Nifty In Long Term Consolidation Phase

The NSE Nifty has been in the midst of a correction ever since it peaked out by posting an intra-week high of 6357.10 during the week ended 11th January, 2008. The Nifty staged an extremely sharp decline but recovered to post an intra-week high of 6339 during the week ended 5th November, 2010, mildly breached its earlier month’s high (didn't sustain), and these levels have not been seen since. Since then, the Nifty hasn't made any particular headway and has remained in a rather large trading range between 4500 on the downside and 6300 on the upside (this process has been going on for nearly three calendar years now).

In the meantime, a rounding bottom has been made (a bullish pattern), indicating the possibility of a near-term upside. While there is still no clarity whether the corrective phase which has commenced in 2008 (the assumption at this point is that this phase is still in motion) has exhausted itself or not, a close above the 6350 level followed by sustainability above this level could be the first probable indication of the resumption of its (Nifty) long-term bull phase.

The monthly MACD is in the ‘buy’ mode. The monthly stochastic is getting overbought, while both oscillators seem to be in a mood to support the current visible positives. Significant long-term support comes in at the 5400, 4800 and 4500 levels, and if the sanctity of the aforesaid levels is maintained for the next 12 months, a superb platform would have been built for a multi-year rally. A scrip-specific approach is advocated, while buying needs to be staggered and initiated only on declines or on a clear breakout above the 6350 level. Succinctly put, a choppy year is envisaged.
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Reliance Infra | CMP - Rs 515.80 | Buy

Reliance Infra bottomed out by posting an intra-week low of Rs 428.30 during the week ended 6th 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 745 during the week ended 24th April, 2009. It couldn’t sustain these levels for long, declined to post an intra-week low of Rs 653.75 during the week ended 24th April, 2009, commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 1404.45 during the week ended 17th October, 2009.


Currently, Reliance Infra seems set to stage an upmove after a decent weekly consolidation. With even the weekly picture looking better, a further upside from these levels cannot be ruled out.

Trading Pointers

Indicators: MACD-Buy | RMI-Buy | Stochastic-Buy | ROC-Buy | RSI-Buy
Support: 495, 428 | Resistance: 586, 678
Targets: 1st Target: 748 (44-46 weeks) | 2nd Target: 900 (52-54 weeks)
BSE Code – 500390 | Stoploss: 400 (cls)
55 Week EMA: 516.94
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Sail | CMP - Rs 89.05 | Buy

Steel Authority of India (SAIL) peaked at an intra-week high of Rs 97.25 during the week ended 9th January, 2009, and declined to post an intra-week low of Rs 70 during the week ended 6th March, 2009. The scrip launched into an intermediate uptrend, peaked at an intra-week high of Rs 186 during the week ended 5th June 2009, only to enter a corrective phase, and declined to post an intra-week low of Rs 138.60 during the week ended 17th July, 2009. It staged a rally to peak at an intra-week high of Rs 258.55 during the week ended 9th April, 2010, and entered a corrective phase.

Currently, SAIL has reversed direction after receiving significant support from the Rs 76 level, and a weekly close above the Rs 97 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: 76, 63 | Resistance: 97, 125
Targets: 1st Target: 121 (44-46 weeks) | 2nd Target: 145 (52-54 weeks)
BSE Code – 500113 | Stoploss: 73 (cls)
55 Week EMA: 93.51
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Central Bank | CMP - Rs 82.85 | Buy

Central Bank bottomed out by posting an intra-week low of Rs 26.77 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 45.36 during the week ended 17th April, 2009. It couldn’t sustain these levels for long, and declined to post an intra-week low of Rs 37.94 during the week ended 24th April, 2009. The scrip commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 223.83 during the week ended 29th October, 2010.

Currently, Central Bank seems set to stage an up-move after a decent weekly consolidation. With even the weekly picture looking better, a further upside from these levels cannot be ruled out.

Trading Pointers

Indicators: MACD-Buy | RMI-Buy | Stochastic-Sell | ROC-Buy | RSI-Buy
Support: 78, 61 | Resistance: 85, 114
Targets: 1st Target: 112 (44-46 weeks) | 2nd Target: 133 (52-54 weeks)
BSE Code – 532885 | Stoploss: 67 (cls)
55 Week EMA: 84.03
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Indiabulls Real Estate | CMP - Rs 71.30 | Buy

Indiabulls Real Estate peaked at an intra-week high of Rs 112.50 during the week ended 20th February, 2009, and declined to post an intra-week low of Rs 83.10 during the week ended 13th March, 2009. The scrip launched into an intermediate uptrend, peaked at an intra-week high of Rs 261.05 during the week ended 5th June, 2009, only to enter a corrective phase, and declined to post an intra-week low of Rs 163.20 during the week ended 17th July 2009. It staged a rally to peak at an intra-week high of Rs 298.10 during the week ended 9th October, 2009, and entered a corrective phase.

Currently, Indiabulls Real Estate has reversed direction after receiving significant support from the Rs 56 level. A weekly close above the Rs 83 level would mean the possibility of a further upside from here.

Trading Pointers

Indicators: MACD-Buy | RMI-Buy | Stochastic-Sell | ROC-Buy | RSI-Buy
Support: 56, 42 | Resistance: 77, 98
Targets: 1st Target: 101 (44-46 weeks) | 2nd Target: 125 (52-54 weeks)
BSE Code – 532832 | Stoploss: 56 (cls)
55 Week EMA: 67.45