|
We now have the first ever test of the 200-day
Simple Moving Average (dma) in the current
primary uptrend that started since early March
last year. Yesterday, the Nifty did test the
200-dma at 4985. Technically speaking, a
hammer-line (in candlestick parlance) after a
fall when the 200-dma gets tested for the first
time signals, at least, a bottom formation for
the short term. The hammer line is formed when
the security, in this case, the index opens at
the higher end of the day's range and moves down
much lower but closes near or around the day's
high. This generally suggests more short
covering to come.
However, the anemic global cues especially the
wobbly nature of the Euro and the limping state
of the equity markets across the Atlantic does
not inspire the required confidence to get back
into the buying mode.
This morning, Asian markets are aping the same
weak movements that we saw in Europe and
America: some are marginally up and others are
marginally down, the overhang of the negative
sentiment is too much to bear with. The SGX May
Nifty is trading at 5039, down by 16 points with
moderate volume.
The Nifty Put-Call Ratio (PCR) is at 1.10,
dropping only marginally from 1.12 while the
Nifty VIX still shows a high reading at 27, both
these indicators continue to favor the bears.
The bulls still have a long way to go to turn
tides for them while the turn yesterday does
show that they have a fighting chance to stem
the rot. However, unless the FIIs come back in
the buy mode in any significant manner any
sustainable recovery is still a far cry.
In case, there is any dip during the day to
sub-5000 mark by the Nifty then the range
between 4974 and 4966 would act as strong
support zone. Prior to that, the levels around
5020 would offer reasonable support to the
Nifty.
On the way up, 5053 and 5083 are two key levels
to watch out for. If these two levels are
cleared then the Nifty would try and test the
severe supply zone between 5120 and 5130. Only
when the Nifty clears this zone we can expect
the bulls to regain some of the initiatives and
a decisive breakout above 5185 would signal a
sustainable recovery in the market.
Rajat K. Bose |
| * |
All prices relate to the NSE, unless otherwise mentioned. |
| * |
Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there. |
| * |
Book, at least, part profits when the prices reach their targets; if you continue to hold on to positions then use trailing stops to lock in your profits. |
| * |
Don't chase a stock, if you are unable to buy a stock because it hits circuit levels on successive days, don't buy that. |
| * |
The analyst and his clients may or may not have positions in the securities mentioned above. |
| * |
Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these
recommendations. |
|
