1) INDICES MODE & RELATIVE STRENGTH
| - BUY FULL |
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| - BUY HALF |
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| - CLOSE POSITION |
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| - Minor sell – sell one eighth |
| (for moderate risk traders) |
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| - Minor sell – sell one eighth |
| - SELL HALF |
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| - SELL ONE FOURTH |
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| - CLOSE POSITION– INDICES ARE AT THIS STAGE |
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| - Minor buy – buy one fourth |
| (for moderate risk traders) |
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| - Minor buy – buy one fourth |
2) ANTICIPATED HIGHS – LOWS FOR THE WEEK:
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| NIFTY FUTURES | SENSEX |
| HIGHS | 5,412.25–5,460.00 (Optimistic 5,508.58–5,513.58 ) | 18,491.06-18,654.20 (Optimistic 18,886.40 – 18,903.53) |
| LOWS | 5,200.49 (Pessimistic 5,045.00) | 17,830.10 (Pessimistic 17,417.63) |
3) PRESENT STATUS OF THE MARKET AND FUTURE ANTICIPATION: Headlines in one of leading daily newspapers says ‘Sensex falls 13% in Jan, worst start in 28 years’ – that means a new history, well we technical analysts depend on history and anticipate probabilities based on historic facts hence we don’t wish that new history is created more often, anyways we had anticipated present intermediate fall should wipe off more than 30% from the highs and to our pleasant surprise ‘Nifty Futures of Jan’ 08’ did so by falling 30.24% and not only that it fell as per mathematical calculation but it got quite a good support there from market leaders (it is to be noted that at recent bottoming time general public was tight in liquidity because of blocking of funds in I.P.O.’s).
Now let us analyze present situation in historic context keeping in mind that Jan’ 08 monthly candles are big black (falling greater than 12% intra month from highs of the month) and closing in lower half of the monthly bars – such cases have occurred 4 times earlier i.e. in May’ 04, Oct’ 05, May’ 06 & Feb’ 07 (out of the total 6 intermediate falls which have come in present super bull wave which is running since end April’ 03) – let us now analyze how indices behaved in following 1 month (let us call these MONTH 1) after such sharp monthly falls (let us call these MONTH 0)
a) Analyzing MONTH 1 closings as compared to MONTH 0 closings:
MONTH 1 Closings of MONTH 1 as compared to closings of MONTH 0
June 2004 Average 1.08% above.
Nov 2005 This case was exceptionally bullish as closing of MONTH 1
was 1.45% above opening of MONTH O.
June 2006 Average 2.42% above.
March 2007 Average 1.51% above.
It should further be noted that closings in all 4 cases in MONTH 1 was above the opening levels of respective month in each case ; keeping above facts in mind if we have to anticipate bullishness in next month of March 2008 & onwards base requirement is that closing of Feb’08 should be above 5,137.45 & 17,820.67.
b) Analyzing down movement during MONTH 1 as compared to closing of MONTH 0 :
MONTH 1 Low of MONTH 1 as compared to closings of MONTH 0
June 2004 Average 2.36% below.
Nov 2005 Average Same.
June 2006 Average 15.23% below.
March 2007 Average 5.24% below.
Average of all 4 cases Average 5.71% below.
Hence on averaging principle we should anticipate lows of Feb’ 08 to go to touch 4,844.10 & 16,640.97 at least .
Based on above 2 observations (a & b), we anticipate following 3 scenarios for Feb’ 08 whichever happens will decide the movement for March 2008 and further onwards
(i) AVERAGE SCENARIO : Indices take support in ranges 4,844.10 – 4,894.60 & 16,640.97 – 16,729.94 & close above 5,137.45 & 17,820.67.
(ii) BEARISH SCENARIO : Indices go down to ranges 4,262.65 – 4,420.00 & 14,559.49 – 15,332.42 and close in lower half of the monthly candles.
(iii) BULLISH SCENARIO : Indices take support in ranges 5,043.22 – 5,060.00 & 17,031.22 –
17,534.96 and close above 5,137.45 & 17,820.67.
We would vote for either of scenario(i) or scenario(ii) based on present fundamental state of ‘Corporate India’ – as per latest quarterly results, for the second consecutive quarter, 1500 companies of ‘Corporate India’ have reported on average a slower growth in both revenues (19%) & profits (19%) if compared on year to year basis and if compared on sequential basis revenues grew by merely 7% and earnings by 3% only – LOWEST IN THE PAST 4 QUARTERS ; alarming fact is that in year to year comparison, 7% of total income is coming from ‘other income’ & not from the main source of revenue (which is up from 4.7% in the preceding year).
Coming to the worst side of the story – if indices close present month below 4,262.64 & 14,559.49 then present long term bull phase should be taken to be in trouble , based on addition factors confirming the same which would be analyzed only at that time , it may be noted here that last year’s super bullish yearly white candle is not confirming to this scenario but first month’s (Jan 08) historic crash is saying something else, hence net outcome of the analysis is that bulls should wait & watch in Feb’ 08 and take decisions only at month-end after watching intra-month scenario and seeing closing post-budget ; onus now lies on budget to change the intermediate trend.
Coming to this week’s anticipation – after an extremely sharp fall of preceding 10 working days indices are taking a technical rally for last 9 working days which should fizzle out latest by Wednesday (could be earlier) and resistence zones are Normal : 5,412.25 – 5,460.00 & 18,491.06 – 18,654.20; Optimistic : 5,508.58 – 5,513.58 & 18,886.40 – 18,903.53.
Coming to the other side of the story – if indices close present week above 5,985.12 & 20,046.45 then only can one take it that intermediate fall is being challenged – ABSOLUTELY POOR CHANCES TECHNICALLY AT PRESENT JUNCTURE.
Coming to N.A.V. of our hypothetical online portfolio – KALPA SUPREME (which was started on 26th Oct 1998 with a nominal value of 100 units) – it has increased from 33640 .64 units as on 28th December 2007 to 36935 .42 units as on 2nd February 2008, a monthly increase of 9 .79%.
Friday’s Closing Level Of Indices: 5317 .25 & 18242 .58.
4) TODAY'S TREND: RESISTANCE IN THE SECOND HALF.
Please note that short sell deals given here are to be closed today itself.
ii) Medium Term Trend (Intermediate): It continues down. Last week 161 scrips have closed lower as compared to 203 scrips in the preceding week (av. fall per scrip at 6 .40% is also lower than the av. fall per scrip of 13.48% in the preceding week) & 70 scrips have closed higher as compared to 27 scrips in the preceding week (av. rise per scrip at 4.57 % is also higher than the av. rise per scrip of 3.30% in the preceding week) out of 250 scrips we follow regularly; last week’s A-D data is indicating that profit booking continues although at a slow pace.
iii) Long Term Trend (Major): It continues up.
6) REVIEW OF RECOMMENDATIONS OF THE LAST WEEK: Last week on the buy side 1 trade was recommended involving positions equivalent to 1 .25 % of the capital (1 .25 % on delivery basis) and profit / loss booking was recommended in 3 trades (which included 2 trades of earlier weeks) involving positions equivalent to 6 .90 % of the capital (5 .55 % on delivery basis).
In addition under the policy of ‘Sell First Buy Later’ 1 trade was recommended in ‘Nifty Feb Futures’ involving positions equivalent to 10 .00% of the capital & covering was recommended in 5 .00 % of the capital.
AVE POSITION PER BOOKED DEAL WORKS OUT TO BE = 3 .65% of the capital (our target
is 5.00%).
AVE PROFIT PER BOOKED DEAL WORKS OUT TO BE = 1.78 % (our target is 3. 00 %).
BOOKED PROFIT ON THE CAPITAL = 0 .26 % (our target is 2. 50%).
Present N.A.V. of our hypothetical online portfolio KALPA SUPREME (started on 26th Oct 1998 with a nominal value of 100 units) is 36935.42 units as on 1st February 2008.
7) GUIDANCE FOR INTRA-DAY TRADERS : Intraday trading is not the preferred kind of trading . We are giving below anticipated resistence and support levels of 68 active scrips for guidance purposes only – please note that anticipated success rate of Resistence 1 (R1) & Support 1 (S1) is only 60 to 75 % & that conservative players should trade only between range of R1 & S1 ; only those who trade on delivery basis could wait for R2 & S2 which anticipated success rate should be 50 % .
8) DELIVERIES /POSITIONS IN HAND: In 2326 trading days (from 26th Oct 1998 to 1st February 2008) we have recommended a total of 11631 deals (10228 on the buy side & 1403 on the sell side) out of which as on date 5 buy deal (which is only 0 .04% of total deals) are in hand, on the average 3 .00 to 4 .00 % profit have been booked in each of 99. 96 booked deals; out of 11626 total booked deals 10725 deals (92. 25%) have been booked at profit and only 901 deals (7 .75%) have been booked at loss; average holding period per booked deal is approximately 3 working days. Latest holding of 5 deals is as follows: (please note that when more than 50% profit is booked in any deal then just for counting purpose that deal is taken as “not in hand”).
a) FUTURES & OPTIONS SCRIPS – (41/20 %)
(Investment limit 80 % of the capital)
Central Bank of India (17/20 %), ONGC (17/20 %), Amtek Auto (3/5 %), I Flex (11/20 %), India Cement (3/10 %), Nagarjuna Fert (3/10 %), Yes Bank (3/10 %), Sobha Developers (3/10 %).
OTHER HIGH VOLUME SCRIPS –(41/20 %) :
(PURELY DELIVERY BASED DEALS)
(Investment limit 20 % of the capital)
B.A.G Film (11/4 %), Prism Cement (11/4 %), Hexaware (17/20 %), HB Stock Holding (2/5 %) & Crest Animation (3/10 %).
----- With due apologies and full credits to Kalpataru
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