Nifty opened positively for the week and went on to make a new six months high and touched 3500 and then started to fall. One important thing that has happened during the week is that nifty as moved above the 200 day MA and closed above it for one day and for remaining two days even though it moved above it, it was not able to close above 200 Day EMA, thus giving an indication that indices have exhausted and need some rest before conquering the 200 Day EMA. Now 200 day EMA becomes a formidable resistance to the market for the coming week. Another important thing to have happened that the 20 Day EMA has moved above the 100 day EMA signifying that markets are gaining strength and we have very good chances of moving further upsides. Even 50 day EMA is also just about to move above the 100 day EMA proving the strength of the bulls so now it’s a buy on every 200-300 fall. The 20 day EMA has moved above the 100 day EMA after nearly 15 months indicating that bulls are stronger compared to entire last years. During the last bull run from 2003 to 2008 when ever 20 day EMA has moved above 100 day EMA 50 day EMA has also moved above it and nifty has risen by around 1000 to 1500 points from that cross over. Considering this as crossovers have happened now only we have to closely see whether the crossovers will sustain or not. On sustaining we can see the market moving up atleast 20%to 30% from current levels. So keep a close watch. As long as nifty is above 3000 we have all chances of moving towards 4000
As nifty is in highly over bought zone and started to correct from there we might see market correcting during the week towards 3200 levels and then make an attempt to move past the 200 day EMA so this week we might get good opportunity to go long at lower levels.
Elliotte Wave: Elliotte wave structure of the last one and half year is furnished below,
It can be seen from the above that wave A appears to have completed and we might be in the “B” wave and the minimum retracement of 23.60 is over on movement above 3400 and the next target happens to be 38.2% which is at around 4000 so any move above 3400 will take nifty towards or near 4000 levels.
Directional Momentum index
As indicated in my last weeks update bulls have taken firm grip on the market. DMI has moved from 32 to 37.60 levels indicating that bulls have gained upper hand. +D1 line is above –D1 line and is still rising indicating that bulls are slowly and steadily coming into the market and taking control of the market.
Nifty Swing Trade:
As per two day swing trade currently it is in buy mode and the trend will reverse on move below the 3355 level (future). As per swing trade it appears that nifty is on its way up as there is tremendous buying coming whenever it falls. If NF goes below 3358 it has chances of moving towards 3301 and there after 2951 The points being discussed in the swing trade are that of the future.
Current trend – buy ( generated at 3140)
Reversal Value - 3325.
As per pivot chart it appears that nifty has turned from up move to down move in shorter term and till nifty does not move above 3431 down sides are not ruled out so currently we may short nifty with stop loss of 3431
Banknifty
Current Price - 5058(future)
Current Trend – buy
Reversal Value - 4862
Individual stocks
XL telecom and energy:Rs.39
This stock has fallen from around 500 levels to around 20 and now it has just started the up move with some good volumes indicating that worst may be over for the stock and we have very good upside potential. The company has been performing exceedingly well for the last three to four years exept the last quarter ended December 2008 where the profits were not much. It has an TTM eps of around 15 and is trading at a PE of just 2.5. Another point to be noted is that the stock is quoting at 50% below its net net current assets. What is net net current assets it is net current assets minus long term loans divided by no of outstanding shares. Net net current assets per share works to around Rs.67 and is quoting at 38 indicating that the stock is grossly undervalued. Warren buffet used to invest on the basis of net net current assets during bear market and he used to make killing in such stocks. So it’s a great value pick at this point of time. Stop loss Rs.28/-
M.Sri Mahidar
April 19, 2009 8:55:55 PM IST
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