Sensex Technical View :
Bounce back seen in indices after getting into highly over sold range. Now technically if we consider 10200 to be a short term bottom then the bounce back targets could be as follows.
On fibonacci retracements the levels would be 12300/12900 as 50 % and 61.8% .
Also in all previous bounce backs since January the bounce backs have been to the extent of 23-25 %. So that would come to again 12500-12800 roughly.
Extreme short term trendline comes to around similar levels. Only a strong crossover above 13k can lead to 14200-14500 zone. From the resistance zones we can see a
Also on the lower side the target zone of 9700 and 2950 on Nifty continue to remain open technically and may get out of picture if we hold above 10200 till Jan 2009 as we can assume the correction could last 13 months. Technically Sensex continues to remain in the standard lower tops and lower bottoms .
Only a good bottom base formation followed by a higher top and higher bottoms to confirm the BIG signal which can come now after a few months after Jan 09 -- CHECK CHART only difference in the chart is the low was to be around 11900 50 % retracement but has come closer to 9700 61 %. The more important to note is the consolidation phase and then a breakout which may take quite some time but in between we could larger trading range and opportunities. We will continue to update on the same.
We saw a good bounce in many stocks and the strong ones may come back faster. Investors can look to reduce exposure at 12300-12900 if it comes. Short term trading resistance at 11900-12300 Sensex and 3700-3750 on Nifty ( Long Nifty advised to clients at 3450 and then later some trades to bring average to around 3300 -3350 tgt is 3700-3750 ) .
Stocks to watchout for :
DLF can give a bounce back to 321 -354 zone in extreme short term.
Lanco Infra buy around 175 stop of 167 tgt 195-210.
Bharat Forge , Century textiles , Arvind Mills, Bombay Dyeing can also see good deadcat bounces.
SBI has been trading in a range of 1300-1600 so one can take a short position around 1580 with 2 % stop . Similar with NTPC at 185 with 190 stop. For people who have bought on lower levels can book at the higher end with a stop of re-entering.
Market Observations :
Yet another victim of margin selling or leverage positions sold for shares which may have been pledged. Earlier we had seen similar things happen with many stocks. The stock has cracked from 240 to 60 in less then 2 sessions whereas the stock was very stable all throughout.
Now going with the data -- Friday saw a volume of around 15 + 23 lakh on both indices and 30-40 % delivery which was usual but the stock saw a drop in last 2 hours of trade implying some major investor/HNI/institutional pullout. On Monday the stock dropped to 60 by end of day with volumes of 2 crores + 2 crore shares. With a rough delivery volume of 25-27 % .
As per BSE bulk deals 31 lakh shares were sold by Indiabulls financial services at a price of 69 which clearly shows quite some shares must have been sold all through the lows. So out of the 54 lakh delivery trade 31 lakh shares was a single entity or a group of entities which might have pledged shares with Indiabulls. The selling on friday must have triggered further margin selling calls on monday and the stock has corrected without a major fundamental change.
My personal view is that stock can get a valuation of 150-250 in good days for a education sector stock with a book value of 44 , 2 rs paid up and last year eps of 11. Also the sector commands a very high p/e. Although have advised buying very small quantity at 100 n 150 with a long term patient view and would now prefer to add once it stables out arnd 48-75 zone. A V Birla P/e arm has taken warrants with a conversion rate at 305 though whether they may or may not convert. Investors can do adequate research and take exposure accordingly as the risk also is there as stock can remain volatile in near term and may need patience for long term gains.