Monday, October 29, 2012

Maybe The Credit Policy Will be The Trigger

Another narrow range day for the Nifty today. Opened with a slight gap up, continued its way down most of the day but showed a smart recovery of about 20 points in the last hour of trading and closed slightly in the green - just 1 point up. As of now it is continuing to trade in the range of 5630 to 5725. The cabinet reshuffle had virtually no effect on the Nifty. Maybe RBI credit policy will act as a trigger for the breakout from the range. Let's see whether it does happen tomorrow or not. The market is expecting the rates to remain unchanged or at the most a 25 basis points cut in the CRR.
As far as our previous recommendations are concerned, some of them have hit our target. Regarding our recommendations on Pantaloon and McDowells, Pantaloons has hit our first target of 177 and we'll have to wait and see whether it goes down to achieve our second target of 166 or not. On McDowells we had given a target of 1050 when it was trading at around 1250. Today it overshot our target too and touched a low of 989 intraday. In our recommendation on Sun TV, our target of 323 was achieved yesterday only but no fresh buying should be done here as it went below the trendline today and our next target for Sun TV is 275. A bounceback to 330-335 is possible in the next 3-5 days. IRB, Havell's, OBC and Ambuja Cement too are following our recommendations.
Attached above is the daily chart of BHEL. BHEL was displaying a bullish trend till now and today on the back of results (a 10% decline in profits), it lost more than 6%. As the trend still remains bullish, maybe, this is a good buying opportunity for us. Some good support is seen on the charts near 223. As seen from the chart, 224 happens to be a key support level (the 61.8% Fibonacci retracement) and the RSI is also close to 40. Tomorrow's movement, after allowing the market to settle down a bit, must be watched and BHEL can be bought on any signs of strength. However, if it continues to go down, next support may come in near 211. On the upside, we'll be looking at a target of 260 initially and then 290.
Attached above is the daily chart of Dabur. As can be seen from the chart, Dabur was respecting two trendlines till now and today it "disrespected" one of them and closed much below it. Though, the RSI still hasn't gone below 40 but I would still expect the price to come to the second trendline near 112-115 in the coming days. And maybe it can see a small recovery to 128-130 once again before starting its downfall again.
Attached above is the weekly chart of Gujarat Fluoro. And as can be seen on the chart, it has made a pattern which is not exactly a head and shoulders pattern but something on those lines. Though, it looks as if the price has broken through but I wouldn't confirm it this soon. I will prefer to see it go down to 310-315 before I would confirm that it has broken through the trendline. On a breakthrough of the trendline I expect a target between 170-180. But since this pattern is on a weekly chart, it will take a much longer time to go to that level. It could be as much as 8-9 months. So, patience is required. Please do subscribe to my posts, so that all posts are delivered free to your inbox and you don't miss any useful analysis of the markets in the future. Happy Investing!!!