Medium-Term Broad Range: Nifty 3150-4250

There is a query from Dark Knight Abhay in the Comments section regarding Market Outlook from the Short-term horizon. He has bought a few trading stocks around Nifty 3600-3650 levels.

Hi Viral,
You commented earlier that if nifty has a weekly close of 3550,it may touch 3800-3850 levels. So do you still recommend that one should hold on till 3800?

My Reply:

In very short term , Nifty is largely range bound in 3600-3720 narrow band. Previously, when i had recommended an upside break-out for Nifty at 3500 levels which was a crucial hump for the markets, the recommended levels of 3550 was only for confirmation of risk-free new break-out trend. This break-out indeed happened for the good, and we tested almost 200 points higher @Nifty 3700 during one of the trading sessions in the previous week. A 200 point break-out on Nifty above 3500 is a good appreciation in actual terms.

In very near-term, markets are undecided about its next move & thus consolidating in 3600-3720 range. May be, quite possibly, markets are somewhat over-bought what with a humongous rally in Nifty since 2600 levels witnessed just a couple of months ago.

Dear Abhay...My targets of Nifty 3850-4250 are from the perspective of MEDIUM TERM broad range and not short-term horizon. Just like we consolidated for 5 months in 2500-3150 range , the next big trading range for markets from now on may well be 3150-4250.

That does not mean Nifty 3850 are up for grabs in a unilateral fashion in a vertical climb-up. Markets should, ideally, move down or consolidate before touching such dizzy targets. One never knows... may be, market consolidation within Nifty 3600-3720 could as well be a part of that much needed cool-down. In any case, if market surprises by unilaterally inching up following positive global cues, than the upside would definitely be capped around Nifty 3800-3850 before any other major up-move towards 4000-4200.

But, all-in-all, chances of a big cool-down in the range of 3150-3350-3720 is high for next few months seeing at the proportion of market rally we have had in last two months.

For Your Trading bets...
For BHEL, IDFC & Videocon i've clearly mentioned targets and Stop loss levels in my previous postings. IDFC looks strong unless it can sustain above Rs.82 on closing basis. BHEL has a strong support at Rs.1500. Two other calls were given in my previous post on Suzlon and HCC which are depicting strong trend on the upside. Stop losses are a must for any kind of trade be it for short-term or medium-term.

CONCLUSION:

My View: 3150-4250 is Medium-Term Broad Range.

Option 1: From here markets look over-bought in very near term outlook & Nifty may as well take a breather with Support @3500 & ultimate support @3350.

Option 2: Markets may surprisingly keep on rising if constantly backed by positive global cues. But, then, there may be an upside cap around 3800-3850 in short-term.

Chances for option 1 to fructify is strong, but one cannot rule out a small up-move from 3700 to 3850 in near term driven by continuous momentum around the globe. Momentum can sometimes over-ride fundamentals & valuations. Political outcome has the capacity to turn any form of trade on its heads.

I would say, book Part profits even in your short-term trades. When markets are so much inflated in so little a time horizon, it is better to play safe partly. Reduce your risk but still don't give up all your positions. Fresh Buying is recommendable around Nifty 3500-3550. And, an Aggressive Buy is thoroughly recommended around 3350-3450 range for Trading purposes.

Long-term Investors:

Investment Buying to be done around Nifty 3150-3350 range. Long-term Investors should wait with patience and perseverance. Markets have given a break-out on the upside after a long consolidation of 5 months. The old range of Nifty 2500-3150 holds no more & a new range of Nifty 3150-4250 has developed which will stay over here for quite some while. So, for those who missed value plucking around the bottom of Nifty 2500, can plunge in around Nifty 3150-3350 range which is somewhat a starting point of 3150-4250 broad range.

Most of the long-term investors have had a missed out feeling of not being able to buy around market bottoms. So, now these unleashed funds will come out for shopping on every dips and support the market on every dip and consolidation. So, funds on sidelines should maintain caution & patience. In the short-term, it would be difficult to see markets below Nifty 3350-3400 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 nature for your trading and investment decisions and its consequent results.

The Global Rally Continues !!

Markets the world over have gained substantially in last 30-40 days. Nifty has gained from 2600 to 3600, a whooping 1000 point rise, in such a short span of time. A substantial 40-45% rise in index speaks a lot about where the rally has primarily originated from - the Large cap stocks. Heavy weight stocks like RIL, ICICI, HDFC, SBI, L&T & ONGC have dragged the index to soaring heights. However, even the sectors like rate sensitive Banking, Auto & Real-estate were at the forefront of leading the current rally.


Short-Term Market Strength Signals:

Speaking about market movement in last 1 week, they have largely remained range bound in Nifty 3600-3700 band. The markets looked over-bought around Nifty 3700 levels, which would mean either a consolidation in a narrow range of Nifty 3600-3700 or a pull-back to the nearest support zone i.e., Nifty 3350. Markets have chosen to remain range bound in the narrow range instead of correcting to nearest support zone of Nifty 3350 levels.

This act of consolidation is providing signs of strength & a signal to the fact that bulls are in no mood to let off gains even for a while. Whatever corrections are witnessed are on intra-day basis, giving spurts of opportunities for disciplined traders at the lower end of the narrow band.

On the other hand, markets are showing lots of Resistance on the upside around Nifty 3720 levels. It needs to cross over Nifty 3750 to head upwards for another quick rally. A major hump in the even could have been in the form of Stress test in US for its banking fraternity. The event has passed through without much hiccups and this could act as a trigger to help Nifty move above 3720 in the upcoming week.


Nifty Traders:

Risk-taking Traders can Buy Nifty around 3600-3620 with a SL of 3550 on a closing basis & wait for a break-out from Nifty 3720 for making substantial profits. Risk-averse Traders should wait for a substantial dip to bet for a long position around Nifty 3400-3450 levels with a SL of Nifty 3320 levels on the downside.

Playing within a Narrow Range: Contra Traders who would like to move in opposite trend direction can Short Nifty around 3700 with a SL of 3750 & narrow Target of 3620 on the downside.


Technical Stock Specific Calls:

Before moving forward with fresh calls for traders, first let me update the trading calls provided in my
previous post on this blog for stocks like BHEL, IDFC, PFC, Power Grid, Videocon & L&T.

1) BHEL call stock is active with a buy call in the range of Rs.1550-1630 & SL of Rs.1500.
2) PFC call is also active with 2 consecutive closings above Rs.165 & target of Rs.185.
3) Power Grid call is still not activated as the stocks has not yet managed to close above Rs.105.

4) IDFC call is active as the stock has managed to cross Rs.82 levels for 2 consecutive closing.
5) Videocon call is also active with a SL of Rs.90 & a target of Rs.153.
6) L&T has touched Rs.1000 during a couple of trading sessions & is on its way towards Rs.1050-1100 if markets manage to hold above Nifty 3600 levels.


Fresh Trading Call:

Active Call: Buy Suzlon Energy on every dip in the range of Rs.68-74 with Upside targets of Rs.92 in the short-term & Rs.111 in the medium term. SL for short-term traders to be Rs.66 & that for Medium term traders to be Rs.56 on the downside. The stock has shown unusual strength in the past week by sustaining above Rs.72 with strong volumes. CMP 74/-

Signal Call: Buy Hindustan Construction (HCC) only if it breaks above Rs.65 (SL to be Rs.61) on the upside. Traders with high risk taking capacity can buy the stock even at current price of Rs.61-63 with SL of 55. Targets for all traders to be Rs.72 & Rs.89/- on the upside.

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 nature for your trading and investment decisions and its consequent results.

Stock Market: The Barometer of Economy's Health

Stock markets are barometer of the economy's health & prospects for the times to come. Markets are nothing but a decisive way towards collective trend of thinking of its participants. The market trend specifies the direction of thinking, regarding optimism or pessimism, in the mind of the market participants. Likewise, a volatile market reflects intense fluttering of ‘UNCERTAINTY’ in terms of whereabouts of forces that dictate market trend.

Stock markets are usually ahead of the ground realities like actual GDP performance and Economic conditions of the country. Like, for instance, the Indian equity markets started plummeting from the early part of the calender year 2008 around the month of January, whereas the worst was experienced by the actual economy in the later half of the same calender year 2008 around the quarter October to December of the same year.

Due to this specific nature of market's tendency of estimating visibility into the future, the movement of the equity markets are based on estimates of the company's future earnings prospects and visibility. That is the reason as to why market's shall often forgive the disappointing performance of company in current period of contention, only if its future earning prospects is healthy and clear.