NEWSLETTER

(Nifty Bhaloo)

(SHAKTI SEHGAL)

In last few days stock trades & volumes have picked up substantially in the market, institutional investors are buying stocks has started, foreign institutional investors (FIIs) have bought 1,600 crore in the last five days.

Kotak Institutional Equities team has put out a list of top 15 stocks to buy now for 2009 - 2010, which are not penny stocks but are reasonably large cap names and stock buying in these counters can give returns of 50-100% over the next 18 months.

Most analysts believe that domestic participation has picked up quite significantly and so people may trade back into the market as there are lots of values and accumulate stocks.

Following are Sanjeev Prasad, ED, Kotak Institutional Equities' fabulous 15 picks

Punjab National Bank (PNB): Valuations are attractive and gross non-performing loans (NPLs) are seen at 5% for FY11

HDFC Bank: It is a large cap stock with attractive valuations

Axis Bank: Valuations are cheaper than that of HDFC Bank and see high return on equity (ROE)

United Phosphorous: See fair value of the company and in a year�s time it would be Rs140-150 per share

Crompton Greaves: See seven times prcie to earnings (PE) on 2010 numbers. It is a pretty good buy, despite whatever has happened on the investment in the power

India Infoline: The brokerage stock will see upside in market volumes

Tata Steel: See FY10 earnings per share (EPS) at Rs 55

Indiabulls Real Estate: The occupancy levels in the properties are going higher and there will be a re-rating of the stock to some extent.

Reliance Infrastructure: See clarity in Q4 on the usage of cash available with the company

JP Associates: The company will benefit from higher cash flows from its cement business

Biocon: Although valuations are cheap and the stock has fallen a bit, but by 2010 things will start improving.

(Ilango)

If these corrections happen above 5 DMA(3307) and just below 200 DMA(3431), Nifty may set itself for a jump above the 200DMA and move to higher levels. For the very short term - break of 3360 may lead to 3325 below which 3295 .
As long as the daily trend is up, the "OB" & -ve div. of hourly gets corrected in intra only. Individual stocks and the "last fallen stocks(Banks)" continue to attract buying...
If "Infy" results & guidances are impressive, "IT pack" may lift the Nifty up..
If "Infy" disappoints, Nifty may use it to set right the "OB"prices with the laggards hogging the limelight..

Santy

As described in the previous post, today Nifty turned higher after testing 3325 level. Price traded higher from 3330 to 3410 in last two hours, hitting intraday trade target from 3325 to 3390/3420. From past two days, market has not been able to make substantial new highs, but market has not been falling to great extent either. It looks like market has been stalled prior to a new big move. Tomorrow if market comes down to 3330 level, then watch the price action and strength. If price makes higher highs and higher lows in small time frame (preferably in 5, 15 minutes chart), then BUY near 3330( 38.2% Fibonacci level from 3150 to 3420) with stop loss below 3305 for target at 3400/3420.

(Niftytrends)

TIME TO BE CARE FULL OR SAY CARE FOOL Does not matter . If u are long keep 3320 sl .

Market near multi month trend line if you can see and last day dozi was created in nifty daily so it can be warning sign . IF you see market in April , May , August ,october all neared the trend line and never crossed .



RETRACEMENT LEVELS MENTIONED IN CHARTS .

(S S Cheema)

April the 13th… sorry seems to have mixed up with Friday the 13th. Well they sound the same to me atleast. I will ofcourse bore you somewhat with why I was not available for the last few days to give updates. Well in army we have this team called Gradation and Examination Board that comes every six months and roger's’ us/the flying base checking it for standardisation and the gradation of pilots. Well it goes like this whether you understand or not – the visit is a whirlwind of activity. Tests, both flying and of ground subjects, poking in every little corner to see the op efficiency of the base and all. Well now fortunately I was not appearing for any upgradation – but unfortunately was coordinating the visit so the stuff like who flies with whom and when, lectures and tests and that is what kept me busy for last four days or so. It was bad enough that I used to reach home around midnight and on my feet early morning. Infact it is after they left that I had a good eight hour straight sleep, one movie with my kids “tasveer”, Mc Donald's, two-three hours at XBox and only then here I am – ready to face the world. Okay now – the 200 EMA – that people say is really important to name the trend – bearish or bullish for nifty is around the corner at 3395. The markets did make a half hearted attempt to break that but was not successful as everyone of you would have seen. The result has been a perfect doji. Well now Doji is a reversal signal but I would like to wait for the reversal signal to be substantiated by some fall in the markets I am saying again at the cost of repetition that confirmation of this reversal signal is important before we see the market going down.. Well the markets have been going on and on and even the best of the bulls that I know now agree that there has to be a breather as the markets have not really consolidated in a worthwhile manner for a long time now.

On the global cues front – our long weekend perhaps played out more than the pure global cues for our markets to make a Doji. Nikkei was up 0.32%, Hang Seng was up 2.95% and Strait Times too closed green. Europe opened green but was definitely close to the flat line till US gave it thumbs up and it went of to touch new highs. FTSE closed 1.48% higher and DAX was up 3.06%. CAC too ended 1.82% higher. In US A better-than-expected earnings preannouncement from Wells Fargo sent the financial sector surging 15.5%, which induced buying in the broader market and helped the Dow move back above 8,000. Dow ended 3.14% up, Nasdaq 3.89% up and S&P 500 3.81%. It is these global cues that can help our indices retain some shine even after a Doji.

Next coming to the candlesticks. I have already told you about the Doji formation and that too just after touching the 200 EMA. All the same if we break 3400 then we are off to 3600/3800 I suppose. The volumes are fairly high with the volumes being 150% of 50 day average.This jump in the volumes has been there since the middle of the run up we are seeing now. The participation has increased and the retail too seems to be jumping on now. Always the last to enter and last to leave. ADX remains bullish and does not waver a wee bit from climbing up. MACD diversion has increased and remains bullish. The RSI however is in the bullish but overbought zone so that is one cause of concern and the second is that once again though the Slow Stochastic is bullish – the oscillator is in overbought zone. The TRIX is merrily looking up so there seems to be still some force of upswing left. Incidentally, if we cross the 200 EMA then it would be a first on Nifty after this bear run began. Instead of the 3 month chart that I used to post earlier I am posting a 6 month chart so that a broader outlook of the trend can be obtained. With this I am convinced that we are moving from sell on rise to buy on dips even though the fundamentals are not supporting it.

I would not put across the options data. See the put build up. the Put build up is too strong and that implies that everytime the market tries to go down – there will be puts that will be sold and that will support the markets to go down. Also now that more and more people have started giving higher targets – there will be more call build up than put build up with the markets going higher. This ratio has to drastically undergo a change and only then we will see the markets either stabilising or falling. This can take upto about two weeks more in my mind. Mind you the markets are closed on Tuesday also so keep your back safe. Also now that we had a Doji – please refer to my last blog and you will find the Fibonacci retracement levels. I expect atleast a 50% retracement before the markets continue further up.

Let us see the pivot data for Monday

R3 3495
R2 3444
R1 3393
Pivot 3350
S1 3299
S2 3256
S3 3205
Projected High Range 3371to 33033418
Projected Low Range 3383 to 3336
Fib Projected High 3426
Fib Projected Low 3281

Best of luck for monday and I will surely be writing an article on options strategy for the coming week.

BSE Sensex Daily Chart Highlighted Till 09/04/2009

"On Monday BSE Sensex may try to touch the upside of the steep uptrend channel around 10500-10700."
A BSE Sensex is still in the steep uptrend channel.The week of 30/3/2009 -09/04/2009 has added to new gains & also many runaway-gaps have been identified in the uptrend channel in the said period.The last candle of 09/04/2009 has been bearish but on a gap up. This fastest rally in the steep uptrend channel covering an almost 2800 points from low of 8160 on 09/03/2009 to high of 10932 on 09/04/2009.

If their is still any steam left in this explosive rally then on Monday 13/04/2009, it may rupture on the upside of the trend channel. Steep trend lines often do get ruptured very early time-wise and price-wise. If the weakness persists on higher levels, then lower side of the steep uptrend channel may offer a good support level.

BSE Sensex Daily Chart Till 09/04/2009

BSE Sensex has successfully broken out of Descending Channel thus affirming short term bullishness. Frther gains above 11400-11500 may now take the rally to new levels in overall bull scenario in BSE Sensex.

Structure Of BSE Sensex
Since low of 7700 in November 2008, Higher tops & Higher bottoms structure was seen in the daily chart. Structurally from January 2009 again it has given way to Lower tops & Lower bottoms. The 9700 is a pivot point & intermediate weekly support/resistance convergence area. Sideways structure has mix of both (Higher Tops-Higher Bottoms,Lower tops - Lower bottoms). The area of 7700-10700 is a big sideways zone for BSE Sensex.

Daily Momentum Indicator /Oscillator
Currently in the Daily chart the KST momentum indicator is in overbought zone. As long as KST Indicator remains in overbought zone bulls can be comfortable.
Note: "The KST was in overbought zone most of the time in the trending market of 2005-2007. But in the daily BSE Sensex chart shows that since fall in January 2008, the KST indicator broke the zero line from the upside and migrated to south - oversold zone. Since January 2008 KST Indicator has been in oversold zone. At every rally in the BSE Sensex the KST indicator briefly touches the zero line or equilibrium line, but again fall back to form new trough in the oversold zone. This phenomenon is indicated in the Daily BSE Sensex Chart with down arrows, in earlier BSE Sensex Posts."

Volume
The volumes From November 2008 to January 2009 are descent, they look more of accumulation . But accumulation can be authenticated on the descent rally. On 10/02/2009 highest volume was seen.The March 2009 rally now seems to authenticate the volume accumulation since November 2008.

Trendline
Since high of 21206, in January 2008, a clear descending channel is seen in the above daily chart of the BSE Sensex. BSE Sensex attempted breaking out on upside on 4 occasions, dated -16/05/2008, 12/08/2008, 05/09/2008, 12/02/2009. But on 16/03/2009 BSE Sensex did successfully crossover the descending channel on the upside.

Next week further regarding trend line will be elaborated in this section.

Moving Averages
In the daily chart of BSE Sensex the last week all moving average from 13ema,34ema,50sma & 100sma were successfully crossed. If 200 sma is next hurdle to be crossed by BSE Sensex in daily chart.

Sensex Key Support Level-- --- 10492, 10523, 10673.

Sensex Key Resistance Level--- 10962, 10998, 11021.

BSE Sensex Weekly Chart Till 09/04/2009.

In the Above BSE Sensex Weekly Chart from the high in January 2008, BSE Sensex has been trading in Weekly Descending channel till September 2009. In October 2008 BSE Sensex broke out of descending channel signalling exhaustion and since then has been trading side ways below the descending Channel.This sideways trading has given to formation of symmetrical triangle.

The symmetrical triangle often referred to as side-ways or consolidation pattern. It means before embarking upon any trend, it is breather period.The last week it was indicated that we will revisit the Symmetrical Triangle once again.

Since Late February 2009 & early March 2009 it was indicative that BSE Sensex may give a down fall. Hence bearish scenario was taken into account. Symmetrical triangle though are a continuation pattern usually. But sometimes Triangles may act as a reversal pattern also. As it is Triangles are one of the most trickiest patterns. Hence we revisit the pattern in BSE Sensex Weekly and have a re-look at our targets.

This weekly Triangle has given breakout downward at 9250.Which will be considered for calculations purpose.The calculations now stand as follows:

The base of the triangle is (High 11870-Low 7700) = 4170.

Upward target after Breakout will be (9250+4170) = 13420.
Again this target of 13420 can be said to be achievable, provided the uptrend line of the descending channel is crossed by the BSE Sensex on the upside which is 11400-11500 currently.

Weekly Momentum Indicator/Oscillator.
"In the weekly chart momentum Indicator KST is still in the oversold zone but have given bullish cross over in the oversold zone. Hence an extended up move may come. "

posted in March 2009 has indeed come true. But still the intermediate tone can said to be bearish in the BSE Sensex. Unless KST indicator gives breakout on the upside in the overbought zone, intermediate bullishness cannot be affirmed.


BSE Sensex Monthly Chart Till 09/04/2009

The January 2009 and February 2009 Candle pattern was Bullish Engulfing pattern. The March2009 monthly Candle is Bullish Belt hold line candle pattern. The January 2009 Candle had taken support on The Monthly horizontal uptrend line 1. This monthly trendline 1 is a good support for BSE Sensex on the downside . Which was left out in hindsight in earlier posts .

In the BSE Sensex monthly chart the sensex has support at 100sma which is at 8155 & 50 sma is at 12176. Also for the purpose of clarity we keep The Dynamic triangle-pattern on the back burner till April 2009 candle is taken into consideration.

Unless 11400-11500 area is not crossed by BSE Sensex the room for down fall remains. As has been indicated may times in Sensex posts, bottoming out is long, tedious and tricky processes. Finally again as retreated often that bull market or bull trend cannot said to be over for long term till monthly uptrend line2 drawn from low from year 1981 gets broken.

Monthly Momentum Indicator
In the monthly BSE Sensex chart all the Momentum Indicators or Oscillators are said to be in very over sold zone.Oscillators are not given any indication of by forming any patterns or divergence. But possibility of bullish crossing KST Indicator can be anticipated if up march in BSE Sensex continues.