Nifty In A Short-Term Downtrend

NSE Nifty:

The NSE Nifty has reversed direction slightly before the expected levels, and has peaked at an intra-day high of 5348.55 on 10th July, 2012 to enter a short-term downtrend. The near-term outlook has obviously been vitiated as important levels have been breached. However, a near-term oversold situation would seem to suggest a limited downside, probably not beyond the 5050 level. While a bounce seems to be on the cards, its sustainability would be slightly questionable as of now. Choppy and difficult times are envisaged ahead as the inability of the Nifty to decisively overcome the 5410 level is slightly worrisome.

The Mid-Caps and Small-Caps too have fallen in line with the market and have been under a significant amount of pressure to decline further. Banks have been leading the decline and Capital Goods have reversed direction to decline again. Consumer Durables have remained market performers, FMCG continues to hang on to the higher levels, while Healthcare has posted a fresh all-time high. IT has remained distinctly weak and Metals have also been significantly weak again. Realty has back-pedalled with alacrity.

The Nifty has been distinctly weak over the near term. While a recovery seems just around the corner, only a decisive close above the 5410 level could mean sustainable positives. Till then, it remains a trading market.

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Asian Paints | CMP - Rs 3601.75 | Sell

Asian Paints bottomed out by posting an intra-week low of Rs 680.90 during the week ended 13th March, 2009, and these levels have rarely been seen since. The scrip launched into an intermediate uptrend to peak at an intra-week high of Rs 2920 during the week ended 17th September, 2010. It couldn’t sustain these levels for long, and declined to post an intra-week low of Rs 2395.05 during the week ended 25th February, 2011. The scrip commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 4170 during the week ended 1st June, 2012.

Currently, Asian Paints seems set to stage a down-move after a decent weekly distribution. With even the daily picture looking weak, a further downside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Sell  | RMI-Sell  | Stochastic-Sell | ROC-Sell   | RSI-Sell
Support: 3600, 3300 | Resistance: 3900, 4200
Targets: 1st Target: 3100 (4-6 weeks)  | 2nd Target: 3000 (12-14 weeks)
BSE Code – 500820 | Stoploss: 3850 (cls)
55 Week EMA: 3269.69

Hathway Cable | CMP - Rs 199.95 | Buy

Hathway Cable peaked at an intra-week high of Rs 126.50 during the week ended 1st July, 2011, and declined to post an intra-week low of Rs 72 during the week ended 9th September, 2011. The scrip launched into an intermediate uptrend, peaked at an intra-week high of Rs 134.30 during the week ended 21st October, 2011, only to enter a corrective phase, and declined to post an intra-week low of Rs 98.50 during the week ended 25th November, 2011. The scrip staged a rally to peak at an intra-week high of Rs 780.05 during the week ended 17th September, 2010, and entered a corrective phase.

Currently, Hathway Cable has reversed direction after receiving significant support from the Rs 185 level. A weekly close above the Rs 205 level would mean the possibility of a further upside from here.

Trading Pointers:
Indicators: MACD-Buy | RMI-Buy | Stochastic-Buy  | ROC-Buy | RSI-Buy
Support: 185, 170 | Resistance: 205, 223
Targets: 1st Target: 230 (4-6 weeks) | 2nd Target: 250 (12-14 weeks)
BSE Code – 533162 | Stoploss: 185 (cls)
55 Week EMA: 153.89

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Educomp Solutions | CMP - Rs 166.75 | Buy

Educomp Solutions bottomed out by posting an intra-week low of Rs 266.20 during the week ended 6th February, 2009, commenced a short-term uptrend, and rallied to peak at an intra-week high of Rs 538.44 during the week ended 24th April, 2009. The scrip entered a corrective phase to actually bottom out by posting an intra-week low of Rs 447.60 during the week ended 8th May, 2009. It moved sideways before recovering to peak at an intra-week high of Rs 1017 during the week ended 9th October, 2009, only to decline from here. Currently, Educomp Solutions seems to be on the verge of commencing a higher top, higher bottom formation on the daily charts, indicating the possibility of a further upside from these levels.

Trading Pointers:
Indicators: MACD-Buy | RMI-Buy | Stochastic-Sell | ROC-Buy | RSI-Buy
Support: 165, 157 | Resistance: 177, 191
Targets: 1st Target: 187 (4-6 weeks) | 2nd Target: 201 (12-14 weeks)
BSE Code – 532696 | Stoploss: 157 (cls)
55 Week EMA: 234.87

Hindustan Zinc | CMP - Rs 116 | Sell

Hindustan Zinc bottomed out by posting an intra-week low of Rs 30.32 during the week ended 27th February, 2009, took support at the Rs 30 (support) level, recovered smartly, and peaked by posting an intra-week high of Rs 69.57 during the week ended 19th June, 2009. The scrip declined from here, struggled a bit, and finally overcame its recently-posted high. It entered a medium-term uptrend, appreciated to peak at an intra-week high of Rs 155.25 during the week ended 21st April, 2011, and entered a corrective phase.

Currently, Hindustan Zinc could be commencing its short-term downtrend. With the oscillators looking negative, a further downside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Sell | RMI-Sell | Stochastic-Sell | ROC-Buy | RSI-Sell
Support: 114, 105 | Resistance: 128, 137
Targets: 1st Target: 100 (4-6 weeks) | 2nd Target: 95 (12-14 weeks)
BSE Code – 500188 | Stoploss: 124 (cls)
55 Week EMA: 124.22

Sebi Disclosure: The author is an active market participant and could not only be having positions but could even be having contrary positions in the stocks mentioned above.  

*LEGEND:
•    EMA – Exponential Moving Average.
•    MACD – Moving Average Convergence Divergence
•    RMI – Relative Momentum Index
•    ROC – Rate of Change
•    RSI – Relative Strength Index

*It would be pertinent to note that these are just tools to arrive at a buy or sell decision. There are no absolutes in this sphere, so the best one can do is to minimise losses and let the profits run.

*In the event of a sharp movement materialising in the scrips recommended - both upwards or downwards (the analysis is done on Monday evening based on the week's price movements while market action can only be taken on Thursday) investors would do well to stay away. Despite an active movement in the scrip, if a need arises to trade - investors can use the support/resistance levels as stoploss and/or entry/exit for taking a position in the market.  In spite of the above-mentioned statement, investors are advised to use their own discretion.