Wednesday, January 25, 2012

EOD Analysis For 25th January 2012 and Outlook For 27th January 2012

Expiry day and surprise surprise - OI in Nifty futures dropped to 34.8 odd million in the opening session but added another 3 million in the last 90 minutes with the choppy action!

Sectoral churns went well for index management. In fact BNF did not really participate much on the upside today. The stars turned out to be bell weather stocks from the Tata pack i.e. Tata Motors, Tata Steel and not to forget Reliance Infra, Sesa Goa; JP Associates extended its gains some modest support from Reliance and the IT pack.

Critical levels and outlook remain unchanged from yesterday.
Closing above 5150 was a low probable outcome but that has become REALITY todayi.e. more upside is possible from here!

Really got to hand it over to the bulls who got everything in their favor from the lows of the series
1] Rising volumes with price rises with stellar performances from broader markets
2] A decent correction in Rollar
3] All 3 milestones achieved despite a strong short-build up
   a] Close above 4840 and taking out 4880 with volume/momentum,
   b] 2 consecutive closes above 4944
   c] Closes in the 5032-5092 band [and not to forget the close above 5150 on expiry day!]

High weightage days for Feb series are 30th Jan, 6th-8th Feb and 16th Feb to 23rd Feb. For the first 2 patches of dates, direction to be determined as we move along but IMHO, 16th Feb to 23rd Feb has a bearish bias attached to it as 377 days from 11th Feb '11 comes to 22nd Feb. Looking at price action of Jan series, my personal opinion is that some sharp falls can be expected in this period i.e. 3rd week of February

First hint of weakness now only with a close in the 4880-4911 zone [ideally below 4880] until which the correction will just be a normal healthy correction/profit booking.

Panic will only set in with a close below 4690!


Satyanarayan said...

The nature of rise from 4800 to now and closing above 5100 on expiry is confirming that we are in bull market. Indicators stayed in overbought zone for long time.

reachnagraj / theknight16 said...

Dear Satyaji
I totally agree with you that the rise indeed has been phenomenal and as the adage goes, the start of a bull market is always a bear market rally.....

2 consecutive weekly closes above 5250 will be a strong indication that the bull market has resumed for Nifty indeed

A few things that don't add up fundamentally IMHO and hence I am a bit more pragmatic

1] Rollar impact - although we have seen decent corrections after the rupee completed a long term 5wave structure with the dollar at 54 odd levels, a corrective B wave to the upside is still pending that will bring some selling pressure in the market

2] PE effect: The P/E has still not rationalized well enough to justify current valuations on some benchmark counters

3] NPA effect on banking sectors that is expected to take a severe toll

4] Margin calls on fund houses that are expected to go up big time in Feb/Mar '12

However, I also agree with you and a lot of seniors/experts that now all major dips should be used to accumulate.