Stocks
Bulls finally break the shackles of 5,169 and trigger massive bear-covering

The bulls have put the bears under pressure and needn’t get worried as long as the 5,164 level holds in any correction

S&P Nifty close: 5,360.70




Market Trend
Short Term: Upwards; Medium Term: Sideways; Long Term: Sideways

The Nifty opened on a better note for the week and gave the break-out (above 5,169) which was becoming largely overdue on the very same day as the announcement of a 25 basis points (bps) hike in interest rates by the RBI (Reserve Bank of India). The importance of this level which we have been harping on for the past month or so—was vindicated by the resultant sharp rise once the bulls broke above this. A trending move materialised with huge volatility (more than anticipated) which was envisaged in the last piece. The Nifty finally closed a whopping 311 points (+6.15%) higher. The sectoral indices which outperformed the market were BSE Metal (+9.39%), BSE Auto (+8.17%) and BSE Reality (+8.48%) while the ones which grossly underperformed were BSE CDS (-1.08%) and BSE Bankex (+2.51%). 

The weekly Histogram MACD remaining above the median line played its role in the short-term trend turning up and one has to see whether this corrective rise lasts for the next 4-6 weeks, albeit with some hiccups in between.

Here are some key levels to watch out for this week.

  • As long as the S&P Nifty stays above 5,281 points (pivot) the bears will be under pressure.
     
  • Support levels in declines are pegged at 5,164 (important) and 4,967 points.
     
  • Resistance levels on the upside are pegged at 5,479 and 5,597 points.

Some Observations

The bulls have put the bears under pressure and needn’t get worried as long as the 5,164 level holds in any correction.
1.    Support in declines is pegged from the recent tops of 5,168-5,169 points.
2.    Further support in declines will be provided by the “gap area” between 4,827-4,861 points.
3.    The 5,169 level is the crucial resistance area to watch out for this week.
4.    Resistance will be pegged from resistance line (in lavender color) which is pegged in the 5,420-5,450 area (depending on the tops selected).
5.    A small top is likely during the first couple of days this week after which a dip could materialize.

Strategy

Last week’s sharp rise has succeeded in closing the “gap area” between 5,229-5,323 points, which is a good sign for the weeks ahead as long as corrections don’t go much below the 5,165-point level. The Nifty has already completed the 38.2% retracement (5,338 points) of the fall from 6,338-4,720 points and the higher retracement levels of 50% (5,529) and 61.8% (5,720 points) will act as resistance levels in the current corrective rise. From a very short term trading perspective, the “resistance line” pegged between 5,420-5,450 points assumes importance. Therefore, caution is advocated in the first couple of days this week where one should take some profits off the table and wait for a small correction before making a fresh entry.

(Vidur Pendharkar works as a Consultant Technical Analyst & Chief Strategist, www.trend4casting.com).


 

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RBI ask NBFCs to stop use of cheques in a gradual manner

The RBI green initiative to gradually phase out use of cheques and shift to electronic payment system will result in more cost-effective transactions and faster and accurate settlements

Mumbai: As part of its green initiative, the Reserve Bank of India (RBI) on Friday asked all non-banking financial companies (NBFCs) to gradually phase out use of cheques and shift to electronic payment system, reports PTI.

The government, in its green initiative efforts, has suggested several steps for entities in financial sector, including NBFCs, for better utilisation of resources and delivery of services.

“NBFCs are therefore, requested to take proactive steps in this regard by increasing the use of electronic payment systems, elimination of post-dated cheques and gradual phase-out of cheques in their day to day business transactions,” the RBI said.

These will result in more cost-effective transactions and faster and accurate settlements, it added.

The finance ministry has also developed an e-payment system for disbursal of subsidies to consumers of fertilisers, LPG and kerosene. This system is likely to do away with the use of cheques and bank demand drafts to make payments.

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COMMENTS

Nagesh Kini FCA

6 years ago

all banks need to counsel their clients to go for ecs to pay their utility bills. it presupposes they leave enough balances on due dates. it not saves a lot of paper and paperwork too.it saves on customers' time in standing in the Qs.

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