Short rally expected around mid-week: Weekly Market Report

Nifty may move in the range of 5,390-5480

The market witnessed its first weekly close in the red, snapping its seven-week gaining streak that started since the beginning of 2012. The reversal happened as investors booked profits on global economic concerns and a slowdown in the country’s economic growth. The Sensex and Nifty fell by 2% in the week after having rallied 18% and 20%, respectively, in the last seven weeks.

The Sensex declined 366 points at 17,924 and the Nifty lost 135 points to finish the week at 5,429. If the pattern of a lower low and lower high continues, as it did on Thursday and Friday, we may see the decline continuing with the Nifty finding support at 5,390. At the higher level, index may get resisted in the 5,460-5,480 area.

Resuming after an extended weekend, the market extended its gains on Tuesday following comments from Reserve Bank of India (RBI) deputy governor Subir Gokarn that the central bank may go in for another CRR cut on the back of tight liquidity. Late sell-off resulting from a weak opening of the key European markets saw the indices settling lower on Wednesday. The market settled lower on Thursday amid a highly volatile session on weak global cues. Offloading of blue-chips by institutional investors saw the benchmarks settling lower on Friday.

Among the sectoral gainers, BSE Fast Moving Consumer Goods and BSE IT, rose 1% each, while BSE Realty and BSE Bankex (down 7% and 5%, respectively) were top losers among indices.

TCS (up 3%), ITC (up 2%), ONGC, Sun Pharma and Coal India (up 1% each) were the top  gainers on the Sensex while the losers were led by Sterlite Industries, DLF (down 11% each), State Bank of India (down 9%), Larsen & Toubro (down 7%) and HDFC (down 6%).

The top performers on the Nifty were Bharat Petroleum Corp (up 6%), TCS (up 3%), Power Grid Corp, ITC (up 2% each) and Coal India (up 1%). The main laggards on the 50-stock index were Jaiprakash Associates (down 12%), Sterlite Ind, DLF (down 11% each), Punjab National Bank and Reliance Communications (down 10% each).

Inflation based on the all India Consumer Price Index (CPI) stood at 7.65% in January, as per the first nationwide retail inflation data released by the government Tuesday. Experts believe that the CPI will become a benchmark for the RBI’s monetary policy decisions, besides being used by the government but it will take some more time to replace the WPI bases inflation data. Inflation based on WPI was 6.55% in January this year.

Leading global financial services company Citi Inc has sold its entire stake in mortgage lender HDFC for $1.9 billion (around Rs9,327 crore). The bank said that it sold its entire holding of 145.3 million shares, or 9.85% stake, in HDFC through the National Stock Exchange (NSE) at Rs657.56 per share.

Earlier this week, reports indicated that SBI planned to lend around Rs1,200 crore to the troubled Kingfisher Airlines, including working capital of Rs400 crore, bank guarantee of Rs500 crore and loan repayment extension worth Rs250-Rs300 crore. While SBI denied any such move, the stock tumbled over 8% on Wednesday.

On the global front, pressure on Iran on account of its nuclear ambitions has led to a rise in oil prices. Besides, markets around the world will eye the Group of 20 (G-20) finance ministers’ meting which will discuss additional funding for the IMF.


The Wolfe Wave target as well as the 61.8% retracement have pushed the Nifty down

The Nifty did decline, as anticipated, and filled the “gap” between 5,428-5,460 points on the daily charts. As long as these levels hold, one can expect the Nifty to test if not cross the recent high once the rally resumes in the coming month. However, it is now time to be selective in stock picking

S&P Nifty close: 5429.30

 Market Trend

Short Term: Up            Medium Term: Up            Long Term: Down

The Nifty opened flat and rallied further to stall very close to the 61.8% retracement (5,648 points) of the entire decline from 6,338-4,531 points. The resistance line of the Wolfe Wave pattern (in pink) as mentioned last week and a break of the low made on 21st February saw the beginning of a correction in the Nifty which saw it shed 2.43% this week. The sectoral indices which outperformed were BSE Fast Moving Consumer Goods (+0.89%), BSE IT (+0.67%) and BSE Oil & Gas (+0.09%) while the gross underperformers were BSE Reality (-7.27%), BSE Bankex (-5.24%) and BSE Metal (-3.97%).
The weekly histogram MACD turned down but is above the median line indicating that a correction is on. We have seen the Nifty rally for seven consecutive weeks during which it rose more than 23% resulting in it becoming overbought in the weekly charts, hence the profit taking. This correction could last for a week or maybe a couple of weeks at best looking at the current scenario. Last week we saw the Nifty come close to the R1 level and then declined to hit the S2 level on the last day of trade.

Here are some key levels to watch out for this week


  • As long as the S&P Nifty stays below 5,488 points (pivot) the bears hold a slight edge in the near term even though the intermediate trend remains up.
  • Support levels in declines are pegged at 5,346 and 5,264 points.
  • Resistance levels on the upside are pegged at 5,571 and 5,712 points.

Some Observations
1.    The EPA target as per the Wolfe Wave pattern was hit and prices fell after facing resistance from the trendline (in pink).
2.    The Nifty also came near the 61.8% retracement of the entire decline from 6,338-4,531 points, pegged at 5,648 points.
3.    Despite the sharp rise, the weekly averages continued to be negatively phased which also implied that a correction was overdue.
4.    We saw the “gap area” of 5,428-5,460 being filled in the decline, indicating that the Nifty might take a breather around these levels before resumption of the uptrend.

The Nifty did decline, as anticipated, and filled the “gap” between 5,428-5,460 points on the daily charts. We have seen the Nifty correct 38.2% retracement (5,418) of the last part of the rise from 5,076-5,629 points and the 50% (5,353) and 61.8% (5,288) retracement levels will act as support in declines. In fact 5,231 points, the 38.2% retracement of the rise from 4,588-5,629 points will act as significant support. One should look for buying opportunities in the declines close to the above mentioned levels. As long as these levels hold, one can expect the Nifty to test if not cross the recent high once the rally resumes in the coming month. However, it is now time to be selective in stock picking.

(Vidur Pendharkar works as a consultant technical analyst & chief strategist, at


Mission Green

Hariyali works in the field of protection and upgradation of ecosystem, Shukti Sarma finds more

The spartan office of Hariyali (Thane, Maharashtra) has no employees. “We do not hire any staff,” declares Professor Punam Singavi, founder-member of Hariyali. “Everything is managed by people who volunteer for our organisation. There are students, local residents and senior citizens who come on their own to help us—be it our field excursions or administrative work.”

A chartered accountant by profession, Prof Singavi started Hariyali in 1996. During his trips in the country, he witnessed rampant construction on forested turfs and open spaces. Concerned about the depleting greenery all around, he decided to start an afforestation initiative along with some like-minded people. But within the city, there was little space. “We were a group without any political aspirations. We approached the forest authorities and said we would like to start a greening drive for the nearby hills which were becoming barren. They were suspicious, more so when we said we did not want any funds,” remembers Prof Singavi. However, senior forest officials were overjoyed. Thus, Hariyali commenced its first mission. While planting trees, they thought of rainwater harvesting and constructing bunds on the stone quarries. The group contributed the required funds; within eight days, three bunds were completed. Word spread and volunteers turned up to lend their mite.

Today, Hariyali organises tree-planting events, nature treks, bird-watching events and field excursions for students. Hariyali has won several awards from various associations including the ‘Go Green Award’ from the Thane Municipal Corporation. Hariyali believes that planting trees is more important than donating money.  “I tell them to send their employees for our field trips. During these treks, many employees decide to donate as well,” says Prof Singavi. Hariyali’s focus is on the hills near Thane, but they have gone beyond Mumbai with their efforts. Volunteers campaign in schools and with corporates and local hubs to raise awareness about environmental issues. They organise lake-cleansing drives for the local water bodies and educate people about preserving lakes. Hariyali grows its own saplings, instead of buying them from nurseries or waiting for government supplies. “We eat fruits like mangoes, jamuns, etc, and throw away the seeds. Why not use them for growing trees?” says Prof Singavi. Volunteers collect seeds of fruits, plastic bags for carrying saplings and water bottles from the locals. There are two nurseries—in Mulund and Thane—where seeds are sorted out, packaged and saplings nurtured. “We ask pilgrims to take the seeds and throw them along their way. If even two plants survive and grow into trees, it is an achievement,” he says.

“We also have to stop firewood collectors from chopping down trees and also stop grazing in these areas. We employ security guards because miscreants start forest fires,” Prof Singavi says. Another unique initiative is storing water on site. Rainwater is harvested with bunds and from waterfalls; water is stored in plastic bottles which the volunteers collect. These bottles are then kept in trenches. “So instead of carrying water on field trips, we can use that the stored water. Even labourers don’t have to carry water. The same water can be used for irrigation,” says Prof Singavi. Taking cognizance of Hariyali’s work, in 2009, Maharashtra government granted Hariyali 25 acres on a seven-year lease. Now, that area is fully covered with saplings. In 2012, the government has given Hariyali another 650 acres for afforestation. “That is a huge project. Volunteering won’t be enough; we will need labourers, equipment and additional resources,” admits Prof Singavi. One can volunteer for Hariyali or contribute financially. All donations are tax-exempt under Section 80(G) of Income Tax Act.

26, Dadoji Konddeo Stadium,
Khartan Road,
Thane-400601, Maharashtra
Telefax: 022 25474119/25408661
Email: [email protected]


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