CHARTS FOR THE WEEK 11-10-2010 TO 15-10-2010 - … · charts for the week 11-10-2010 to 15-10-2010 ... national stock exchange of india ltd code no.23/13511/13 ... ¾ hul ¾ itc ¾

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Mumbai – 400056.

MEMBER: NATIONAL STOCK EXCHANGE OF INDIA LTD CODE NO.23/13511/13

CHARTS FOR THE WEEK 11-10-2010 TO 15-10-2010 NIFTY Last week we said that we are heading for a correction. This week ended we have seen nifty give a red candle for the 1st time in the past 6 weeks. However it can still move up higher but at every rise profit booking advisable… BEFORE READING FURTHER PLEASE NOTE: THAT WE ARE NOT TALKING ABOUT ANY MAJOR FALL OR EVEN A FALL HALF OF THE SIZE OF 2008 magnitude… What we are SAYING IS THAT THERE IS A BRIGHT POSSIBLITY OF A 15% PLUS SELL OF IN NIFTY FROM 6200-6500RANGE.

Nifty in this up move from 5350 has taken support at the 10 weeks EMA. Friday was the 2nd instance when it took support at 10 days EMA. 10 days EMA as of now at 6080.


Mumbai – 400056.


If it breaks that then the next round of support is at 55 days EMA, which has been the support range since June 2010. 55 days EMA is around 5750. ACCORDING TO ME IF THE NIFTY CORRECTS NOW THEN 5750 -5850 MAY ACT AS A SUPPORT FOR THE NIFTY TO BOUNCE BACK AGAIN. IT IS ALSO POSSIBLE THAT NIFTY TAKES FRIDAYS LOW AS SUPPORT AND MOVES UP HIGHER TO RETEST OR SURPASS ITS PREVIOUS TOP OF 6357… may be 6400 /// 6500.. IF THAT HAPPENS THEN WE ARE IN A TOPPING OUT PHASE IN SHORT TO MEDIUM TERM………WHERE IN EVERY RISE SHOULD RESULT IN PROFIT BOOKING. As we have informed earlier every time the SENSEX tries surpass its previous highs it surpasses it by a small margin (1%-2%) and then falls. ON both the previous occasions the fall has been substantial. Please see below 1st instance 2nd instance

Even psychologically there is some discomfort creeping in the markets. There is consensus that

America is doomed All the funds will come to emerging markets as this is where you have growth

India story shining very bright Rupee is going to only strengthen


Mumbai – 400056.


Dollar is doomed. Because there is so much consensus ( even if all this falls true) it is possible that we have a shake out. A shake out big enough to shake every body confidence.

Higher the market go from here higher will be the probability of the shake out. DOLLAR // RUPEE CHART

As you may see form the above in the

1st leg of down fall when the rupee strengthened from 53 to 44 levels……… between March 09 to March 10..…… nifty moved up from 2500 to 5400……………………….FII flows in this period = 40000 CR ( APPROX)

2nd leg of down fall HAS NOT YET STARTED……….. BUT IT IS A GIVEN THAT IT WILL HAPPEN BY SOME………..

IT WILL START ONCE IT MOVES BELOW 43-44 RANGE. If it moves below that 43-44 range then there is a very high possibility of a steep fall

in dollar all the way up to 39. Very important to note that FII flows since April 10 to till date = 44000 CR (

APPROX) of which September & October have resulted in close to 29000 CR.


Mumbai – 400056.


BANK NIFTY

Bank Nifty has moved up from levels of 3400 to 12500 levels. Past few weeks we have been advising profit booking in Banking stock especially PSU. Now private banks join the race too………………………………All further up moves should be sold into. Every rise from here (12700) is also an opportunity to short………………………………… It can move up higher from here and timing a top is like committing suicide and the bulls will squeeze you out. A proper spread out sell will instead do the trick. It is worth noting that PSU BANKING STOCKS (except SBI & BANK OF INDIA) have a tendency to peak out 1st .. in the 2003-2007 bull run they had peaked out some where in 2004-2005 Please see below to understand why at these levels there is very high risk of owning PSU Banks and why the possibility of it underperforming the market is so high.


Mumbai – 400056.


BANK OF BARODA As you may see from the chart below from 1997. After moving up to 250 range in Apr- June 2004 it corrected to 110 range in just one quarter. Then it was just a laggard till mid 2007 after which it moved up. ( in other word after the upmove from 40-250 it underperformed the market.

SIMILARLY ALLAHABAD BANK peaked out in quarter ending March 2005


Mumbai – 400056.


OR CAN BANK.

OR PNB

STATE BANK HAS BEEN AN EXCEPTION EVEN AFTER 2004-2005 FALL IT MOVED UP 8 TIMES COMPARED TO THE REST WHICH ONLY MOVED UP 2 TIMES TO 2.5 TIMES. AND SOME LIKE ORIENT BANK DID NOT MOVE AT ALL.


Mumbai – 400056.


SBI

Please note how some of the strongest counters ( BEST PERFORMERS) have fared recently. ASIAN PAINTS After moving up one way from levels of 700-2900 this counter has for the 1st time given a weekly close below the 10 weeks EMA for 2 consecutive weeks. If one notices carefully one may realise the amount of distribution taking place. PLEASE SEE VOLUMES

Lets go to another stalwart HERO HONDA


Mumbai – 400056.


TATA MOTORS—SEE TO UNDERSTAND HOW THE STOCK PERFORMS SINCE 1990.. it may move up by another 10-15% but will remain a laggard from there.

Macd negative after a very long time….. stock in over bought territory


Mumbai – 400056.


STOCKS WHICH SHOULD BE BOUGHT IN CASE OF PANIC INCLUDE STOCKS LIKE

BHARTI ONGC CAIRN HUL ITC RANBAXY MADRAS CEMENT HDFC HCL TECH AND MANY MID CAP STOCKS THE LIST OF WHICH IS VERY LARGE

From NAYAN M. VALA SECURITIES PVT.LTD.RESEARCH

By Dharmesh N. Vala Disclaimer: The information contained herein is confidential and is intended solely for the addressee(s). Any unauthorized access; use, reproduction, disclosure or dissemination is prohibited. This information does not constitute or form part of and should not be construed as, any offer for sale or subscription of or any invitation to offer to buy or subscribe for any securities. The information and opinions on which this communication is based have been complied or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, correctness and are subject to change without notice. NAYAN M. VALA SECURITIES PVT.LTD. and/ or its clients may have positions in or options on the securities mentioned in this report or any related investments, may effect transactions or may buy, sell or offer to buy or sell such securities or any related investments. Recipient/s should not consider this report as only a single factor in making their investment decision. Neither NAYAN M. VALA SECURITIES PVT.LTD. nor any of its affiliates shall assume any legal liability or responsibility for any incorrect, misleading or altered information contained herein.

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CHARTS FOR THE WEEK 11-10-2010 TO 15-10-2010 - … · charts for the week 11-10-2010 to 15-10-2010 ... national stock exchange of india ltd code no.23/13511/13 ... ¾ hul ¾ itc ¾