 94-95 below which it can correct this fall if happens will be good for the equity markets.

So watch for 104 on the upside and 94 on the downside for equity market clues.

I came to know about this index through http://blog.afraidtotrade.com/

It’s a pity we don’t have such bond index in India so that retail investors can channel their saving towards govt or corporate bonds.

SnP time to be carefull

noreply@blogger.com (sanket) — Thu, 01 Jul 2010 08:32:00 +0000

SnP 500

SnP has broken a major support at 1040 and now technically is in a down trend, the break of 1040 represents not only a trigger of stop loss for bull but also an incentive for bears to sell more and view the market as a sell on rise.

The next target on SnP could be 1010-1000 which is a mild support area; the current downtrend will be in danger only if the index rises above 1075.

The general outlook about the whole financial markets has started to become gloomier day by day. If one observes the treasury bond index it has been on rise, the Japanese bond yields which have been in a range for 7 years have broken on the down side and the Swiss bond yields which have been in a range for 15-20 years have also broken on the downside which indicates that investors are seeking the safety of treasury bonds and other triple “A” bonds even if they get lower interest rates.

May be the whole bond market is sensing something big in the coming days , we as equity investors better watch out .

Praj

noreply@blogger.com (sanket) — Mon, 28 Jun 2010 19:25:00 +0000

Praj industries

A biofuel manufacturing company which manufactures ethanol and other bio fuels and also has operations in breweries.

The stock has closed above its 20 day high today as well as above its 50 DMA, the last 10 days average volumes have been three times the last 30 day average volumes. The stock faces strong resistance at 85-84 region as 85 is the 100 dma mark and 84 is the 50% retracement of the recent fall and also the 23.6% retracement of the fall from all time highs. Above 85 the stock can test 90 and then 94 mark.

The support for this stock comes near 78 below which it will go weak, so a close above 78 will be a stop loss for any trader who plans to take long in this stock. The ideal time to go long is on a close above 85 for a target of 90 and then 94.

Now that the petrol price has been deregulated the product of this company i.e. ethanol and bio fuel will be in demand as oil marketing companies will blend their fuel with ethanol to make them more competitive in the market.

NIFTY

noreply@blogger.com (sanket) — Sun, 27 Jun 2010 17:27:00 +0000

NIFTY

As said in the last post nifty ran into the resistance zone of 5320 and crept above it only to fall below 5300.

Now as the situation stands 5200 has become an important support zone for nifty below which the nifty can test the 5100 mark which incidentally is the area where 50 and 100 DMA lie and hence makes a good support area which the bears will want to test.

Points to be considered in the coming week.

1> RBI action on interest rates now that fuel price have been more or less deregulated

2> The important support at 1040 for SnP500 which can be tested and if it breaks then 5200 can break and more weakness can creep in.

3> The fact nifty is below its 5 dma is itself a weak signs and it it is not conquered soon then weakness will prevail.

4> There is a probable inverse head and shoulder with a target of 5478 and above, although it has almost achieved it target a sustained effort by nifty to stay above 5200 can lead to the levels of 5400 and above being retested.

For short term traders long are dangerous as long as nifty does not close above 5dma the same 5 dma will act as trailing stop loss for traders having short positions.

SnP 500

noreply@blogger.com (sanket) — Sun, 27 Jun 2010 17:17:00 +0000

SnP500

As mentioned in the last post about SnP 500 it went above its resistance of 1110 and touched the resistance cluster of 1130-1140 and then turned back down till 1070, this retreat from 1130 is significant as it also represented 50% retracement from 1220 to 1040.

Now going forward it is extremely crucial for SnP to hold onto the 1070-1040 area a failure to do so will result in a significant correction, good thing for bulls is that the volumes on SnP near the support area have been good which indicates that the index might just survive this bear onslaught and remain range bound between 1040-1130.

The two levels to watch out for are 1040 on downside and 1130-1140 on upside, a break of either will trigger fresh move in respective direction.