Saturday, July 11, 2009

The Melting Point... Nifty Corrects Further

Treading on a Thin Rope.

Nifty back to 4000 levels. It went almost 30 points below 4000 during the last hour of trade on July 10, but got averaged out a trifle above 4000 in last 10 minutes of adjustment period. On Thursday (July 9), Nifty made a futile attempt to cross 4105-4125 zone for multiple number of times only to end lower and in the process not witnessing that crucial cross over.

Again coming back to July 10, Nifty made last attempt to cross 4125 during the first half of the trade, but all in vain - it didn't manage to cross the crucial hurdle of 4125. Thus, nifty made level testing of 4125 levels twice in last 2 trading session only to end lower. This provided enough indication that Nifty (read Markets) was witnessing a constant supply of paper at lower levels, unwilling to wait even for a minor bounce back.

What Next ??

As mentioned in my previous post, Nifty seems slated to test 3800 levels in short-term horizon. The journey from Nifty 4000 to 3800 need not necessarily be as swift and fast as we witnessed from Nifty 4400 to 4000. But, quite possibly, we could see some consolidation in between 3900-4250 (perhaps even 3900-4125), before moving forward to attaining Nifty 3800 or even sub-3800 levels.

When Should Investors Start Buying ?

Investors were alerted (in the previous post) as to not to indulge in catching the falling knife when Nifty breached an all-important 4250 levels. However, they can indulge in small quantity accumulation in Nifty 3900-4000 range, preferably as nearer to Nifty 3900 levels as possible. Presuming that Nifty might take some support at 3800-3850 levels, investors can accumulate in small quantity below 3950 levels. The second tranche of buying to be done around Nifty 3600-3700 zone.

A point for Investors to note is that even if they don't get the opportunity to accumulate their favourite stocks around Nifty 3900 levels in very near-term, they could rest assured that for any substantial upturn to occur Nifty has to cross 3 significant Resistances situated around 4125, 4250 and 4400 levels. Also, the upward ride to cross all these 3 resistance would not be a unilateral rise and it would be a slow, wacky and a consolidating move.

Yawning Gap

But, there is no surety that Nifty will sustain a support at 3800 levels. A yawning gap on charts have been left post-election results. A jump from Nifty 3650 to 4350 was a huge 20% gap-up opening on the day Congress-led UPA Government was re-elected on Centre. This gap needs to be filled up on charts sooner or later. Half the gap has been already filled from Nifty 4350 to 4000 levels, remaining from 3650 to 4000 still pending.

However, it is not necessary that Nifty might make an attempt to fill-up the whole gap at this very attempt. It may take longer time depending upon market trend and mood. Markets have a knack of giving its participants a feeling that it moving ahead to do that pending repair job of filling the gap, but it may well decide to do it later. The idea to convey over here is that the repair job needs to be done, but not necessarily at this attempt and at current juncture.

Rocky Resistances

Lastly, to point out over here that now markets have 4 hurdles to pass for indication of any kind of bullishness. A primary level would be Nifty 4125 which proved to be a hurdle on weekly basis. Second hurdle is Nifty 4250 which was an active support for the old Nifty range of 4250-4650. however, that support turns out into Resistance unless Nifty rules below it. A Trend Reversal could be witnessed above Nifty 4400 levels and a confirmation that we are moving ahead with a rally for a substantial rise could be procured only above Nifty 4650.

Fundamentally Sound

If markets correct substantially, here is a list of Mid-cap stocks to keep an eye on from strictly Long term perspective. Accumulation to be done in small quantity on dips, staggered over a period of time.

Thermax, Moser Baer, Kalindee Rail, Videocon Ind., Adlabs / PVR, Gitanali Gems, Alok Industries, Biocon / Glenmark, Financial Technologies, I-Flex / 3i Infotech, IVRCL / HCC / Patel Engg., Punj Lloyd / GMR / JP Asso, BOB / BOI / Indian Bank, Voltamp Transformers, I.B.Realestate / HDIL, Educomp / NIIT Ltd., Time Technoplast, Aditya Birla Nuvo, Deccan Chronicle, Crompton Greaves, Pantaloon Retail, Reliance Capital, Praj Industries, Jain Irrigation, Aban Offshore, GE Shipping, Everest Kanto, Opto Circuit, United Phosphorus, IDFC /PFC, Bartronics, Sesa Goa, BEL.

Note: The above list of Mid-caps is not a recommendation to Buy stocks. It is just a list of few mid-cap counters for investors to focus during down turn as probable buying targets when their valuations touch lucrative and reasonable levels. While some of the above mid-caps are already quoting at cheap levels, some others are not so cheap at current levels.

Disclaimer: All data, content and/or reports posted by Viral Rajnikant Dholakia on this site are only for information and educational purpose of visitor/readers of this blog. It does not constitute to be a recommendation/offer/advice to buy or sell assets/securities in any form. Individuals/organizations are requested to take an informed call by consulting their Financial Advisor before acting on any matter/data published on this blog. This blog does not warrant of any kind of accuracy, adequacy and completeness of data, ideas or thoughts published in it. This site and Viral Rajnikant Dholakia assumes no responsibility or liability or loss or damage of any kind/nature for your trading and investment decisions and its consequent results.


Amar said...

Hi Bull,

What about GUJ NRE COKE, its also a growing company. please suggest if its worth buying on dips.

Thanks & Regards

Viral Rajnikant Dholakia said...

Dear Amar,

The list of mid-caps mentioned in this post is not a complete list. I may have missed many good stocks. I just listed the names of stocks which I could recollect in a short span of time while writing the post.

Yes, even Guj NRE is a good company and even it could be bought at lower levels. You can opt for it around early 30's for accumulation of this stock.