NEWSLETTER

(Inder Bhatia)

The Indian market opened on lower note tracking weak global cues and saw smart recovery from the lower levels and end session with marginally red zone. For coming session if nifty trade above 2756 levels it can test 2801-2827 zone on the lower side 2691 will act as support zone .

(Lee)

Well how was my timing yesterday? :)
I for one was very happy with it...Covered shorts near the low and took some very low risk longs in calls...In a notional profit right now. I will likely look to cover it very soon - even before expiry - I am obviously not very comfortable holding longs at this juncture...Markets can reverse back down at any point of time...2850 would be the most aggressive target.

Now why did I cover? Below chart explains it...And I did point this out yesterday also...And we got a doji...Seems to be playing out according to plan...We should also get a big up day very soon if its playing according to the plan.



The other interesting thing - If you pull up the intraday chart from yesterday, we seem to have formed an intraday inverse H&S which projects a target to 2800 if we move above yesterdays highs...So worth watching. (pull up a yahoo 5 day chart and see what I am referring to)

Okay so thats my short term outlook and my trading plan...

Now coming to the bigger picture...MVP asked a very interesting and important question in the chat box...Something I have also been wondering for some time...Simply put...why is there a disconnect b/w our markets and the dow or spx...We have broken the lows in DOW or SPX and nifty is still strong...Why? Well I do not have answers but I can speculate...

Something else worthy of note here is that Nasdaq has not broken the lows and looks more strong...It looks more like Nifty so we can compare ourselves to that index...

But...coming to the discrepancy...There are 2 possibilities...

1. If you remember in Oct of 2007, US already started the bear..Much earlier than us...We waited till January to put in the big move down...Market might be held up right now and stealth distribution might be going on...Before the final capitulation move to a bottom...This is one possibility.

2. The second one is a more fundamental one...I.E India is more stronger and is preparing itself for the next bull market...Hence the relative strength.

I think its a mix of above 2. I expect we will tag the bottom of this chart eventually as I have been calling for a while. It may happen sometime within the March-April timeframe. Sensex Monthly attached below.



And I think this will be a very important bottom for our markets...And we might not breach this in the coming months...You can see we have been in a structural long term bull market...Recent bear market non-withstanding...A tag of 6400 on sensex and moving up from there will have me very bullish. We can expect several tests of the channel bottom before the next bull market begins...Ofcourse all this will take a lot of time...Its not a 1 or 2 day event.

But during this time SPX might might just form another term bottom at 650-600 odd and then mount another rally only to break it later...India on the other hand will become more stronger as time goes by...And as the fundamentals regain strength.

This is my longer term view and should be taken with large fists full of salt :)

Earnings wise, I am here in US, I see it, its bad...SPX might have negative earnings very soon...Do you see that for India? No...Sure we are in a slowdown...even recession...But we will recover within 2 yrs or so...US on the other hand if lucky will recover in 5-6 yrs...If NOT, worst case US of A is going into a depression.

Speaking more on the fundamentals, I am appalled at the way policy is moving here right now...Its not good...US of A is moving more toward socialism when we are trying to move more to capitalism...They are worsening the situation with every new policy step they take...If they had done nothing, market and economy might have recovered sooner...This is why I think USA has peaked...New Policy is making it worse...Sure it will stabilize somewhere but I think the boom here in US of A is over...

The next few decades belong to China and India.

(Ilango)

The positive divergences that developed in the past few days are translating into intra rallies despite huge negative sentiment in the world markets.
U.S S&P500 has fallen for 6 days in a row and it is due for a bounce.
The near "Nil" discount in Feb futures point to weak bears in this series.
Nifty is in downtrend in weekly & daily. However, the hourly continues with + div in the "OS" region. Trade light..2750-2770 is a strong resistance zone followed by 2800. A fall below 2680 will lead to huge selling.
"Lots" differences in the March series will hamper retail rollovers owing to margin pressures.

(The triangle in Nifty that developed over the past 4 months can be labelled as 5th wave in the form of an ending diagonal...So holding 2680-2660 in the next few days will keep some bullish scenario alive) Trade this sideways range of 2678 - 2807 until a decisive break...








MY CHART

Nifty :: We clearly given buy signal at lower level in yesterday post and Nifty made an Long Legged Doji pattern near strong support level. Close above pennant breakdown level.. Now for 25^th Feb watch 2741 above 2741 momentum seems up and below 2741 momentum down.. Watch two strong resistance 2741 & 2763 above it next strong resistance 2806/ 2850.. Still our strategy same as yesterday buy on deep (S.L 2703) Sell at high.. Resistance for up move at2741/2763/2770/2806/2820/2850.. Supports at 2703/2668/2661..

SVShah)

BSE Sensex : (8843)

The Support for the Sensex is 8630 and the Resistance to the up move is at 9030-9157

Nifty : (2736)

Still we are in cautious levels and Dow has important role for direction of Market. Once Nifty move above 2840 and stay for 1-2 trading day then we can say worst is over for short term. Nifty has Crucial level of 2620 if break then possible 2500 or below.

The Support for the Nifty is at 2680 and the Resistance to the up move is at 2790-2830.

The government to cut service tax by 2%, to reduce it down to 10%, The government also cuts excise duty on bulk cement to 8% or Rs 290/tonne.The 8% excise duty cut applicable beyond March 31.

NIFTY (2733.9)

Resistance : 2760 / 2790 / 2830 / 2880

Support : 2705 / 2680 / 2650 / 2610

SENSEX (8843)

Resistance : 8915 / 9030 / 9160

Support : 8685 / 8630 / 8530

NIFTY FUT (2726)

Resistance : 2750 / 2780 / 2840

Support : 2690 / 2650 / 2615

MKT COMMENTS

NIFTY FUT OI (both series) up with increasing volumes indicating rollover of short positions to next series.

We expect NIFTY FUT to trade positive with volatility.

On Wednesday,Opening is Flat to Up,

Stay Long Above 2730,Sl Above 2715,Tgt 2745/60/90,

Sustain Below 2710,Sell with Sl Above 2725,Tgt 2690/50/30.

POSITIONAL HIGH RISKY TRADERS : Sell NIFTY@ 2750/70,Sl Above 2790,Tgt 2675-2650

Buy AMBUJACAM above 69

Buy SBIN,Sl Below 1010,Tgt 1045/55+

Buy NALCO Above 200/205

Buy ABAN Above 350/55,Sl 340,Tgt 375/85

Buy GUJALKALI Above 58,Sl 55,Tgt 61/64/66

Buy ACC Above 560,Tgt 575-585-610,Sl 550

Buy BANKINDIA Above 220,Tgt 225-230-240,Sl 215

Buy VSNL Above 390,Tgt 400-410-425,Sl 380

Buy SIEMENS Above 220,Tgt 225-230-245,Sl 215

Sell TATASTEEL Below 160,Tgt 155-150-145,Sl 165

Sell HEROHONDA Below 900,Tgt 885-875-850,Sl 910

FUTURES

BHEL (1361) : Buy@ 1350/60,Sl 1345,Tgt 1370/80/85/90/95+

ONGC (680.60) :

Buy @ 670/75,Sl 665,Tgt 685+

Or

Open High Sell @690/95,Sl 705,Tgt 685/80

RIL (1253) : Buy@ 1230/45,Sl 1225,Tgt 1270/80/90/95

Technical Levels for 25 February 2009
Symbol	RES 1	RES 2	RES 3	Pivot	Support 1	Support 2	Support 3	Trading Signal
Top of Form GOLD Bottom of Form	15870.33	16010.67	16124.33	15756.67	15616.33	15502.67	15362.33	Sell Signal
Top of Form SILVER Bottom of Form	23591.00	23846.00	24022.00	23415.00	23160.00	22984.00	22729.00	Sell Signal
Top of Form LEAD Bottom of Form	50.47	51.38	52.32	49.53	48.62	47.68	46.77	Buy Signal
Top of Form COPPER Bottom of Form	161.67	163.63	166.42	158.88	156.92	154.13	152.17	Buy Signal
Top of Form NICKEL Bottom of Form	487.13	495.77	508.33	474.57	465.93	453.37	444.73	Buy Signal
Top of Form CRUDEOIL Bottom of Form	1952.33	1990.67	2014.33	1928.67	1890.33	1866.67	1828.33	Sell Signal
Top of Form ZINC Bottom of Form	54.03	54.62	55.33	53.32	52.73	52.02	51.43	Buy Signal
Top of Form NATURALGAS Bottom of Form	207.90	211.20	214.40	204.70	201.40	198.20	194.90	Sell Signal
Top of Form MENTHAOIL Bottom of Form	520.97	526.03	534.37	512.63	507.57	499.23	494.17	Buy Signal
Top of Form ALUMINIUM Bottom of Form	64.33	64.87	65.93	63.27	62.73	61.67	61.13	Buy Signal
Top of Form REFSOYOIL Bottom of Form	449.83	453.07	458.73	444.17	440.93	435.27	432.03	Buy Signal

S S Cheema

There are reasons that I would like to list before I try to protect the stand I have taken today. Firstly I have been of the opinion for some time now that this fall is unwarranted – we cannot fall unhindered even if we were doing as bad as we are doing now a days. But I also agree that the markets have a mind of their own and it did not stop climbing when everyone was hoarse calling out that the climb is not keeping pace with the pace of growth. All the same at the moment we are oversold, the volumes have been low, we are overly concerned with the happenings in the US and the rest of the world, we have an elections at our door steps and the present regime gives less weightage to the economic concerns than the populist concerns. All the same we do not have a negative growth. Our internal demand, development continues. we still remain to be agrarian society where too much exports do not effect us like China and the list goes on and on… All this is right but the fact is that we are seeing lower tops and lower bottoms. The earlier range in which we used to play was 3200 – 2900, now if we can play the range 3000 – 2600 – it will be a great miracle.

Today the candle we have made is Dragonfly doji. It is a fairly strong reversal signal. It indicates that the control has shifted from the Bears to the bears. Now that would be great. But all the same take this with a pinch of salt. We are into the last few days of settlement and that could have let some pressure off. The second reason that I feel (and do not see as a major concern to others) is that the lot sizes have increased considerably. In these times of low volumes and low liquidity I feel that the rollovers may suffer. If that be so then a percentage of the shorts will have to be covered and not carried forward. That would lead to some sort of bounce. That coupled with somewhat stable to good international cues can ensure that we go up a bit higher and trigger a wave of buying that can sustain us above 3200. Hypothesis and nothing else but all the same a scenario in front of all of you.

The global cues … Asia remained weak and we saw red all the way home. Nikkei was down 1.46%, Hang Seng down 2.86% and Strait Times down 1%. There was a chance perhaps of better day but the Europe basically dashed the hopes. FTSE closed 0.89%, DAX 1.03% and CAC down 0.73%. Does is not seem to somebody that the markets around the world are hanging around at levels – wherein at the first signs of recovery can give a good push up?There was a statement by Bernanke wherein he has lighted a glimmer of hope by saying that if all goes well then the recovery to the US economy can take place in 2010. The markets that had opened flat – gone green – fell to flat line again rallied up. Since then the higher ground has been lost but US is still green all the same. hope like hell that it remains this way.

As I have mentioned earlier the candlestick is a Dragonfly Doji and it represents reversal after a fall so that is one good condition. We are now officially trailing the lower edge of the Bollinger bands. The bottom touched it. 5 EMA is below the 20 EMA and 20 EMA is below the 50 EMA so a long way to go before the trend changes. Volumes were low – but a bit higher than day before. ADX is purely bearish. MACD continues with its negative divergence – but I am happy that the divergence is not too much. RSI is negative and Slow Stochastic has the red line crossing over the blue line – but still in oversold territory. TRIX is still looking down.

Wanna see how the day went past? Well the trade was fairly simple. We opened just below the S1 level and threatened once to break to the S 2 levels but crossed the S1 levels towards the Pivot point and thereafter never looked back. We never really test the Pivot but neither we saw the lows seen earlier during the day.

The pivot levels for tomorrow should hold a lot of meaning because the good times will be indicated by the charts before they happen.

R3 2815 as against 2869 on Friday
R2 2787
R1 2760
Pivot 2718 as against 2744 on Friday
S1 2691
S2 2649
S3 2622 as against 2620 on Friday
Projected High Range 2739 to 2774
Projected Low Range 2718 to 2683
Fib Projected High 2764
Fib Projected Low 2658

forecast

Market may open up. Market may up between 10.30 and 10.51 Market may steady or up side between 12.30 and 12.50. Market may close at up or near to previous closing.


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Opening Bell Call
Buy
RCOM - Reliance Communications Limited
ABB - ABB Limited
JINDALSTEL - Jindal Steel & Power Ltd.
INFOSYSTCH - Infosys Technologies Ltd.
IFCI - IFCI Limited
DIVISLAB - Divi's Laboratories Limited

On 24th February 2009 - The BSE Sensex closed at 8822 (down 21 points) while the NSE Nifty closed at 2733 (down 2 points).

Opening Bell Call
Sell
APTECHT - Aptech Limited
PARSVNATH - Parsvnath Developers Limited
HDIL - Housing Development and Infrastructure Limited
JAICORPLTD - Jai Corp Limited
APIL - Alstom Projects India Limited

Technical Analysis for 25th February 2009

BSE-SENSEX - Major Resistance -8766, 8839, 8912, 8958, 9003, 9076, 9149, 9223
BSE-SENSEX - Major Support - 8721, 8675, 8602, 8529, 8484, 8438, 8393, 8348

NSE-NIFTY - Major Resistance -2719, 2740, 2760, 2774, 2788, 2809, 2829, 2850
NSE-NIFTY - Major Support -2705, 2691, 2671, 2650, 2636, 2622, 2609, 2595

Manas

Every dip is being bought into.we broke below 2691, but still didn't break down.

Dow is hitting 11 years lows, and we are still 20% higher than our recent lows.yes, its strange, but that the way the market runs, it will never make our job easy.

i read in some blog, that in case we hit a 7 year low, thn nifty will be at 900 levels :-D

well for trades.. break down or not, i will still consider 2690 important, and no shorts above it, or no longs below it.

if 2690 holds, we may see 2807-2846-2870 levels in this week.

Now for intraday, 2707-2690 is the level to watch, breaking which nifty may fall to 2650-2635 levels.
if the above level holds, 2755-2772 for intraday


(NOORESH)

Sensex Technical View :

In the last week had discussed that Sensex immediate levels in short term are 8630-8750 to watch and would decide the next move. We saw fridays low around 8750 and today arnd 8620 close to the band.

Some things to note in last few sessions:

--> A fall of 1000 points or around 10% in last 7 sessions.

--> Gaps around 9213-9279 and 8944-8978 left in the last 2 weeks. 3rd gap down got filled today itself.

-->8630 is the January month low.

The above observations point to an oversold state ( indicator followers can check hourly charts , i prefer to keep it simpler and understandable) .

A possibility is we see a bounce back in the next 2-4 sessions which may look to touch 8970-9270 zone which is gap filling and resistances.

Although the trend remains down and could see more selling pressure below 8500. So a risky play would be to go for a pullback with a stop of 8500.

TRIANGLE PATTERN IN SENSEX :

In my last video had shown the impact of triangle formation on Sensex . Some weeks back we had discussed about the same when Sensex broke 9500 after Satyam fiasco. Sensex has not been able to get back into that trendline and currently the chart as seen yesterday another important support comes around the 8500-8700 band roughly on closing charts.

Sustained closing below 8500 would again confirm the breakdown from triangle ( taking 2nd line joining 8500, 8316 , 8631 ) and lead to a tgts of 7700 and lower also.

So continue to watch 8500 level till March end ( time series calculation ) to get the next direction for the market.

Stocks to watchout for :

Pullback possibilities

SBI

The stock has had lows around 990-1000 in the last few months. So can expect a bounce back from this zone. Buy around 1010-1020 stop of 990 tgt 1045-1070 in short term.

AXIS Bank and ICICI Bank

Supports placed around 350 and 310 can be bought on dips with the stop and can give a bounce of 5-10%.

Maruti /Bajaj Auto

The above two stock seem positive in the near term. Bajaj above 505 and Maruti above 645 could give a good bounce of 20 bucks.

Sector to watch for :

Small PSU and private banks look a low risk investment bet in long term. Of late we have been seeing a good amount of selling pressure in OBC , PNB , Central , IOB , BOI etc. With high dividend yield and good price to book the sector looks interesting on further dips below october lows could give a safety net of capital preservation. Seems good to me but am not good at fundamentals so expect readers to contribute on stock picking in the sector.

(ss)

Looks like we're going to take another shot at 2950-3000. A pullback right on the lower Bollinger Band gives some confidence in trading on the long side. Volatility has been going down and the 20 day ATR is at 78.50 or 2.87% of the closing price. Such a low volatility does not suit anything big happening yet and we'll continue to see range bound moves for some more time.