Monday, November 14, 2011

EOD Analysis for 14th November 2011 and Outlook for 15th November 2011

A positive start to the innings with Nifty futures clocking an OI of around 29.6 mill during the first half of the day and then waiting for cues from Europe.

Critical levels remain unchanged and we are slowly moving into the dangerous period anticipated on the bourses from 16th Nov to 22nd Nov as highlighted earlier. Now the downside may be limited if 5032 - 5092 levels survive on closing basis tomorrow IMHO and the downside may just be restricted to 4980 levels during this series if bulls manage a close above this critical zone tomorrow. Otherwise, floodgates open up on the downside this time [to be confirmed with a close below 4880] So rather than blind shorting, one should see whether 5032-5092 levels hold fort tomorrow on closing basis.

As we have been highlighting earlier as well, the critical levels need to be observed carefully along with volumes as well. Auto sector finally saw the pounding it rightfully deserved after the Diwali euphoria. Sales have slowed down, locally as well as globally. Steel sector remains fundamentally weak as shown by Tisco's disco and Sail's pail performance.

On the other hand, volumes will have a say at severe downfalls as well otherwise it will just be modest cuts. Infosys still holding above 2800 levels although they have declared across international media that they are expecting cuts due to slowdown in the west. RIL took a very modest cut today compared to some of the other index heavy weights as well.

The Euro-Dollar is showing signs of weakness but one must also bear in mind that the Italian bond yields have managed to cool down a bit; DAX went a shade ahead of the 6100 mark but still holding the 6k levels as I put this blog. FTSE also staged a counter-trend rally towards the 5550-5600 levels and is showing signs of tiring. Euro-Dollar is marginally below 1.37; Full weakness to be confirmed below 1.365 on closing basis and the pending target for Euro-Dollar is 1.3475-3495 in a few sessions that will take a severe toll on DAX, FTSE, SMI and in turn BNF, SGX Nifty and Nifty;

Would like to remind readers once again that since we are in a corrective phase on the bourses, there is significant positive correlation with the above mentioned factors. Also, FMCG and Pharma counters proved their defensive merit today in a falling market. So whilst 'Sell on Rise' is the preferred strategy, in the initial stages of the trade, hedges must be employed and to be given up only on confirmation of the trend.

One way to confirm the momentum is to plot TRIX (8 period) along with Twigg's Money Flow (21 period MA) for a second level confirmation. TRIX above 0 implies momentum is UP and below 0 implies momentum is DOWN; TRIX (8) crossing over TMF (21 period MA) will confirm the bearish trend [and vice versa for uptrend] and would advise using these indicators on the daily chart and hourly charts simultaneously to determine the primary trend.

1 comment:

Suraj said...

Thankyou Nagraj Sir