Weekly Nifty View: Volatility set to increase so keep a stop loss of 5638 points on longs

One needs to be alert for the slightest sign of a break of support

S&P Nifty close: 5,703.30

Market Trend
Short Term: Up                                 Medium Term: Up                 Long Term: Down

After a flat opening the Nifty drifted lower to breach the weekly support of 5,648 points, intraday, only to recover and close above it on the settlement day. The new settlement opened with an upside gap and the Nifty finally closed a meagre 12 points (+0.21%) in the green. Volumes were, however, significantly higher as the Nifty formed a “high wave line” (though not classical as the candle should preferably have been longer), implying that there is equilibrium at current levels between the bulls and bears. The histogram MACD, which is above the median level, moved higher indicating that the bulls remain in control even though the short-term oscillators have ventured into overbought territory.

The sectoral indices which outperformed were CNX Media (+6.47%), CNX FMCG (+4.13%), CNX Realty (+3.94%), CNX Consumption (+2.82%), CNX Pharma (+2.12%) and CNX Auto (+1.19%) while the underperformers were CNX Metal (-1.75%), CNX Energy (-1.57%), CNX PSE (-1.20%) and CNX IT (-1.03%).

Here are some key levels to watch out for this week
■ As long as the S&P Nifty stays above 5,692 points (pivot) the bulls will be in control.
■ Support levels in declines are pegged at 5,649 and 5,595 points.
■ Resistance levels on the upside are pegged at 5,746 and 5,788 points.

Some Observations
1.    The Nifty came very close to hitting the 61.8% retracement level of the decline from 6,338-4,770 points pegged at 5,740.
2.    The Nifty is now moving within a sharp up sloping channel (in blue), support from which is pegged around 5,410 points and resistance is pegged around 5,795 points, this week.
3.    We have closed above the previous weekly top of 5,629 points (24 February 2012) which is a sign of strength as long as it stays above it.
4.    The weekly chart above also shows a channel (in brown) the resistance line of which should be closely watched in the weeks ahead.
5.    We have completed 89 weeks (Fibonacci number) from the top of 6,338 points (05 November 2010) hence one has to keep a close watch whether the market starts correcting from this level.
6.    The volumes were significantly higher as compared to the previous week which was also the case a week prior to the previous significant top of 5,629 points (24 February 2012). Hence one needs to be alert for the slightest sign of a break of support.

The bulls have managed to hold on despite the dullness for the better part of the week. There is a small body on very high volumes which is a warning that the volatility is likely to increase in the coming weeks. One has to keep a tight stop loss on longs because we have completed 89 weeks from the top of 6,338 points and the previous top of 5,629 points was also made on significantly higher volumes. The simplest stop loss that one can keep is the last week’s low of 5,638 points. Tighten your seat-belts as the volatility is likely to increase in the weeks ahead.

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


Market under pressure: Weekly Market Report

A close below 5,670 on the Nifty may result in a sideways move

The Indian market closed with meagre gains in the week on the continuing reforms push by the government and supportive global cues. However, the upmove was restricted by profit booking after decent gains seen in the past three weeks. The focus will now shift to the second quarter earnings season, which kicks off next month.


The Sensex closed the week at 18,763, up 10 points (0.05%) and the Nifty settled 12 points higher (0.21%) at 5,703. With the market having already factored the government’s reforms push, investors are beginning to look at the global arena for fresh developments. On Friday the Nifty settled at its highest since 8 July 2011, however, if the benchmark closes 5,670 we may see some sideways movement setting in.


Profit booking saw the market closing marginally lower on Monday. Absence of any local cues and fresh concerns from Europe led to a flat close on Tuesday. The benchmarks were range-bound and closed in the negative on Wednesday.


The market witnessed a highly volatile session on the derivatives expiry day and ending lower on Thursday. The market closed with gains of around 1% on Friday on the government continuing with its reforms push and support from the global markets.


BSE Consumer Durables (up 5%) and BSE Fast Moving Consumer Goods (up 4%) were the top sectoral gainers while BSE Oil & Gas (down 2%) and BSE Metal (down 1%) were the top losers.


The key performers on the Sensex were Mahindra & Mahindra (up 7%), BHEL (up 6%), Cipla (up 5%), Tata Power and ITC (up 4%). The major losers on the index were Bharti Airtel, Sterlite Industries (down 5% each), ONGC (down 4%), Coal India  and Tata Motors (down 3% each).


UltraTech Cement, M&M, ACC (up 7% each), BHEL (up 6%) and Cipla (up 5%) were the major gainers on the Nifty. The losers were led by Sesa Goa, Cairn India, Bharti Airtel, ONGC (down 5% each) and Coal India (down 4%).


BSE lowers stock circuit limits for Kingfisher, UB Holdings

Earlier, Kingfisher shares were allowed an upward or downward movement of 10% in a day, while the circuit filter limit for United Breweries (Holdings) was 20%

Mumbai: Leading bourse BSE has halved its circuit limits on shares of Kingfisher Airlines and group firm United Breweries Holdings, capping their maximum movement in a day at 5% and 10%, respectively. The changes follow a sharp rally in the share prices of the two companies in the past few days, reports PTI.


Earlier, Kingfisher shares were allowed an upward or downward movement of 10% in a day, while the circuit filter limit for United Breweries (Holdings) was 20%.


The exchanges generally lower the circuit filter of a stock as part of their surveillance mechanism to avoid excessive movement in the share price.


Kingfisher shares today fell by 4.95% to close at Rs16.12 at the BSE. The stock had gained 9% on Wednesday, after chairman Vijay Mallya said the air carrier is in talks with foreign airlines for possible stake sale.


UB Holdings stock, which had also gained nearly 11% on Wednesday, settled 8.35% lower at Rs133.85 in today's trade.


While Kingfisher shares have been rallying sharply for past couple of weeks, shares of other group companies have been on an uptrend for much longer period, largely on reports and speculations about stake sale in various businesses.


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