Nifty weekly update 01-05 Oct 2012

Nifty made a new 52 high close to 5760 which is close to an important square which could act as a hurdle in the near term. If we analyse the charts as per pure quantitative methods we have targets like 5776 and 5850 levels and we are close to those two targets and thus i would not be creating any new buying positions especially in the stocks that have rallied in the previous month and that would be the banking space. As the momentum is so strong and the momentum indicators are still in a buy mode we could assume any downfall as a normal profit booking or consolidation period. Any sudden upmove if remains within a consolidation range could be treated as valid and an upmove without any breathing space would be treated as a bubble to suck the wealth of public. If we analyse the current upmove except tata steel all the major largecap stocks have given a decent performance and on any correction tata steel would be my first pick as i would assume the stock is spending more time in the accumulation phase. A stock which is forming a good base pattern should be the  darling of traders and should be picked when it is ripe.

Time cycle analysis 

Before nifty making the current upmove it made a low on 5th of September 2012 and we are now on we have completed the month of September and the time and price are close to squaring off or the first cycle of upmove is getting matured. Even if there is an upmove close to 5800-5850 levels time would be just matching or overshooting the price and any upmove can be considered as points to exit. As the chart says there would be multiple support zone close to 5630-5650 levels and test of these levels could only be treated as a 'throw back' and most probably it could happen within a week's time on or before 09th of October or it would mark the high of the month and thus first week of the month would remain crucial for traders to decide the trend. If we have a downward move we could see the upmove again as it would be range bound session then price has to shoot up to 5850 levels to match the time in the second cycle. In a nutshell the broader range for the month can be 5520-5850. 

Nifty update for 28-Sep-2012

Nifty held the support zone of 5630 and is expected to trade higher till 5800-5850 in the month of October with a reversal below 5520-30 zone. Apart from being an expiry day large cap stocks like SBI and l&t are still supporting the upward momentum and that would be a positive factor in the coming days. If we closely observe the large cap names some of them like ICICI bank and Axis bank are facing major resistance at higher levels and it would bring in the possibility of nifty topping out soon close to 5800 levels. Thus any upward move would just finish the target and as a trader one should be shifting the focus from large cap stocks to midcap names espcially in IT and Pharma. Volatility index was showing 5650 -5630 levels acting as a strong support zone and long positions are getting added on every dip as lot of people are left out as there were huge gap up openings.Turnover data is still positive but it seems to be moving to the extreme zone and the previous yearly high of 5630 should be closely watched and as a trader it is wise to close all the long trades below this zone. When we look at the longer term picture the 5450 - 5400 zone would be a strong support zone where nifty could get some buying support when ever there is a downward move and we should see these corrections as much needed consolidation sessions and the market is taking its breathing time before the new up move. The trading range can be 5630-5740.

Nifty update for 27-Sep-2012

Nifty held the support zone and tried for a rebound in the second. Apart from the current consolidation phase nothing has really changed in the long term view. The consolidation seems to be a little more longer than expected but i don't expect the downward momentum to accelerate. As long as the left out feeling is there in the market it can be a buy on dips market close to the support one of 5520-30 levels. Volatility index is not showing much of short accumulation but the scenario is very clear ahead of expiry as it is creating a narrow range. It would be good to take out some profits in banking biggies like SBI and ICICI bank as both of these are high beta names and gave a decent rally on the upside.As mentioned in the previous post pharma space is the one to have a re look as most of them are getting ready for a bounce back. If we watch the currency space though there would be some bounce backs the medium term target would be around 52.50 levels and is expected to achieve in the month of October. The only concern in nifty would be the amount of trading activity happening at higher levels. Usually when lot of trading activity is happening at the top after a rally it could be read as a negative sign as a distribution pattern can be formed but none of the stocks are showing these kind of patterns and that could remain as a positive factor for nifty . Thus in a nutshell the index is taking its own time to consolidate and lets give that time for any further upmove.The trading range can 5630 - 5700.

Nifty update for 26-Sep-2012

Nifty spent one more day well within the mentioned range and it is not expected to make major moves till expiry.Though nifty is spending the days in a narrow range individual stocks are giving us lot of trading opportunities.Pharma sector would take a pause in the downward move and it is all set to make a major bounce back let it be Biocon, Ranbaxy or Auro pharma. As i mentioned in the previous posts it is better to lighten the beta of the portfolio and profit taking sessions in banking biggies like SBI and Axis bank were much visible and needed after a huge rally. Volatility data is not showing any additional short build up other than the previous day and there is ample evidence to believe that lot of short positions are lying close to 5730 zone. Turnover data is showing good amount of liquidity from the foreign institutional traders and as long as the volume supports the trading activity it would be in favor of bulls but as a cautious approach there is no harm in booking some profit at current levels. Though world markets are still not giving any major move the domestic market does not seem to care much about that but one should be looking into relatively under performed  sectors like pharma and IT. 

Stock to watch

Orchid Chemicals - The stock is expected to complete the consolidation phase of 2 months and it is expected to give a move to 135 zone once it crosses the hurdle of 116-118. I would like to keep a stop of 110 for the current trade and it is expected to move to the target zone within a week or two.

Nifty update for 25-Sep-2012

Nifty held the resistance zone of 5730 levels which is close to 78.6% retracement of the entire fall. It is expected to trade till 5850 in the month of October with a decent support close to 5520 levels. The short term corrections would be much needed for a structural bull market and as long as nifty maintains a higher top higher bottom scenario things are clearly in favor of bulls. Bank nifty is leading from the front and it would be an interesting situation for nifty to build up the confidence level. Fund managers are really churning their portfolio between banks and pharma stocks and the scenario is visible if we have a look into the stocks. Volatility data is showing some short build up close to the resistance zone and nifty might take some more time before any valuable upmove. As i said in the previous posts one should be booking profits in high beta counters and reduce the portfolio beta at higher levels and it is time to rethink about stocks in the IT  sector too. Turn over data was in favor of bulls and the foreign institutional traders are really utilizing the opportunity to create long positions in equity market.If there is a consolidation phase it would be logical to assume that the rally is not over yet. At 5800-5850 the cash inflow would get stretched and that would be the ideal time where i would re look into the positive momentum in nifty. The trading range can be 5630-5740. 

Nifty weekly update 24-28 Sep 2012

Nifty had a dream run which happens once or twice a year and we might be in the middle of a long term rally. We could see an increase in the turnover data and lot of retail participation could be seen in the equity market which would be a good sign for the markets in the coming days. Though the volatility is on the rise i would like to interpret it as those option traders who are busy making long straddle positions. Nifty is expected to trade till 5850 with a decent support close to 5520 zone. Any dip close to the support zone can create fresh buying interest in the market. It would be a little bit difficult to choose those stocks which have not rallied till now and there would be only a few in that category.It is time for traders to lower the beta of the portfolio and go for low beta stocks like Crompton greaves and BGR energy. Nifty is making higher tops and higher bottom in the daily chart and weekly chart and the momentum indicators are also in the positive territory which is a good sign for the market. There would be lot of debates that could be seen arguing whether it is the beginning of a new bull market or not and for the time being it is better to avoid this kind of noise and concentrate on the trading portfolio's. If we see the cyclical moves too lot of changes are happening in the market structure where new cycles are being developed which i have marked in the chart.

Stock to watch

Crompton Greaves - The stock seems to have completed a bear market and i would like to take long position in the stock by keeping a stop below 110 for a target of 135-140 with a time frame of 15-20 days.

Nifty update for 18-Sep-2012

Nifty had a gap up opening and it is expected to trade till 5850 with a support close to 5450 in the medium term. As a short term target we could consider the previous high of nifty and traders should take out some profits at higher levels.The turnover was really good and an up move in price with increased trading activity and it shows that any dip in the market would be bought into. Volatility data is showing some short build up at higher levels and it would be a good signal as of now because it cannot be 12-13 when nifty s trading at 5600 levels. Though it shows some consolidation could happen in many of the stocks but as a trader one should not try to go short in the market. I would read this rise in India VIX as a trading strategy by institutional traders to hedge the positions by writing out of the money calls. Pharma sector will have a consolidation phase and the upmove in banking is expected to continue after a consolidation phase and it is not a good time to create fresh long positions.

Nifty weekly update 17-21 Sep 2012

Nifty held the support zone of 5450 and rose to a new high in the recent period. It is expected to trade till 5850 with a reversal close to 5330. In the short term the recent gap of 5450 would act as a support zone. As mentioned in the previous posts PSU banks were one under performing sector and the bank nifty gave a new high in the recent time with the help of banking biggies like ICICI bank and SBI. We could see some huge short covering happening in metal stocks but should consider that as an exit signal. Volatility data is showing traders are going short close to 5500 but a positive news flow could again cover all these short positions. A good turnover data is showing some buying happening large cap stocks especially the banking names. Going ahead the important level to watch out would be 5450-5460 as the gap up happened from there. Dollar/ INR has also broken a crucial support zone which would be a positive factor for nifty. In the stocks front banks like Bank of India and YES bank are expected to out perform the index and pharma stocks like Ranbaxy would have a difficult time ahead.

Nifty update for 14 - Sep - 2012

Nifty had a range bound session and as said in the previous posts it is expected to trade higher till 5530-50 levels with a reversal close to 5320-30 zone. Though i wont be a buyer in the break out trade in nifty PSU banks are expected to out perform the index in the coming days. The bank nifty is still lagging nifty and that would not be a good indication for nifty but most of the banks are making decent base ahead of the monetary policy and i expect it to have a positive effect on bank nifty. With the positive news flow S&P has done with the upside target of 1450 and i would be cautious on any up move beyond this. Volatility data suggests some short build up at higher levels close to 5450 and any positive news flow would force the short sellers to cover their positions. Turnover data is showing the injection of liquidity continues and as long as the fund flow is there go with the flow. SBI is consolidating at 1850-1900 levels for quite a few days and it is building the base around those levels for a 90-100 points move. 1900-1910 seems to be an immediate resistance zone and a move beyond this could take the stock to 2000 levels. If you are reader of this blog for quite sometime you could see the bullish stand taken is quite justified for quite a few days and lighten the longs when we are close to the target and that is way one could prove how smart he/she is as a trader. The trading range can be 5430 - 5530.

Nifty update for 13-Sep-2012

Nifty is done with the mentioned short term target of 5450 and is expected to trade till 5530-50 levels once it crosses the previous high. Though we have some higher targets in the chart i would not be a buyer on a break out. The move can be good as lot of banking majors have still not performed. We could see many major indices like midcap and bank nifty are lagging and nifty alone is moving up.I expect the PSU banking majors to move up in the coming days and a real good performance from bank nifty is needed for this up move. Stocks like Bank of India and YES bank are making bullish patterns and these would be good bets in the short term.If we consider nifty the index is facing a trend line resistance close to 5530-5550 where i expect it to consolidate or correct. Thus the trend is up with a reversal close to 5330-20 for a target of 5530-5550. Volatility data is showing addition of long positions at lower levels and 5380 -5400 would act as a decent support zone in the short term. Turnover data is showing the liquidity is pumped in by institutional traders and the market will get support till the flow is there.

Nifty update for 12-Sep-2012

Nifty held the support zone of 5330 and is expected to move towards the first target zone of 5420-5450 in the short term. The turnover data is not very much in favor of any big movement but when the system is ruled by liquidity we just need to follow the momentum until the trend is reversed. Volatility and open interest data is showing some long build up at lower levels and it could possibly break the 5450 mark too in the September series. The momentum is gaining strength as the PSU banks are also joining the up move.The segment was a real under performer till now and it is surprising to see SBI at 1850 levels when nifty is trading at 5400. The mid cap PSU banking space like BOB and Canara bank are expected to outperform the index in the near term. We were mentioning about a possible break out of  SIEMENS in the previous week post and that has happened yesterday with good volume and open interest. Thus if we look at the whole structure in the short term nifty is moving with higher top higher bottom formation which is a good signal and the advance/decline ratio is also in favor of the bulls. 5330 -5320 would be a key support zone or the stop for all the long positions.

Nifty update for 11-Sep-2012

Nifty is still spending its time in a tight range and it would be one of the most boring market conditions in the past few years. The poor turnover data is showing the lack of interest by retail traders and and institutional traders are ruling the market with their heavy participation. It is expected to take support close to 5320-5330 zone and head towards 5420-5450 zone in the current series. The upside could be capped due to lack of participation. As said in the previous posts S&P would face a stiff resistance close to 1450 and nifty would not be able to do any magic if world markets start falling.Volatility data is showing building up of short positions at the upper end and 5300-5400 could hold for this week too. Though the index is providing trading opportunities only for option writers PSU banks are at attractive levels to get in. Stocks like Canara bank and Bank of baroda are on the verge of a break out. I would be a buyer in these two stocks above the previous highs as it is a break out trade. The trading range can be 5300-5410.

Nifty update for 10-14 Sep 2012

Nifty held the support zone of 5320-5330 and reached the first major resistance level of 5380. It is expected to trade til 5420-5450 in the short term with a reversal around 5330. There is hardly any evidence to see that nifty is going to make a new 52 week high. As told in the previous posts the medium term trend is still up as long as the short term trend line is holding close to 5250-5230 as we have a higher bottom , higher top formation.Bank nifty and ICICI bank are also following the same pattern and if it is a new uptrend bank nifty has to lead fro the front and lead nifty.If we see the US market charts S&P might be extending the final up move to 1450 as there is a valid trend line resistance coming into and nifty is also in its final leg of up move in the short term. As the liquidity flow is good enough it can spend the remaining series with 5200 as the base but there is every chance that we are in the 5th or final wave on the upside. Dollar is still making a  decent base around 55 zone and 57 can be looked into at some of time this year. Overall we have a trend deciding date coming around 20-21 of September where i expect the up move would get arrested temporarily. If one is already long in nifty it can be hold but other wise it is not a market to buy the break outs but only buy the dips close to 5300 zone.

Nifty update for 07-Sep-2012

Nifty held the support zone of 5250 and is expected to trade till 5360-5380 in the short term.We could see a positive momentum in the stocks and bank nifty too held the crucial trend line support.On a bounce back the beaten down banking names will have a sharp recovery and some buying could happen in real estate names too. Among the banking names we could see SBI not joining the downfall in the previous week and that could be a stock to bet on as new buyers would be there rather than mere short covering. Volatility data is showing still some shorts are left close to 5300 zone and a good rally would cover all these positions in favor of bulls. Another stock that can rise in the near term would be L&T as the stock is near the support zone. The overall turnover data was poor but is expected to rise once the confidence is back in the system. If we see the US market charts we could see S&P holding to the mentioned support zone of 1395-1400 zone and that would be good sign for the bulls. The strategy would be to go long with the near out of the money calls in names like L&T,ICICI  bank and SBI as it is worth taking a small risk at this juncture. The trading range can be 5250-5380.

Stock to watch.

LIC housing - The stock is close to the strong support zone of 230-235 zone and it is expected to trade till 255-260 zone in the near term. I would like to go long in the counter with a stop below 230.

Nifty update for 06-Sep-2012

Nifty held the important support zone of 5250 from where the index touches an important trend line support and a bounce is possible. The cash flow indicators are in the oversold territory from where lot of buying can happen.Thus the strategy would be even if there is a trend line break down in nifty look for a buying opportunity at lower levels and go short on stocks if they are breaking the support zones. Stocks like financial technologies and BATA india are looking weak and i would be a short seller below the previous low zone. Volatility data is showing that though there is some short build up buyers too are adding to their positions. The fight could be interesting and there would be lot of put writers active in 5200 zone. Bank nifty and nifty are at a crucial juncture of a decent trend line support but the banking stocks are looking like really dangerous on the long side though some dead cat bounce could be there. Dollar/INR has broken out of the range and 57 zone would be possible with the pattern target. The trading range can be 5200-5300.

Nifty update for 05-Sep-2012

Nifty held the mentioned support zone of 5250 and it is expected to spend some more time in a narrow range of 5250-5330. The short term bias can be positive as it is holding the previous low zone and large cap stocks like l&t and SBI are leading from the front. Volatility data is showing some long build up in the range of 5260-80 zone and this level should be the stop for any long positions. A break above 5330 could lead to higher levels in nifty. In the stocks front Reliance and SBI are looking good on the long side as they are getting good buying support. Turnover data was still poor and it shows the current rally can be due to short covering and buying has happened only in few counters.If nifty is ready to move up real estate sector stocks like DLF and HDIL are expected to move up but would like to remain bearish on banking except SBI. We could see an interim base close to 5250 and bears will gain strength only once that level is broken on the downside. Though we could talk about the price action could get weaken by breaking the low there would be multiple support zones lying close to 5200 zone. Options data is telling us lot of options writers are still active in 5200 puts.The long build up in nifty futures is visible by analysing the open interest and volatility data but the reading says institutions would take some more time to make fresh long positions in stocks. The trading range can be 5250-5330 with a break out above the upper band.

Nifty update for 04-September-2012

Nifty tried to make a high above 5320 but failed and gave a close at the lower end of the day's range. On the upside till 5330 remains as a hurdle the trend is down and is expected to trade till  5200-5220. Turnover data was poor and the advance/decline ratio was not entirely in favor of selling counters. Thus the trades are showing unwinding of short positions in stocks and profit booking in nifty too. It would be be wise to buy puts only below 5250 levels as we have the previous low placed close to that zone. On the upside above 5330 large cap counters like l&t and SBI could take nifty to 5400 levels once again. It is better to wait for 5330 levels to be taken out to take any call on the long side. Volatility index is showing profit booking in short positions as of now and new shorts can emerge only below 5250 levels and till then nifty is expected to stay in the range.

Nifty update for 03-07 September 2012

Nifty futures held the previous low zone and we could see the selling momentum weakening in many stocks. We have a short term support lies at the trend line close to 5200-5220 and that zone is expected to hold in the near term. If we come to the modern technical analysis many indicators and oscillators are hiding the basic price and volume action and they are not clearly showing whether we are in the correct position or in a trap. The classic Dow theory says the major index and the corresponding indices should complement each other with a positive correlation and if it is not doing so the move is doubtful. If we follow the same principle we could not see a positive correlation between Bank nifty and nifty at this point of time nifty's recent high was not followed nor lead by bank nifty. Any up move should get arrested on the upside as still some downside targets are left. On the upside nifty started falling from 5360-80 zone and that could be acting as a stiff resistance zone. If we have a look into the US market charts we could see S&P holding the mentioned support zone of 1395-1400 and should be closely watched for any reversal for the downside. The trading range can be 5250-5360.

Stock to watch.

Siemens - The stock is forming a consolidation pattern with a rounding bottom and seems to be a triangle break out on the upside in the weekly chart. A price break out should be confirmed above 685-690 zone with decent volume and we have to wait for that thing to happen. The volume is expected to increase once the price break out happens as it happened in Biocon. The stock is expected to see levels of 720 once it breaks above the previous high with a reversal below 665-670.