Tuesday, July 21, 2009

Time For A Small Break??

Abhay has posted a query in the 'Comments' section regarding movement in Nifty and market trend. As per his comment he is expecting some cool down after recent sharp up move in last few sessions.


Firstly, important to understand over here that the Trend has again turned in the upward direction in the near term. The break down below Nifty 4250 proved false for a sustained down trend. Nifty has bounced back vigorously after testing 3900 on the downside. Since then Nifty has fully engulfed the bearish move by rising above an important resistance of 4250 levels and now within testing distance to break above 4500 zone.

A correction of about 125-200 points on Nifty could be more likely, after witnessing a steep run-up in last week. But, again, it may or may not happen as per our expectation. Markets might as well choose to simply consolidate around current levels before next up move.

But no markets can move in single direction for a long time. So, traders should preferably look for a dip to take an entry at lower levels. During such strong momentum, even the corrections could turn out to be short lived or sometimes even as compressed in nature as intra-day correction only. Traders can buy around Nifty 4250 (which seems a bit unlikely even if markets choose to correct marginally) to 4350 zone. Accumulation of first lot of buying could be done around Nifty 4350-4300 which could prove to be a health entry point from Trading perspective. If markets choose to correct from here, traders can buy around Nifty 4350 with target of 4600-4700 on the upside, when the rally blooms again after a short correction.

On the other hand, long term investors need to wait patiently and hold on to their holdings and record price appreciation for their existing portfolio. Investors were recommended to start accumulation in Nifty 3900-3950 zone during the recent downturn. But, we missed out on aggressive buying spree as lower levels looked imminent then, but didn't turn up. At least, we were able to do some bit of cherry picking at the lowest point of the past 4250-3900 range. Investing should be a slow and a patient affair.

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hey viral..

bharti airtel is now at 401..down 50% after the stock split..can u plz comment on this..



Viral Rajnikant Dholakia said...

Dear Abhay,

Bharti Airtel is a good long-term story. It is not only a premiere company from Telecom space but also spreading its swings into Insurance, DTH, Broadband, etc.

More recently, its alliance with MTN will also give it more exposure to one of the faster moving developing markets of the world. It has already taken a step towards diversifying its business geographically.

This stock can be accumulated in the range of Rs.330-360 as Phase 1 of Buying for Long term. More could bought on dips as and when a serious correction kicks in.

Dharmesh Vora said...

Nifty first target 4800 in 4 days and then it will come to 4200, this is according to my view. What is your view for market from here.

Dharmesh Vora said...

For short term buy godrej ind. and punjlloyd target 25% return from the current level in three months.

Shalu said...

Hi Viral, Hope all is okay....there is no new post from you in a very long time.
What is your view on market now? Can we see a substantial correction in the near future?

Viral Rajnikant Dholakia said...

Hello Shalu & Dharmesh,

Inconvenience regretted. I was not finding enough time to post on the blog since last 2 weeks. I will try to get back as soon as possible.

Regarding markets, we have seen strong Nifty resistence at 4725.

After that, many important levels have come and gone. But, as of now, it would be safe to presume that the 'uptrend' is intact and this could just be a correction before next trending move.

Support for Nifty could be sought at 4400 and 4250 on the lower side. Traders can buy around 4400-4450 with SL of 4380. Below 4380, another 100 point crack-down on Nifty can't be ruled out.

What could be the possibility? We can again test 4700 after some consolidation at lower levels. Supports lie around 4250-4400, which ever stands the test of time.

The broad range continues to be Nifty 3900-4700. Below 4250, the consolidation and waiting period could be an extended one.

Can we cross 4700? Quite possibly, we could go to 4900-5100 zone before this phase of exuberance ends. But it is too soon to think about such higher levels unless we cross 4750.