Technical view by Nooresh


Crude cracks 130 ! … Next thing mkts need is GOVT to stay….

Sensex Technical View :

At last it seems Sensex is coming out of the pullback and crack pattern which we had seen in our previous statistic where in we saw after a new low below 16500/14700 the cracks were deeper and we dint see any retesting of previous low .

Still the indices are well below the downward channel and the trendline for the same comes around 13500 and 14100 . The short term trend could change only if Sensex crosses 14100 level convincingly . On a breakout these levels it could possibly see 14500/15100/15800 retracements which i believe could be triggered only by political stability . Global cues like crude , Dow , europe are supportive in near term as well as inflation for the week is better then expectations.

So ideally investors could wait for further action according to the govt stability as that is one of the major triggers . Although it could lead to a positive sentiment rush and pullback but investors would get ample opportunities in coming weeks to invest and no need to hurry or rush and get over leveraged .

Crude has cracked as expected and closed around 129 odd ! . Chart updated below. Technicals apply to all commodities, forex , equities but i would prefer to stick to equities πŸ˜‰ as it closes 3.30 pm πŸ˜‰ so updates on crude would be only for some time...

Traders can look to reduce longs at 13500 and 14100 and wait after that and be hedged if over exposed. Well as nobody knows about the govt :) .. i doubt even Mr Manmohan Singh knows if he has the magic number or not :)

Stocks to watchout for :

For quite some time we have not taken short term trades but focussed on investments as gap ups and gap downs are so much based on crude , global cues.Although the view on crude was bearish it would not warrant a buy on index stocks as u cant expect to time crude exactly regularly. The strategy remains to be patient and trade only the major moves and invest on dips to sell on rise.

Allahabad Bank , Vijaya Bank and Andhra Bank are the best picks in the small PSU banks segements with good div yields and book value . Downside is limited but with better sentiments one can see a 20 % appreciation . Accumulate on dips for medium term for low risk ppl.

Tata Steel is coming to the buy zone of 575-600 where partial buying can be done for long term and keep provision to add on further dips.

Bounce Back candidates for extreme short term : Keep a 2-3 % stop to cmp tgt 6-12 % move possible in 2 weeks.

MTNL , PAtel Engg, Indbull real estate.


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Article by Nooresh Merani

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