Nifty update for 30 -Oct-2013

Nifty ended the correction at 6080 levels and continued the rally to 6200+ levels. It was interesting to see bank nifty breaking the downward slopping trend line and gave one of the best closings of the recent time. Lot many midcap banking stocks have again come in a buying mode after a consolidation phase and thus it is better not to chase nifty and concentrate on stock specific ideas.The current pattern is showing a broadening wedge which is a very unusual pattern in indices which shows a pattern target of 6500 which was mentioned as the medium term target in the previous post.Thus as said in the previous post it is better to shift from defensive stocks and focus on midcap banking especially PSU stocks and the rate sensitives ones than chasing nifty.  Never leave the equity portfolio and whenever in risk buy puts just to protect the portfolio.

I would like to add one more stock to the portfolio apart from the 4 which are discussed before (syndicate bank, mcleod russel, tata chemicals and r- power) and that is HDIL. The stock is trading close to the support zone and showing good accumulation pattern. Buy the stock with a stop below 37 for a target of 60-65 in a period of 2-3 months .

Nifty update for 28 Oct - 1 Nov 2013

Nifty held 6120-6130 once more and it is expected to trade down till 5900-5950 with a reversal above 6270. If it is in a sell mode it has to do it fast and no short sell ideas will work out in a range bound market (as the chartists say "never short a dull market"). Thus wait for 6120-6130 zone to be taken out and enter into short selling mode by with 5900 put November.Important developments that are happening in equity market would be the end of run up in telecom and fmcg sectors and it is time to exit stocks from these sectors. Even if nifty performs it is time to shift focus to banks and rate sensitives from the defensive's. if we look at the world markets we could see a break down happening in hongkong but all others are not looking like a sell at all. Indian markets are also not showing any signs of breaking down but waiting for a consolidation or a breathing space. Midcap index has reached an important resistance point where it can give a decent retracement and bank nifty is not crossing the previous high zones.

Nifty update for 25 Oct 2013

Nifty has done with the upside target of 6250 and is expected to trade till 5950-5900 in the short term with a reversal above 6270. The volume data is the major concern for the current up move and i expect it to correct till 61.8% retracement one of 5900-5950. I am not expecting a deeper correction just because of the optimism in the market but two major indices which are midcap and the banking index are at major resistance points and bank nifty is not even reaching the previous highs. If we see the volume data nifty it was huge on negative closing days. Thus i am expecting a retracement move to the current up move and 5900 put November would be a good bet for this downside move. Bank nifty can give a corrective move to its 20 and 40 day moving averages close to 10300 levels but expect this as only a bull market correction and not as the beginning of a bear market . The medium term trend is up as far as 5750-5800 holds and i don't expect other indices to give a break down even if nifty comes down just because it would give some time for traders for accumulation. The premium in futures contract is very less and it clearly says that people are less interested at higher levels and waiting for a dip to buy more and thus there is a possibility of increasing premium at lower levels though the scenario is very rare in nifty. Expert options traders would write options at this juncture as it can be more profitable because the downward move would not be that steep. The trade setup can be like this

Buy on 5900 put and on any major dip add stocks than calls as the range bound market scenario is developing and as a retailer it would be very irritating unless and until you are an options trader.

Short term trend   -  Down                               
 Target     -             5950-5900                   
 Reversal  -                6270

  Medium term trend       Up                                                                        
  Target                           6500            
  Reversal                        5750 
                                                                                                       

Investment picks - R power and TATA chemicals

R - power

1. R - power is coming out of an accumulation zone with a after spending a long time in the range of 60-70, The patterns are showing a move to 100-110 within 6 months time frame with a stop below 65 on closing basis. The stock is trading above the major moving averages with the successful break out from a symmetrical triangle with decent volume.

   TATA Chemicals

2 . TATA Chemicals - The underdog from the fertilizers space has been giving a rounding bottom formation in the daily chart with a good upside potential close to 315-325 within 6 months time frame with a closing stop below 235. Delivery volumes were extremely good and any dip close to the support zone or a breakout above 255 zone is a buying opportunity 

Nifty update for 14 - 18 Oct 2013

Nifty had quite a good run from the support zones and it is expected to trade till 6200-6250 with a reversal below 5820-5850. Yes , we are close to the resistance part and don't chase the market for a break out to buy ,but wait for consolidations to be a buyer at the support zone. It is explaining a typical bull market scenario where almost all the sectors are participating and that is what is exactly a decent run up means. A confusing figure of 6000 or 6100 cannot make market expensive because just 2-3 weeks ago only broader indices started to out perform , thus buy the dips. If we take the broader indices we could see bank nifty has a decent support close to 10k zone where some important moving averages and a trend line is placed and the indices have a little more to go before going to the overbought territory and none of the stocks are in an exhaustion stage. It is time to enter into good stocks and i had already mentioned two in the previous posts. Nifty has enough cushion at 5900-5950 in the current expiry and a dip to these zones can be a good buying opportunity and that too with November call options.  

S&P alert !!!

In the previous post i had mentioned about a very much possible correction of U S market in the immediate short term and finally S&P is breaking down the trend line a correction close to 1620 can be expected in the short and as it is a news based and if the crisis is worsening we need to be careful about the immediate danger. It will be a wait and watch week for nifty and we are yet to see how nifty will react to the bad news in the world markets. It might give nifty some time to shed the heavy premium and stocks would turn to be attractive at lower levels. The volatility index is expected to rise further and if we only take nifty it would be a positive sign as we could see 27-28 levels in India VIX close to 6000 levels in nifty. The consolidation phase in EURO/USD and the last wave upmove in USD/INR can give a halt to the current upmove atleast in the short term.

Nifty update - 08-12 Oct -2013

                                                                  1. S&P

        

    2. J P Morgan

Nifty came down till 5750 and gave a bounce from those levels to 6000 and it is showing lot of buying support at lower levels. Bank nifty has completed a faster retracement as compared to nifty and yes i am seeing some kind of a bull market scenario. 

How can it be a bull market.

1. Midcap and Small cap indices are giving signs of reversals and making higher tops compared to nifty in the past 3-4 months.

2. Many of the midcap PSU banking stocks are turning their heads up for a major up move obviously some major moving average cross overs over the past few months.

3. In the past one year nifty has come 4 times close to 6300 while it came down only till 5100 and that too only once.

4. EURO/USD might consolidate in the short term but maintaining their bullish sentiment for the

 rest of the year.

5. India VIX close to 28-30 where market normally forms a bottom.

Words of caution.

The prediction can go wrong mainly because of two reasons 

1. US markets giving a major correction , given the current situation and the debt ceiling issue has to be solved for some kind of consolidation with a downside cushion at 1600 .
1650-60 are levels to be watched for 

2. USD/INR reversing the trend on the upside which i see a very low probability in the given conditions. 

3. The premium in nifty futures has to come down for a better opportunity to be a buyer, not ruling out a consolidation phase in October.

I have attached charts of JP morgan and S&P 500 for the purpose of correlation.

Anyway as of now it is not far from seeing a new high in nifty by early 2014.