NAGARJUNA CONSTRUCTIONS - BUY CMP 180

 

Nagarjuna Constructions has given a breakout of rectangular consolidation pattern during which it has been moving in a band of Rs.30 for nearly 6 months. Breakout has happened on Friday's close with a rise in volumes. The stochastic has however given a negative crossover indicating mild short term weakness, however the medium term looks good. Investors could look to buy at lower levels for gains in the intermediate term.

Target : 210

Stop Loss : 175

BILCARE - BUY CMP 555

 

Bilcare has broken out of ascending triangle pattern as shown in the attached chart. Breakout has happened on 8.3.2010, but as is usually the case it has fallen back to its support line at 552. Yesterday it has bounced from 552 and is poised to move higher. Stochastic is however showing a -ve crossover and this stock should be avoided by conservative traders. Other indicators are neutral to +ve.

SL : 545

Target : 770

TATA ELXSI - BUY - CMP Rs.299

 

Tata Elxsi has shown breakout of symmetrical triangle pattern as shown in above chart. Volumes have increased from 108 K shares to 487 K shares on breakout. Fundamentally also this is a good stock to hold and can be a part of an investors longer term portfolio.

Target : Rs.345

SL : Rs. 285

BOMBAY DYEING - BUY CMP 580

 

Bombay Dyeing looks interesting having broken out of a symmetrical pattern with heavy volumes of 979 K v/s 241 K shares.
Moving Average, Stochastics and MACD have given positive crossovers, while RSI is neutral.

SL : Rs.555

Target : Rs. 655

NIFTY UPDATE

 

Nifty has closed well above its 200 DMA (which provided it with strong support) and is now poised to test new highs. As shown in chart above resistance exists at 5200 and then at 5300 which should act as a healthy pause in this market. Given time and strong global cues Nifty should cross these hurdles without major corrections and head for our long term target of 6800 as indicated by the Inverse Head and Shoulder pattern which has formed on the weekly charts around July 2009. A pause or slight correction would be a good opportunity to get into stocks which are technically well placed. I have a feeling that the time has come for mid and small caps to now make their move. Readers can look at stocks which have bounced off their supports and are yet to move close to resistances. Infrastructure stocks which have not performed so far could prove to be a good bet. If these stocks can be coupled with technically valid price patterns and bouncing off support levels, they can be bought into.

TIMEX GROUP - BUY - CMP RS.24

 

Timex has given a breakout of an Inverse Head & Shoulder Patttern on the weekly charts. The breakout has happened for the second time. It could not sustain the rally the first time around because of adverse market conditions. The rally yesterday was not supported by high volumes because the stock hit the circuit filter of 5 %. Other parameters are positive to neutral.

Stop Loss : 22

Target : 40

NIFTY UPDATE

 

A positive budget has enthused the markets. The Nifty tried to take out the 4950 resistance on Friday but failed to close above it, indicating that the bears still have some firepower left with them. On the whole the martket look like it is going to breakout above its near term resistance of 4950, albeit after some struggle by bears, and head towards 5300. The 5300 high made in January 2010 will be far more difficult to overcome. In my opinion, traders can take a long call on the markets now, after applying the 7 parameters in the case of individual stocks.

NIFTY UPDATE

 

Nifty has moved in a directionless manner all of last weekwithout testing any major support or resistance levels. As indicated in the chart the support now seems to be at 4700 which is the present position of the 200 DMA and the resistance is at 4950. It looks likely that the outcome of the budget and the market perception of it will be the decider in whether the market overcomes its resistance or falls below the supports. Interesting week ahead.

BAYER CROPSCIENCE BUY CMP -586

 

Despite uncertain market conditions, Bayer Cropscience looks like a promising buy, even on fundamentals. It is one of the largest players in the seeds and pesticides business, with a strong parentage, being a subsidiary of Bayer AG of Germany. With increased focus expected on agriculture in the budget, this could be one of the beneficiaries. Again it has a huge land bank in Kolshet near Thane, which is lying vacant because of plant relocation. It is estimated that the sale of this land could be worth around Rs.400 to 500 per share. Also the parent company has got a large majority stake and could look at delisting which would provide an attractive open offer to investors.

Technically as indicated in the charts, it has broken out of a rectangular consolidation around 585 and is supported by strong volume action. Other indicators like Moving averages, RSI, Stochastics and MACD are all showing positive crossovers.

This stock could warrant a long term hold for investors portfolio.

Target : 665

Stop Loss : 575

NIFTY VIEW

 

Readers would be tired with the directionless movement of the Nifty. It has been see-sawing all over the place, closing at 4750 on the lower side and testing 4900 on the upper side. To add to the confusion, various commentators have been calling for an end to the bull markets. There has however been no clear indication that the bull market is over. We could merely anticipate a fall, there was no confirmation. We know how dangerous it can be to jump to conclusions on the basis of insufficient data thrown at you by the markets. In such times it is better to stay away from the markets, take a breather, go on a vacation till a clearer picture is revealed.

The picture now is still uncertain, whether this is a trading bounce due to short covering or whether the intermediate trend has changed to bullish. A look at the attached chart shows that the 200 DMA (Red line) has held out strongly at
around 4750. The markets have bounced back strongly from this level. However we are not yet out of the woods. This is because 4950 has acted as a strong support at least 4 times in the past. It has also given a resistance in the recent fall when the markets tried to claw back but failed. This has been indicated by blue coloured bars in the chart. Once 4950 is decisively crossed on a closing basis we can take a more confident views.

Readers have been writing to me enquiring about the lack of posts/calls in the past few days. I have deliberately avoided putting out calls because as we know we we trade with the trend. When the trend is not clear we adopt a wait and watch approach. Even though the scanner has been throwing up some buy calls, I have refrained from posting them. We will take a call once 4950 is broken on the upside.

NIFTY - TREND

 

The present Nifty chart is showing signs of Nifty cracking. Levels to watch out for would be the 200 DMA (shown by red line on the chart. The next support is provided by the 200 DMA at 4650, after the conestion based support at 4750 was broken yesterday. If the 4650 support breaks we have another congestion based support at 4600. A break of this support would herald the beginning of a severe correction because then we would have a lower bottom in place thus breaking our uptrend principle of higher tops and higher bottoms. Investors would do well to book losses whenever stop losses targets are hit and not initiate any long positions until a clear uptrend is established. Going short is also not advised at this stage as the market looks technically oversold and a short squeeze could result in a sharp rally. So stay out till the market gives you the next signal in either direction.

BANK OF BARODA - BUY CMP 575

 

Bank of Baroda has given a breakout of an ascending triangle. Volumes are fairly stable, but if you compare it to volumes of 3 periods ago, there is a strong jump, with nearly 4 times increase. Moving averages have given a positive crossover.

MACD, Stochastics and RSI have all given positive crossovers in our periods under consideration. Moreover MACD crossover is close to the zero (centre) line which makes it more bullish.

Target : 650

Stop Loss : 555

NIFTY - HAMMER AT BOTTOM

 

As can be seen from the attached chart, the Nifty has given a hammer at bottom signal on the daily candlestick chart. Confirmation in the form of a strong light candlestick is awaited on Monday. aggressive traders can trade long on the basis of the hammer on Monday keeping strict and tight stop losses, whereas conservative traders may wait for the confirmation to come in before initiating long positions. Remember, Candlestick patterns are short term patterns and the new patterns which develop after must be closely analysed, and investors must lock in profits/book losses at the sign of trouble ahead

The 4720 - 4750 support zone has held up admirably, preventing the Nifty from falling below it, even in the face of adverse news from RBI on the interest rate front. Let us hope that a strong bounce from this support results and the bullish trend is resumed.

For those investors who would like to go long, they would be well advised to do so only in Large Cap Nifty components. This is so because any bounceback is more likely in the Nifty rather than in mid and small caps and also the windscreen ahead is murky and a clear buy signal has not yet been generated.

NIFTY SUPPORT - FIBONACCI RETRACEMENT

 

Above chart indicates the retracement of the rise in Nifty from its lows in March 2009 upto the recently made high.
This is a retracement of the rise from Nifty 2500 to Nifty 5300 approximately. As readers may observe the first major line of support i.e. the 23.6 % retracement of the entire rise stands at 4670 to 4680 (approximately).

NIFTY - SUPPORT LEVELS

 

Investors will be distressed by the sudden downturn taken by the Markets, but this is the nature of the markets and this is what makes it interesting.

I'll try to analyse some supports for positional trading and the strategy one should adopt in such a scenario.

The first major support for the Nifty exists at 4722. This was as strong resistance zone during July to Sep 09, which took the Nifty nearly 3 months to break.

If 4722 is broken on the downside the next majot support ( a very strong one) is at 4600. This has acted as a resistance as far back as July 2007 and has further acted as either a support or resistance at at least 5 more major points in the past as indicated by up and down arrows in the chart attached.

Ideally positional traders should avoid buying until Nifty bounces back either from 4722 or from 4600. If 4600 is broken then all bets are off. So do not be in a hurry to buy, let the markets tell you when it is buying time.

Most of the stop losses would have been triggered last Thursday or Friday and traders would have done well to book losses at that point. The further fall in the markets would have validated their decision.

MAHINDRA LIFESPACE DEVELOPERS - BUY CMP 358

Mahindra Lifespace Developers is poised to give a breakout of a symmetrical triangle. Breakout has not yet happened on a closing basis, so strictly speaking one should wait for it to happen. But I am sticking my neck out on this one and reccomending it, because all other indcators like Moving Averages, MACD, Stochastics and RSI are showing positive cross over on the daily charts.

Again these days, breakouts happen with huge surge in prices and there is little opportunity left to buy. In this case there is no significant resistance on the upside unlike it would have been in the case of an ascending triangle or rectangle.

SL : 340

Target : 435

GIC HOUSING FINANCE - BUY CMP 95.40

Unable to upload charts due to some technical problem in blogger.

GIC Housing Finance is showing breakout of Symmetrical Triangle continuation pattern on daily charts with strong volumes. Volumes have increased from 464 K shares to 2.1 Mil shares.

RSI MACD, Stochastics and Moving Averages are showing positive crossovers.

SL : 93

Target : 120

SABERO ORGANICS BUY CMP 72.35

Due to some technical problems I am unable to upload charts.

Sabero Organics is showing breakout of ascending triangle continuation pattern.
Volumes have increased from 79 K shares to 1.35 Mil shares.

MACD and Stochastics are showing positive crossovers.

SL : 69

Target : 84

BUY ATLANTA - CMP 193

 

Atlanta has given a breakout of a trendline based channel with volumes increasing from 138 K shares to 1 Mil Shares on breakout. MACD and Stochastics are showing positive crossovers.

SL : 185
Target : 225

THIRUMALAI CHEMICALS - BUY CMP 139

 

Thirumalai Chemical has broken out of a trendline based channel. Volumes have increased from 8.7 K shares to 81 K shares.
Stochastics and MACD have given positive crossovers.

SL : 134
Target : 170

IMP Powers - Buy CMP 136.25

 

IMP Powers has given a strong breakout of ascending triangle continuation pattern.
Volumes have increased significantly from 12K shares to 81 K shares on breakout.
MACD cand Stochastics are showing positive crossovers on daily charts.
RSI is indicating neutral position.

SL : 131
Target : 170

DEEPAK NITRITE - CMP 164.50

 

Deepak Nitrite has shown a breakout of a Symmetrical Triangle Continuation pattern.
Breakout is accompanied by significantly higher volumes. Volumes have increased
from 15K shares on 12.1.10 to 319K shares on 13.1.10.

Price Target : 205

Stop Loss : 158

MARKET DIRECTION

The upward trend in midcap stocks is arrested for the time being.
Short term picture looks weak. This is particularly so because
markets did not rally on yesterdays good news of Infy results
and IIP numbers.Yesterday's fall was on larger volumes,
indicating potential weakness.

Investors should avoid fresh long positions, but not yet
liquidate their holdings. Tight and strict stop losses are
advised as any falls could be sudden and sharp.

ALOK INDUSTRIES - BUY CMP 25

Alok Industries is showing a breakout of a continuation pattern i.e. a Symmetrical Triangle.
The breakout has happened on 30.12.2009 with heavy volumes, but prices have not risen
significantly, therefore, giving investors an opportunity to enter the stock even at current levels.


Stop Loss : Rs. 24
Target : Rs. 40

AGRO DUTCH INDUSTRIES - CMP 16.20

Agro Dutch Industries has given a breakout of an Ascending Triangle pattern on 11.01.2010.
Voulme action is also supportive of the upmove.



Stop Loss : Rs.15.50
Target : Rs. 21

EURO CERAMICS - BUY CMP 60

Euro ceramics is showing a breakout of a long term rectangle consolidation on weekly charts. The consolidation has lasted since May 2009, and breakout has happened on 7th Jan 10. Breakout has occurred with significantly high volumes of 481K shares as compared to 39 K shares on previous day.
Stop Loss - 54
Target - 80