NEWSLETTER

Nifty mirrored the global weakness and opened deep in the red. It remained under selling pressure for the entire session and
finally closed near day's low at 4387, losing 192 points in value. The market breadth was extremely bearish at almost 2:11. All
the sectoral indices gave a negative close. The BSE Metal and Realty indices lost the most.
Weak global cues took its toll on the Indian markets as well and Nifty opened weak in the morning. Selling pressure intensified
as the session progressed and it finally ended the day at 4387 losing a staggering 192 points in a single day. We had earlier
indicated the level of 4610 to be as a crucial level for Nifty in the immediate term and had mentioned that the recent peak of 4731
may be a prominent top for weeks to come if Nifty is unable to sustain above 4610. It failed to sustain above 4614 and has now
retraced almost all its gains that came in late last week. Nifty is now placed near an important support level of 4359 which also
almost coincides with the 50 Day EMA placed at 4362. However on the daily chart Nifty has formed “Head & Shoulder
pattern” which is a bearish sign. Additionally the “MACD” indicator has already given a sell on the daily chart. The Nifty
Futures chart has formed an “Island Reversal” pattern on the daily chart. All of which indicates further weakness for day's to
come. It may thus retrace at least 61.80% of the recent run up from 3918 to 4731 and test 4229 below that it may even drift down
to 4165 which is a “Trend Line” support – Trend Line connecting the low of 4159 to 3918. This support range may turn out to
be crucial for next few days as a failure to hold above the support range of 4160 to 4230 may indicate tremendous weakness and
a deeper correction even below the major swing low of 3918. In that case it may dip to the next support range of 3550 – 3600.
Alternatively if Nifty takes support near the range of 4160 to 4230 then we may see a bounce. However for the immediate term it
appears weak and the weakness may extend further on a breach of the support range. We have already mentioned about the 19
Months Time Cycle which points to the current month of August' 09 as an important month; as a prominent peak/bottom can be
formed in the month. We give high credence to the mentioned time cycle especially because it has worked beautifully well in the
past several instances in anticipating a Top/Bottom. The time cycle study coupled with the “Negative Divergence” registered
by the “MACD” indicator as well as “RSI” oscillator on the weekly chart (a combination earlier witnessed only at the peak
level of Nifty – 6357); leads us to believe that a prominent top may be in place in the current month of August '09. We would also
like to revisit the 49 Day Time Cycle; we have been using earlier which indicates today's session as an important date for a
reversal in prices. The level of 4619 may now serve as a stiff resistance for Nifty in the immediate term. Support levels for
tomorrow's session are placed at 4359, below which it may further correct to 4229. Resistance levels for intra day trade are
placed at 4432 and higher up at 4468, beyond that the range of 4500 to 4525 may prove as a very severe resistance for Nifty.
Moving Avg Sensex Nifty
13 Day EMA 15227 4514
50 Day EMA 14653 4362
200 Day EMA 12960 3899

(NOORESH)

Sensex Technical View :
A big drop out of the blue ... This is what makes market so difficult place to be !..
Technically the recent most trendline comes very close to 14700 area which is also the bottom seen last week.Also the orange line from the lows before election is another strong support.

Fibonacci retracement of 61.8% comes to around 14250-14300. So index is back to the support zones although the steepness of todays trade makes it a lil uneasy but till this market doesnt give a weekly close below 14200 the uptrend remains in place though caution be used always.

Rising Wedge :
On the pattern front it does seem like a rising wedge may be formed in weeks to come. This seems to be similar to the one in oct-Jan last to last year. Although such a pattern takes a long time to develop with 3 bottoms and tops on either side before an eventual move finding the direction. Will see charts of oct-jan , crude and other indices on this pattern in the weekend.

Or else the index can get into a huge consolidation between 13k-16k. So we still have to wait for next few months before the next major move unfolds. Till then continue to trade the range with broader market.

As always i would strictly mention to avoid leverage as volatility may increase. Keep reduced volumes to conserve profits made in previous good periods. Focus on the broader market as thats where the action could shift.

Stocks to watchout for :

IOC and ONGC still good for short term till they stay above 560 and 1140.
IFCI could not cross 54.GSPL still on radar.

(NOORESH)

Click to enlarge the chart so can read the target levels easily.
IOC :
Sustained move above 575-580 can give a good short term trade.

IFCI :

Momentum traders favorite stock. Sustained move above 54 may lead to a quick move to 60 + in short term. May take a small dip before the sharp move starts.

GSPL :

A strong breakout is possible in the medium term. For the short term the stock can test 80-85 levels.

Disclosure : Already recommended to clients at 70.5 yesterday.

Some other stocks :

ION exchange

the stock was discussed earlier also as a good funda pick seems now the stock may see smart volumes come in. Close above 115 for 2 sessions may lead to a move beyond 130 in short term.

KLG systels has given a small breakout and can slowly move higher but 5% circuit limit :(

Guj Flouro and Hikal limited look interesting but not heavily traded stocks.Investors can have a look.

RUMOURs and Badhi Baatein ! TAKE UR OWN CALL ... NEW SECTION ( do ur research or speculate with the risk involved) ... Just some market buzz. No onus on me if things dont go as rumours say.

NDTV stake sale to happen at 220 + .. Something cooking in here.

BPCL , HPCL may run before Oil India IPO.

Spicejet,Jetairways and Deccan can see renewed buying interest in next few weeks.

FMCG premium given to many stocks and super moves. Will pharma stocks see similar re-rating in months to come.

Small private banks like to move up on being possible takeover targets or catch up with large moves by the big ones.

NOORESH)

Although i dont like to comment on not so good stocks or on the manipulations in the market place but this is an exception. Some weeks back just happened to receive a call from a friend who just started investing and a major novice asking me what to do about Anu Labs which he bought around split or bonus time thinking he will make a killing :) ..

All i had to say is best of luck as i still dont understand how companies which are just a few years on the listed space decide to reward shareholders with bonuses and more. Whereas old companies take years and even decades to come out with a bonus.

On a curious note just happened to check the announcements and price movements which clearly show how a lay investor got stuck coz of buying on news and market-makers dumped the stock on news. Volumes and delivery volumes would make the picture more clear but m not interested to delve much more into it.

The above chart is bonus/split adjusted so it becomes easier to understand how the price kept falling after the news and maybe in cases the bonus share wont have been credited into the account leaving no option to the investor.

All in all.... Do good research and a good news or a spam e-mail is not the way to make a killing. I think some other chap also asked me about Vishal Info some days back in a similar manner :P

Sensex Technical View :
Nothing much has changed in the sensex view. 16050 on upside and 14500-14800 on downside remains the range for now. Till we dont see a move beyond it it would be better to look into stock specific moves.

Large midcaps/Midcaps/Small caps:
In the last couple of weeks or even before that the view has been to shift focus to the broad market then to look at the index as i expect the real action is there. Have been advising lot of such trades to clients and will still be doing that with small trades in large caps.
Earnings surprise, elections and many events led to a re-rating of index stocks as well as fy10-fy11 projections revised on higher side but what is missing is that the performance on the broader segment has been more surprising and interesting so similar re-rating could be possible in there which could give lot of opportunities in next few months as money would try to flow on the larger broader market.
So for next few weeks would stick to this segment !! ...

OIL and Gas :
Volumes and price build up being seen in many stocks from these sector and related stocks. Refinery companies like IOC, HPCL , BPCL and others like ONGC , GAIL , GSPL , Petronet Lng and even EKC,PSL , Nitin fire are seeing investor interest. Expect more moves in this space if we see follow up buying.

Stocks to watchout for :
Large caps or liquid names first and then a diff posts with mid cap charts ( many already sent to clients which may not be discussed here )

CAIRN
The stock can give a good 10-15% move if stays above 252 levels in the short term.
IOC
Sustained move above 575-580 could see a tgt of 600/640 in near term. These stocks may help the index moves.
ONGC
A nice breakout in happening. Sustained volume supported move above 1230-1250 can even take the stock to previous highs of 1350-1400 in short term. Can lead the index if follow up buying seen.Can be bought on declines to 1200-1150.


MY CHART

Nifty :: Finally Nifty break Ending Diagonal 2-4 line at 4420.. May be this c leg (from top 4731 to 4359 a, from 4359 to 4619 b) correct as usual up to 4246.. And up to 4150 still Innervated Head and Shoulder structure intact.. Before 4246 watch strong support zone 4362 to 4323.. After a hard hitting, may be Nifty take some rest and we see some side way momentum near this support zone.. Be careful to give long commitment immediate, all word market correct sharply and may be made top with C wave so wait for conformation then buy for mid term. Till then stay in sideline.. For 18^th Aug our strategy watch strong support zone 4323 to 4362 if Nifty open gap down and hold this support buy in deep (S.L 4323) sell at high.. Once Nifty break 4323 next strong support only at 4246/4228.. Resistance for up move at 4400/4458/4498/4538/4585.. Supports at 4362/ 4350/4334/4323/4246/4228..

(S S Cheema)

We seem to have come made a violent attempt to make a breakout. This has been on the lower side that has been expected by me and my bear fraternity for a long time. So many reasons that the markets were just sweeping below the carpet – and well I think the time has come for the markets to see what the lower side of the life seems like. There has been a Chinese angle to this meltdown and I think that this was about the time that it happened. In any case if this was to happen then either this or that would have been reason enough. No justifications either side. The markets opened gap down and then the sell off just gathered strength without a respite. Look at the FII data – like I had mentioned yesterday that the FIIs do not seem in any mood to buy into our markets any longer. Now there is another thing that we are perhaps are not considering – and that is that though the DIIs are merrily pumping in money at each level – where do they have their stop losses? (If any – I am certain that since they are playing with my and your money – the stop losses are far away) And that they will start selling at much lower levels. I pray for my mutual funds. For all those who think that the market has already dropped so much and would not like to jump on the shorts – then think again – the fall has just started and it is of global scale – if what I see purely on the charts alone then there is along way to go and that way is just pointing downwards. The markets should give a confirmation that he trend is down and down only. Okay – now I will try not to get carried away and come to the Brass tracks…

The Global cues are bearish and actually saying bearish without throwing a bucket of red paint on top of it would perhaps convey the situation a bit better. After burning every index and stock in Asia the fire went on to Europe with FTSE down 1.48%, Dax down 2.02% and CAC down 2.16%. US opened well in red and then traded in fairly narrow band to close at the lowest for the day. Dow was down 2%, Nasdaq down 2.75% and S&P down 2.43%. The Asia once again started the day in red but Nikkei is now green up 0.2% – the strait Times – now in early trades is just 0.16% down. The meltdown yesterday was supposedly due to profit taking in the wake of slower-than-expected economic growth in Japan. It has been described as one of the worst single day percentage loss in last six odd weeks.

Next I come to the Candle sticks. Frankly what I had expected yesterday was a piercing candle – that would go more than two third down the white candle we had on last Friday and that would ideally had been enough to signal a good reversal – but the markets just did not stop there and continued the journey till they took support at the 50 EMA. I have magnified and put the candles up for all to see. The candle had taken a support on 12 Aug and now 17 Aug. 3 EMA has definitely fallen below the 15 EMA and 15 EMA is just 14 points above the 20 EMA – actually poised for a fall below. Already the 315 has generated a sell – second time in last ten days. – now it has to be seen whether we bounce back vigoursly to show that we are range bound or continue down. The ADX gave a sell yesterday and today too the value is 14 – so it will only be in these coming few days that we will know whether this downtrend has enough strength to sustain. MACD remains bearish. RSI generated sell and TRIX is looking down. Slow Stochastic too has turned around but not really given a sell. All in all – majority are either generating sell or justifying a greater downfall of indexes.

As far as the option data is concerned the Put call ratio has reached 0.8866 and open interest is maximum in 4700 call and 4300 put. So on the down side the 4300 may be a difficult nut to crack. Besides this there is a build up in 4600 and 4500 call so upward journey may be as painful with 4700 being the absolute max. The option pain is minimum at 4500 – 4400 range at the moment. Inspite of reliance defying the general bearishness of the markets I was certain that it will never cross 2100 because of the highest call buildup there and now I am even more certain as basically there is only call buildup with very less put writing – so the downside in reliance may be expected more than the yesterday’s 94 Rs odd fall.

To summarise global cues remain to be bearish. On charts all seems favouring the bears though a small bounce cannot be ruled out due to the ferocity of the fall yesterday. The options are still not showing the extreme of sentiments but still favours the bears. Ideal strategy is to remain short – do not hold shorts if likely to close above 4604, If holding log best would be get off the bus at the best levels today – and do not hold longs in any case if closing below 4464. For intraday go short below 4486 and long above it.

Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty at signal	Points gained/lost since (4387)	Remarks
315 Strategy	Bearish	Sell/17 Aug	4387	-
ADX	Bearish	Sell/17 Aug	4387	-
MACD	Bearish	Sell/06 Aug	4586	+ 199
RSI	Bearish	Sell/07 Aug	4387	-
Slow Stochastic	--	--	--	--	No signal
Options	Neutral / bearish	--	--	--

P.KANDASAMY)

Nifty :-Close - 4387.90. Sell below 4360 with sl 4395 for tgt 4335-4315-4290. Buy above 4405 with sl 4380 for tgt 4425-4450-4475. Buy at dips to 4250 with sl 4220 for tgt 4295-4320-4335. 1.RIL :- Sell below 1920 with sl 1945 for tgt 1898-1880-1865. 2.LNT :-Sell with sl 1436 for tgt 1392-1382-1365. 3.JPHydro :- Sell with sl 81 for tgt 77-75.50 below 75.50 it can touch 71-69. 4.Jaipra :- Sell below 198 with sl 201 for tgt 194-191-189. 5.KPIT :- Sell at rise to 59.25 - 60 with sl 62 for tgt upto 56.

buy nifty- above 3597 sl- 3569 tar- 3616/3654 sell nifty - below 3520 sl- 3547 tar- 3470/3434. nifty range for d week - 3520-3750 ( break n tarde any side will deciede future trend)