Sensex Technical View:
It has been one of the most confusing and volatile markets we have seen in the last few years. The index has corrected a good 10% from the top and is testing the previous breakout levels.
Although we have still not received a confirmation of a breakdown or reversal from re-test levels but its generally a very confusing period in re-test.
The long term trend for Sensex changes below 17800 and all the optimistic scenarios go out of the picture once thats taken of. Similarly weekly closing below 18800 cuts down the short term momentum and makes it a sideways market.
We need to wait and watch before concluding major long term decisions. For now we have advised clients to re-deploy cash at 19000-19400 levels and quite a bit of it was removed on sharp pullback of 5-10% in our stocks entered . Below 18800 is our stoploss.
Certain Technical Points :
- > 200 dema is placed at 18800 and 5640.
- > Re-Test of Channel is placed at 18800-19000 / 5650-5700.
- > Recent Bottom on 26 Nov was at 18950 and 5690
- > Previous breakout took placed at 18500 and 5550.
- > Long Term Parallel channel is closer to 18000 levels
- > Previous Major Bottom at 17800.
-> Midcap and Broader market has not corrected heavily in this drop.
In short there are lot of supports but when there is a breakdown there is no logic in looking for supports but wait for reversal signs. Right now our bet is that 18800 should hold and ideally 18950 should not be broken but if does one needs to be ready to get on to high cash quickly.This doesnt imply that the long term projections are dented but one needs to survive corrections to participate in the next rally. In adversity lies the real opportunity.
Investors can look to start being selective and make a list of stocks to add in coming days. So research and research.
Stocks to watchout for :
Real Estate stocks like DLF and HDIL seem can give a sharp bounce. Also there are certain signs of bottoming out and after a couple of months these stocks can be in focus.
Short Term Pick – Buy REI Agro above 28.5 for a target of 32.
Dr Reddys can be a short below 1600.
HDFC and HDFC Bank look good provided they can hold 650 and 2100.
TECHNICAL ANALYSIS TRAINING
Ahmedabad January 22-23
( Limited Seats)