Nifty's Response to past Union Budget

As SEBI has decided to keep market open on Budget day which will be presented on 28 Feb by Honorable Finance Minister Shri Arun Jatielyji. As this the first Budget under the leadership of Shri Narendra Modiji so will be keenly watched by whole world.

Will it be one of Dream Budget ?

Union Budget is just 5 days away, Below i have discussed Nifty range from 1999-2014. Maximum Range on Budget day is 346 so big volatile move on cards, so trade cautiously.

Bank Nifty Futures – February Expiry Outlook

Daily Chart

Bank nifty future hurdle at 19450 Resistance 19550 – 19900 Supports 19000/18650

Bank nifty future from chart above looks like making a head and shoulder formation which is in its last leg of forming the right shoulder (which it should, to become a valid pattern).  As per the chart above 19450 is tough line of resistance for bulls only once this level is sustained close basis the next up leg shall begin, till that the bank nifty is sell on rally and around 19000 there is a strong support from where it becomes a buy towards this resistance again.

The same has been happening form last couple of sessions. Now next week is FNO expiry for February series and for bulls to have any chance of a expiry happening higher bank nifty must be able to close above 19450 in coming two/three sessions on downside however its been testing around 19000/18900 levels and bouncing back if it close below 19000 today or monday then a sharp correction to 18350 and lower shall be seen.

Any uptrend however will resume only above 19450 towards 19900 and higher.

A correction round the corner?

The market is all set to open on a buoyant note this week. With the possibility of a Grexit from the Eurozone staved off for another four months, the Dow, S&P 500 and the Nasdaq hit record highs on Friday.

Since other markets were not trading when the deal was reached, they are likely to play catch-up on Monday morning. Stocks in India struggled to move higher last week, partly due to the stalemate in Greece. With Greece’s creditors agreeing to extend the bailout for four more months, investors can now rest easy for a while.

But even if the market rallies in the early part of the week, it would be best for short-term investors and traders to divest their short-term positions in this rally. Since stock market reactions are difficult to predict, it is best to stay away from the market for a week if you are a trader and watch the Budget jamboree from the sidelines. You can jump in next week, after the trajectory of equity prices is apparent.

Volatility is also likely, ahead of the expiry of February derivative contracts on Thursday. If traders decide not to roll over their long positions to the new series, it can drag down prices.

From a medium-term perspective too, the rally appears stretched. As we have been reiterating, the indices could move a little higher from the current levels, but a long-drawn correction is round the corner. Despite the Sensex and the Nifty gaining 45 per cent since the beginning of last February, a significant medium-term decline has not been seen in this period.

The disappointing December quarter earnings and the Government’s inability to get key Bills passed by both Houses of Parliament are making investors restive. Foreign portfolio investors have been net sellers in many of the sessions last week.

Against this background, even if Jaitley delivers a sound Budget that addresses the key issues with the economy, the market can find something to dislike in the document to beat up stock prices.

Long-term investors, however, need not worry about these gyrations. The long-term trajectory is firmly pointing upward and there is no threat to the Sensex unless it falls below 21,000 and the Nifty below 6,300. If a correction does set in after the Budget, it will provide opportunity to long-term investors to buy their favourite stocks.

Daily oscillators are ambivalent, indicating that there could be a movement in either direction. Weekly oscillators have been in a downtrend since late January. There is also a negative divergence in the graph of weekly oscillators.

This implies that despite indices drawing close to their previous highs, the current uptrend lacks inherent strength.

Sensex (29,231.4)

The Sensex moved sideways with a positive bias last week to close 136 points higher.

The week ahead: The Sensex can move in a wide band next week since the market is open next Saturday for the special Budget session. The range that is possible next week is between 27,800 and 31,500.

A gung-ho start on Monday can take the index higher to 29,844 and then to 30,129. If the rally continues beyond the initial sessions of the week or if the Budget makes participants euphoric, the rally can extend up to 31,419.

Supports that short-term investors need to watch out for are at 28,044 and then 27,811. Fresh purchases should be avoided if the index declines below 27,800. Next downward target will be 26,470. The index has good support in the band between 26,000 and 26,500. The short-term trend will be under threat only if the index goes on to close below 26,000.

Medium-term trend: There is no threat to the medium-term outlook of the Sensex yet. The index can attempt to move past the 30,000 mark to 30,900 or 31,419 in the coming weeks. But it is best to stay cautious as one leg of the long-term up-move could be coming to an end.

The medium-term trend in the index will turn negative only if the index closes below 25,120.

Nifty (8,833.6)

The Nifty closed flat last week, after the sharp decline on Friday.

The week ahead: The Nifty is in a short-term uptrend. If the opening is on a strong note, the index can rally to 8,996 or 9,045 in the near term. Traders are likely to get nervous as the index nears the 9,000 mark; there could be some volatility. If the Budget is extremely positive and the market gets euphoric, the index can rise to 9,400 next week.

Immediate supports for the index are at 8,500, 8,470 and 8,430. Fresh purchases should be avoided on a close below 8,430. Next downward target is 8,065. This becomes possible if market turns very bearish after hearing the Finance Minister.

Medium-term trend: We retain the positive medium-term target for the Nifty. But investors need to watch their step as we could be nearing critical medium-term peak.

Global cues

Global benchmarks closed on a strong note last week, helped by the deal on Greece struck on Friday. European benchmarks surged on Friday and the DJ Euro STOXX 50 closed the week 1.2 per cent higher.

The Dow Jones Industrial Average and the S&P 500 closed at new lifetime highs. The Nasdaq composite closed at yet another multi-year high, inching close to the 5,000 mark.

Since the Dow has already moved to our first target at 18,103, the index can attempt to move on to the next target at 18,426. The short-term trend in the index will turn negative only if the index goes on to close below 18,100.

Many Asian indices such as the Jakarta Composite Index, Shanghai Composite Index, and Straits Time Index closed with strong gains last week.

The indices appear stretched. It would be best to stay away from the market for a week

Source : Business Line

All set for the pre-Budget rally?

The bulls engineered a smart reversal in stock prices last week, helping the Sensex and the Nifty to close with gains, despite a quavering start.

The truncated week ahead could see indices edging a little higher from these levels. The Budget and the upcoming Parliamentary session are likely to keep investors riveted.

The good news is that the sun is shining bright once again on global equity markets. Major global benchmarks hit record highs last week; crude oil prices have recovered and the dollar is retracting.

Greece’s debt concerns have not yet been resolved. However, since the deadline for debt repayment is two weeks away, global investors seem happy, brushing the issue aside and making merry now.

That stock markets only mirror the emotions of the people transacting in it, was once again brought to the fore last week. Just as most men are able to shake off the gloom following any disaster in next to no time, Indian investors who were a bundle of nerves last Monday — at the prospect of a BJP rout in Delhi elections — grew cheerful on Tuesday as they hoped that the new setback will make the BJP government more serious about expediting reforms.

Macro data releases last week were not too encouraging. Retail inflation grew at a slightly higher 5.1 per cent in January and industrial production grew just 1.7 per cent in December, down from 3.9 per cent growth in November.

Foreign portfolio investors have turned net sellers in February in the secondary market. They however continue to love Indian debt, pouring $1.5 billion into Indian debt market in February. Turnover in both cash and derivative segment was strong last week.

With the December quarter earnings not too encouraging, India Inc is in dire need of a booster from the Budget. Else, stock prices can correct after the much-awaited Budget.

Oscillators in the daily chart are beginning to look up. But they are still in the bearish zone. Weekly oscillators hover in the neutral zone. But the negative divergence in weekly oscillators since last July implies that the medium-term trend could be in its terminal stages.

Sensex (29,094.9)

The Sensex hit an intra-week low of 28,044.5 before reversing smartly.

The week ahead: The Sensex followed our script pretty closely last week, sliding to 28,000 levels, where the 50-day moving average is positioned and is reversing higher from there.

So does this mean that the worst is over? Not really.

For the index is once again at a short-term resistance level of 29,155.

The inability to get past this level will drag the index lower to 28,000 or 27,355.

Fresh purchases should be made only if the index manages to close above 29,155 on Monday. Subsequent targets are 29,844 and 30,130.

Medium-term trend: The medium-term trend in the Sensex continues to be positive.

Since the index managed to hold above 28,000 last week, there is a possibility of yet another leg up that takes the index higher to 30,900.

Nifty (8,805.5)

The Nifty too reversed higher from its 50-day moving average last week to close sharply higher.

The week ahead: The Nifty moved in line with our expectation, reversing from the zone between 8,420 and 8,460. Despite the formation of three marching soldiers in the daily candlestick chart, traders holding long positions need to exercise caution.

The index is at key short-term resistance at 8,804. Reversal from these levels will mean that last week’s rally was a mere dead cat bounce.

The inability to get past this level on Monday will drag the index lower to 8,496 or 8,296.

On the other hand, if the index continues the current rally, next targets are 9,045 and then 9,401.

Medium-term trend: The medium-term outlook stays positive. But as we have been reiterating, the entire move from the August 2013 low is close to its termination point. The d-wave of the fifth appears to be in motion now. If the d-wave has ended last week, we will have the upper moving e-wave that can take the index to 9,028 or 9374.

That would set the stage for the perfect pre-budget rally we are waiting for, to be followed by a dramatic crash.

Global cues

Global benchmarks put up a strong show with most of them ending with gains. The CBOE volatility index fell below 15, reflecting investors' optimism.

Germany’s DAX index managed to close at yet another record high last week. The index is on a roll this year, up 11 per cent since the beginning of this year. European markets are on the whole on a strong wicket; the DJ Euro STOXX 50 is up 9.5 per cent since the beginning of January.

It was a volatile week for US markets but the Dow recovered from an initial hiccup to close above the 18,000 mark. As indicated earlier, the index can now go on to 18,103 or 18,426.

The strength in the Nasdaq 100 is also worth taking note of. The index closed at 4,377, a level last hit in 2000; the 2000 peak for this index was 4,850.

The smart reversal in indices prepares the ground for a surge to a new high

Why BJP wanted to lose Delhi

There are enough signs to indicate what you see in Delhi may not be true at all. There is something going on behind closed doors and is not known outside a tiny group in the Bharatiya Janata Party (BJP). Notice the developments: BJP inducts three rejects of India Against Corruption movement and Aam Aadmi Party (AAP) into its fold — Kiran Bedi, Shazia Ilmi and Vinod Kumar Binni. While the last two are of little consequence, Bedi is being projected as BJP’s chief ministerial candidate. In a single stroke, BJP has managed to divert the attention from party mascot Narendra Modi to Bedi as far as Delhi polls are concerned. So if BJP loses or fails to get a majority, you have a convenient scapegoat.

On the other hand, media has reported an implosion of sorts in the BJP rank and file. That BJP’s Delhi unit is not a disciplined and united force is known to all. Evidence for AAP’s expose on Satish Upadhyay’s dubious businesses came from a BJP leader. How? Moreover, while AAP and Congress have declared their candidates for the February 7 polls, BJP is yet to decide on the names. Even the sitting MLAs are unsure of tickets. Why this delay? Why? This week, BJP president Amit Shah’s rally was cancelled because the party could not obtain police clearance on time!

BJP is a very well-organised outfit with sympathisers in every layer of government, judiciary, media, commerce and industry. It is unlikely all this is happening due to poor management. Then is all this ‘bad management’ part of a deliberate plan to lose Delhi? Or to let Arvind Kejriwal win? But what will BJP gain from losing Delhi? A lot actually. If Kejriwal wins Delhi, it will be projected as a victory of a mass movement, media will eulogise Kejriwal, hail him as a hero and will dissect AAP’s campaign for days. Prime time on television will be reserved for one man only — Kejriwal. More importantly, Kejriwal’s victory will divert attention of the people who are getting restless from Modi’s inability to deliver on his election promises.

Once a government led by Kejriwal is sworn in, the focus of national media and by extension national discourse will shift to his government and ministers. Kejriwal will have no honeymoon period, both media and voters will demand immediate results, at least on corruption, power tariffs, VAT (value added tax), health hotline and WiFi. A hostile government at the Centre will not help him either. This spotlight on Kejriwal will come as a huge relief for Modi. It will shift the focus from his government at the Centre. Finance Minister Arun Jaitley is planning a radical budget and several unpleasant decisions are expected this March. The media spotlight on Kejriwal government will allow Jaitley to quietly to push through unpopular reforms — disinvestment of PSUs (public sector undertakings), budget cuts in health, education — in his attempt to cut budget deficit.

Secondly, away from media spotlight, the right-wing Sangh Parivar machinery can then unleash its foot soldiers to polarise voters with low-intensity disturbances ahead of the two big battles — Uttar Pradesh (UP) and Bihar. These two states are absolutely essential for BJP’s growth. Victory in Bihar and UP will complete the Parivar’s dominance in the cow belt. Moreover, UP and Bihar will shore up BJP’s strength in Rajya Sabha, an absolute necessity for pushing far more radical and unpopular reforms. Last but not the least, these two states will make Modi, Shah and Jaitley the most powerful political coterie in the history of democratic India.

BJP’s top brass is aware that even if the party wins Delhi, the state will remain a headache — partly due to intra-party bickerings and partly because of impatient voters who expect immediate results and good governance, something the BJP is unsure of delivering. BJP has controlled the city-state’s civic bodies for years but has failed miserably. Losing Delhi won’t be such a bad idea!

Source: Bobby Naqvi is the Editor of XPRESS, a sister paper of Gulf News.

Down but not out

Investors remained on the backfoot for the second consecutive week. The searing rally since the second week of January that made the benchmarks gain almost 10 per cent, is giving way to some profit-booking now.

Despite stocks gliding lower over the week, the pace of the decline is not so alarming.

The trend along all time-frames — short, medium and long-term — remains up for the Indian equity market. However, if the decline continues for another week, it will weaken the short-term outlook.

The early part of last week was dominated by the Reserve Bank of India’s monetary policy meeting. That the RBI left the policy rate unchanged even as it reduced the statutory liquidity ratio disappointed many in the market. The parade of earnings announcements also caused stock-specific moves.

With the Budget scheduled for the end of February, the announcements that the Finance Minister are likely to make on the B-day will now start dominating tea-time conversations.

Investor sentiment will be affected by the Delhi election result, to be announced in the early part of the week. The industrial production numbers for December and the consumer price inflation for January slated for release next week will also be of interest as it will give us an indication on what the RBI’s next move is likely to be.

The decision on how Greece is going to manage its debt in the near term will influence the global markets this week. Crude oil that is surging higher will also help beaten-down stocks of oil producers.

Oscillators in the daily chart are signalling a sell. The 10-week rate of change oscillator moving into the negative zone implies that the there could be more pain in the short term.

Weekly oscillators are poised at the neutral zone. Further decline will denote a threat to the medium-term view.

Sensex (28,717.9)

The Sensex hit an intra-week low of 28,647 before closing 465 points lower for the week.

The week ahead: The Sensex is pausing just above the short-term support at 28,657, indicated last week. The pattern in the daily chart indicates the possibility of the index sliding further.

The Sensex could extend its slide to 28,329 or 28,000 next week. Investors should watch out for a reversal from the 28,000 zone.

Presence of the 50-day moving average at this level makes it an important buttress. Short-term view will turn negative only on a close below this level.

Short-term resistances are placed at 29,115 and 29,390. Short-term traders can initiate short positions if the index fails to go past the first resistance.

Medium-term trend: The medium-term trend in the Sensex continues to be up.

If the index sustains above the 28,000 mark next week, it will signal that the medium-term trend is not under threat. Breach of this level will pull the index down to the next support at 26,469.

Nifty (8,661)

The Nifty slid to end the week 147 points lower.

The week ahead: The five consecutive lower closes in the Nifty are currently forming a running correction. This is a bearish pattern that can be followed by another decline that could take the index lower to 8,529 or 8,429.

Investors can look out for buying opportunity in the range of 8,420 and 8,460, since the 50-day moving average is poised there. Fresh long positions should however be avoided on a decline below 8,420.

Rally in the early part of the week can take the Nifty to 8,774 or 8,860. Short-term traders can initiate fresh short positions in rallies with a stop loss at 8,860.

Medium-term trend: The medium-term trend remains unchanged. The immediate level to watch out for from a medium-term perspective is 8,065. If this level is breached, a decline to 7,500 is possible.

We maintain the targets beyond 9,000 at 9,290 and 9,405.

Global cues

Global indices closed with small gains last week. European equity markets remained strong on a weak euro and revival in crude oil prices. DJ Euro STOXX 50 closed at a six-year high.

CBOE volatility index declined after investors turned more confident after a rally in the US market last week.

The Dow Jones Industrial Average recorded a sharp reversal last week resulting in a bullish engulfing candle in the weekly chart. This reversal implies that the index can now go on to its previous high of 18,103 or beyond that to 18,426. The recovery in crude prices is sending a cheer through global markets. But the rally is still in a nascent stage.

Immediate hurdle for crude will be in the $59 to $60 range. Rally above $70 is however needed to signal a reversal in the medium-term trend.

The indices are moving lower. But the short-term view has not yet turned negative

Source : Business Line

RBI to dictate market’s movement

The Indian stock markets have begun the year on a high note with the Sensex and the Nifty gaining 6 per cent in January. The indices have also managed to scale new highs.

But unlike in the past when most global equity markets moved in tandem, there is a marked variation in the equity market behaviour in different regions.

For instance, the DJ Euro STOXX index, the European benchmark, gained 6.5 per cent in January, buoyed by the ECB’s stimulus. The Dow and the S&P 500, on the other hand, are down around 3 per cent, as American investors began worrying about the negative impact of a strong dollar and slowing external environment on company earnings.

Shanghai Composite Index that had gained almost 60 per cent between July and December last year vacillated at higher levels and closed almost unchanged.

It is therefore apparent that the global investors are deciding on the investment in each region depending on the prospects of that country. This bodes well for India that has relatively strong growth numbers, falling inflation and is at the beginning of a down-cycle in policy rates.

Interest rates and inflation will be in focus this week as the Reserve Bank of India unveils its monetary policy statement on Tuesday. While another rate cut appears extremely unlikely, the language he uses to define his stance on policy rates for the rest of the year will be keenly watched by the investors.

Oscillators in the daily chart are beginning to droop, though they continue to feature in the positive territory. Weekly oscillators are however appearing positive. The price rate of change oscillator in the weekly chart is bouncing off the zero line after displaying negative divergence since last July.

The moving average convergence divergence oscillator in the weekly chart is also attempting to reverse in the positive zone.

Oscillators in the monthly chart too are quite bullish; implying that there is no threat to the long-term trend in the index. The bullish engulfing candle in the monthly candlestick charts of the Sensex and the Nifty denotes a strong underlying uptrend.

Sensex (29,182.9)

The Sensex hit a life-time high of 29,844 before reversing lower to form a giant bearish engulfing candle in the daily chart.

The week ahead: While Friday’s session would have been harrowing for most, it is not time to throw in the towel yet. Immediate supports for the index are at 28,858 and 28,657.

Short-term investors can buy in declines as long as the index trades above these levels. If the index bounces off either of these levels, it will mean that it is readying to hit new highs again.

Key short-term support is however at 28,000. Presence of the 50-day moving average at this level makes it an important level to watch out for. Short-term trend will reverse lower only on a close below this level.

If the index opens the week on a positive note, immediate target is Friday’s high of 29,844. Target beyond this level is 30,359.

Medium-term trend: The medium-term trend in the index is under no threat yet. The movement next week will give us clues about the pattern that is evolving. If the index manages to hold above 28,000, it will mean there can be yet another thrust upward that can take the index towards 32,000. We however stay with our view that we are in the final stages of the move that began in August 2013. While the Sensex can move a little higher from here, a medium-term correction is around the corner that will result in a choppy movement for a protracted period.

Nifty (8,808.9)

Nifty too recorded a sharp decline on Friday, wiping off the gains made in the early part of the week.

The week ahead: The bearish engulfing candle recorded on Friday implies that the short-term trend is down. But the index has immediate supports at 8,720 and 8,650. If the index manages to hold above this level, it will mean that it will soon hit a new high. On the other hand, decline below these supports will take the index to the next key support at 8,425. Presence of the 50-day moving average at this level adds to the importance of this level. Short-term outlook will turn negative on a close below this level.

Immediate upward targets, if the index opens on a positive note are 8,996 and 9,170.

Medium-term trend: The medium-term trend in the Nifty stays positive. The index could move a little further in the early part of the year, as we have been reiterating. Targets beyond 9,000 are 9,290 and 9,405. But we are nearing the end of the wave that began from the August 2013-low.

We could therefore soon experience either a swift and deep correction or a shallow and long-drawn correction. The medium-term view stays positive as long as the index trades above 8,000.

Global cues

It was a mixed week for global indices. Investors in the US are worried about economic growth, despite the Fed’s bullish prognosis. The Dow Jones Industrial Average closed 507 points lower.

But the index is holding above the short-term trend-deciding level of 16,743. This level needs to be breached to indicate that the short-term trend is reversing lower.

Greece General Share Index hit yet another multi-year low after the Syriza took over the governance of the country. The Index is however still above the June 2012 low of 471, which is a long-term support for this index.

The monetary policy meeting will determine the short-term movement in indices

Source : Business Line

Has Nifty formed short term top, Weekly Analysis.

Nifty has reacted last Friday from its long term resistance line as seen in past occasion nifty will try to touch its lower end of trend line which comes around 8350/8300 odd levels.

As per Fibo retracement theory Nifty took support at 23.6% retracement @ 8776 unable to hold heading towards 8641/8531 odd levels as shown above.

It was negative week, with the Nifty down by 26  points  closing @8808 forming a gravestone doji pattern, correcting after touching the upper trendline resistance. As discussed in last analysis  Weekly time cycle also started in positive note, its time to be cautious now as Nifty is approaching its trendline resistance in daily, weekly and monthly charts so book some profit in nifty and stocks positions.

Nifty Trend Deciding Level:8806

Nifty Resistance:8888,8957,9079

Nifty Support:8723,8680,8600

Levels mentioned are Nifty Spot