NIFTY WEEKLY OUTLOOK (06/09/2010)
MOMENTUM INDICATORS REJECTS RUN AWAY MOVE ABOVE 5500
Last week nifty opened at 5408.90 & went down to register the low of the week at 5348.90.It then rose relentlessly to mark the high at 5513.95 & finally closed the week at 5479.40.Thus it gained 70.70 points over the previous week which is 1.35%.
RETROSPECT: - We are still of the view that there is no secular risk free move & would continue the sideline action.
SENTIMENTS: - There is no perceptible change in sentiments over the previous week.However the earning season's short fall to the expectations have become reality & began readjusting in price level.Expectations started to build on fertilizer & power policy after the oil marketing & telecom policy from the government.However the realization of the CHINESE WALL of 5500-5600 has dawn on sentiments.
ELLIOT WAVE THEORY: - Nifty has been subdividing the waves & keep moving up with the lower & lower momentum. Thus it is trying out the patience of Bears. We have given below the same wave count with minor alterations. As shown below there is still one minor degree 5th wave & we see the 5660 as major resistance. In our estimate this 5th wave will further subdivide & may consume most of the time of coming week. However on completion of this wave nifty should retrace back to around 5350 level. In view of this we will skip the further integration for the long term wave count & would proceed only with further unfolding of the data.
JAPANESE CANDLESTICK:- Last week it has formed the MORNING STAR as shown in the chart above.It has turn the nifty upside.However we can not expect much longer run up as it was formed only after a short decline so reversal power will be of lower degree.
CHART PATTERN:- The rising wedge pattern in the weekly chart is still valid & break out will be confirmed on breach of 4900.It may be pertinent to note that in daily also there is wedge formation & has broken last week.
OSCILLATORS READING:- The daily RSI & MACD has turned down & indicates the short term bearish atleast.The weekly RSI,STOCHASTIC & MACD have remained the neutral mode & may turn down if nifty moves down with vigour.
SECTOR ANALYSIS:- This week we are analysing the CAPITAL GOODS sector.It has corrected from 15400 to 14460 in last two months & stated rising.Werecommend investing in this sector with the stop of 14500 for the target of 16000.
STOCK RECOMMENDATIONS:- (1)BUY INDIAN HOTEL AT 106 WITH THE STOP OF 104 FOR THE TARGET OF 116. (2)BUY APOLLOTYRE AT 82.50 WITH THE STOP OF 81 FOR THE TARGET OF 92. (3)BUY PUNJLLOYD AT 112 WITH THE STOP OF 111 FOR THE TARGET OF 117 (4)SELL ASHOKLEYLAND AT 76 WITH THE STOP OF 77 FOR THE TARGET OF 72.00 (5)SELL HINDPETRO AT 517 WITH THE STOP OF THE 525 FOR THE TARGET OF 490 PULSE-READING:- JKD SOUL VOICE SAYS THAT MARKET IS JUST RIPE TO EXHIBIT THE IRRATIONAL EXUBERANCE & RETAIL & NOVICE INVESTORS ARE ADVISED TO REFRAIN IN THIS MADNESS. OUTLOOK & STRATEGY:- Keep strict watch on the 5475 for any long position.On the upside 5610-5660 is sticky area for any long positions.
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