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.