Polaris - deciding it's future trend!!

Polaris Software is one of the active mid-cap infotech stocks. For the past few days it has been consolidating in the range of Rs 100 and Rs 110.

Moreover it's 200 DMA is currently placed at 107. I have provided a line chart ( or Closing price chart) which suggests that a close above Rs 110/- should lead to further buying in the stock.On break out one may keep a stoploss at 100/- and expect a calculated target of Rs 138-140.

Other technical parameters (not depicted here) are also suggesting an upward bias and a likely change in trend to up.

Happy trading!

CA Rajiv D Khatlawala

WIPRO - - Changing Long term trend

The OUTPERFORMERS. . .

A few weeks back I had analysed the Rupee-Dollar Chart and anticipated a move from Rs 39.75 to the technical target of 41.80. The price target has been well surpassed.

At that time I had also mentioned that technology counters are likely to outperform the Sensex / other stocks. I presume that has happened. While majority of the other index heavyweights are far away from their highs, technology counters like Infosys , Satyam and Wipro are in an uptrend. Satyam in fact is near it's 52 week HIGH.



For my regular subscribers I had indicated a buy on Wipro at Rs 450/- (notice the Inverse Head and Shoulder Formation). It has since risen to Rs 515/-. Moreover it has taken good support at the 200 DMA which is a positive sign.

I presume it is changing it's trend to UP. Expect some more upward movements in the stock (along with those in other technology counters)

Happy trading

CA Rajiv D Khatlawala

HPCL - Gaining on Crude Oil Fall..

Crude Oil's Loss is HPCL's Gain

A couple of days back, I had indicated that a 'topping' pattern had emerged in Crude Oil and it is likely to fall . Crude Oil which touched a high of $135 on the day of the topping pattern, has since fallen to $128.



This should be good news for HPCL / BPCL and IOC. Another positive for these counters is the need for the government to find ways to find out how to subsidise Petrol and diesel. the govt is actively thinking of levying an additional cess (Oil cess) on the Tax collections. This should to some extent reduce the burden on the oil companies.

All this seems to be reflected on the prices and it may be assumed that the stock HPCL has made a bottom at Rs.230/-.

A break above Rs 254 with volumes would be a positive. Consider buying on a break above Rs 254 with stoploss kept at the recent low of Rs 230. Target should be in the vicinity of Rs 300-312/-

Happy Trading !

CA Rajiv D Khatlawala

Reliance - Waiting to Fall ?

It is probably time to take market cues from the Index mover Reliance Industries.

The Stock did try to surpass the resistance zone of Rs 2650-2700 but failed to do so, presumably because of heavy selling from large players.

Technically, you may consider that the pre-Jan08 support zone of Rs 2700/- has now effectively become a resistance zone - a classic case of previous support changing its role as a resistance provider!!

The more recent move from Rs 2200 levels to Rs 2700 levels is in the form of a rounding pattern (though technically it cannot be called a rounding top).

The immediate support is at Rs 2480, which is incidentally today's low and a break below this should lead to further selling. I would target a re-entry into the sub-Rs 2200 price zone. Keep a Stop at 2665 for short sell positions.

And yes, if this heavy weight falls as evaluated, I wonder which stock can support an already weakening Nifty !!!

Happy trading !

Will 4800 support Hold ? ? ?

Consider the above chart of Nifty.

The support level of 4800 is a crucial retracement level support and it is likely that the bulls will try to hold this.

But the Bollinger Bands ( which interalia measure volatility) are suggesting that the bears are currently in control ! Moreover the MACD is also about to go in to negative territory which can further strengthen the bears...

Resistance on the daily charts is crucial at 5100 points ( which is also near the current weeks' Pivot point resistance R1 of 5091) and unless this is surpassed, the bias will be on negative side.

A close below 4800 will further aggravate the situation!

Happy trading !

CA Rajiv D Khatlawala

A request to all readers

Dear Friends

I have come to know of certain readers of this blog who display / copy the analysis on my blog elsewhere.

While I do believe in sharing knowledge (the main purpose of this blog) I also believe that due credit should be give for copying / displaying the material of this blog elsewhere.

In fact if you all do not respect Intellectual property , i may as well slow down on the number of posts or even stop putting up any posts altogether!

Hope this is taken up in the right spirit

CA Rajiv D Khatlawala

Nifty Pivots - last week and next week!!

Pivot points on the Nifty computed last week , acted as useful reference technical levels for investors and traders during the week just ended.

The following is the Hourly chart of the Nifty showing the Nifty movement in reference to the weekly pivot points which we tracked last week.



Also, on May 22 I had indicated the possibility of a down ward break of the support line of the ongoing 'channel'. The channel was broken on Friday and the Nifty closed much below the support line as also much below the Weekly pivot point support S1 which was placed at 4992.

For the coming week the key pivot points are depicted in the second chart .



The main Pivot is at 5016 while the resistance R1 is at 5091 and support S1 is at 4872.

This week too we shall observe the Nifty behaviour taking reference of the pivot points to give us an indication of then market's direction.

Happy trading !!

CA Rajiv D Khatlawala

Crude - 'Peaking' or 'Resting' ???

I had analysed Crude Oil Chart (on MCX) a few days back when it was at sub-4800 levels. Later on it shot up to a recent high of Rs 5822 (yesterday) before closing lower.

Yesterday's formation is technically called a 'doji' in candlestick terminology and suggests a possibility of a reversal.

You would have noted that the earlier when the price was below Rs.4800/- 'negative divergence' on the RSI and MACD though visible, was not 'confirmed' by way of a swing break out and hence we saw the rally from Rs 4800 to Rs 5800 .... ( The swing break rule is explained in detail in my Book)

Whether yesterday's doji turns out to be a reversal or not , time will tell; but I would be strongly biased towards the down side till the price breaks the recent high.

This should then be good news for HPCL / BPCL / IOC all of which were up today (Friday) inspite of a further 250 point fall in the Sensex.

Happy trading !

CA Rajiv D Khatlawala

Nifty ... near Crucial Support !!

The Nifty move today (May 22) was interesting.

It opened in down Gap and remained weak during the entire day. On closing it took support near the upward channel support line on daily charts - placed at 5005( Nifty made a low of 5010 today).

The weakness as suggested by the MACD is restraining prices from showing upward momentum and hence we need to watch the support line carefully a break below 5000 now should be treated negative.

Also if you remember the Pivot points for this week was at 5080 which should now act as a resistance level ; while the support level S1 (based on Pivot) was at 4992 which too is very near now.

My perception is that a break below 5000 especially on closing basis, will lead to a downmove throughout the remaining of the month - at least till derivatives expiry.

Happy trading !

CA Rajiv D Khatlawala

ZINC (metal) ... Bottoming out !!

Zinc (commodity) on MCX
-----------------------
While Crude Oil , Gold and Silver are strengthening world wide, the industrial metals are not as enthusiastic. I thought of technically analyzing Zinc (commodity) traded on the MCX.

The chart above suggests that Price below Rs 90/- triggers buying in the commodity and it has rebounded from these levels thrice in the past six months..

Currently it is placed at Rs 96/- and the MACD is also showing strength. A break now above Rs 100/- should give a minimum target of Rs 110-112- which turns out to be a 10% plus move !!

Time to refer the Chart of HINDUSTAN ZINC, I presume!!!

Happy observing!

CA Rajiv D Khatlawala

PIVOT POINTS - a revisit

Nifty Pivots for current week
==============================

The weekly pivot level for the current ongoing week is placed at 5080 which gives us a broader perspective as to the market's bias.

Weekly resistance is strong initially at the retracement level of 5150 and then a 'pivot point' resistance level of 5245 .

Support is now at 5060 based on retracement level and a strong support at 4992 based on the Pivot.

It will be interesting to see how the market behaves and respects these pivot / retracement levels n the current ongoing week.

Today for instance, on the first trading day the Nifty touched a low of 5072 and closed at 5104 (above the pivot of 5080)

If the Nifty closes below the Pivot of 5080, one needs to change the view to bearish. Till then the bulls are still holding on!

Happy observing !

CA Rajiv D Khatlawala

Himatsingha Siede (on reader request!)

One of the readers "N" requested analysis of the mid-cap scrip "Himatsingha Siede" and accordingly I have analysed the scrip



The stock which made a high of 135/- in Jan 08 , it has recently made a low of Rs 50/-. In fact, price is finding support at Rs 50/- levels, though the volumes have been less.

In the short term, one can look for a break out above Rs 58/- for a target of Rs 80+. On break out keep stoplos at Rs 50/-.

Moreover, investors may decide to book profits at Rs 90-95 levels, and that level is a major resistance area for the stock.

I would suggest keepig a watch on the volumes when the break out occurs. If they are higher than usual , the better the break out.

Happy trading

CA Rajiv D Khatlawala

Nagarjun Fertilizer ... a good harvest !

( I was awaiting readers' comments on the Pivot Point article.. And also wanted to know whether such 'educative' articles would interest you all or not...Do give your feedback.. Thanks!)



After touching a high of Rs 89 pre-Jan crash and a low of Rs 24 post Jan crash, the scrip (Nagarjuna Fertilizers) has been taking good support in the range of Rs 40 and Rs 50...

A break above Rs 50.75 should trigger further buying (hopefully with volumes) at which level, traders may enter the stock with a stoploss kept at Rs 43.50 for a target at Rs 64-66...

Presumably the targets would get achieved with the onset of the monsoon in a few weeks from now!

Happy Trading

CA Rajiv D Khatlawala

Using Pivot Point Levels

Friends,
One of the purpose of this blog is also to provide a platform for enhancing knowledge in the exciting field of technical analysis. In this context, I have today taken the topic of the widely popular "pivot points".

Check the following link to know calculation of the Pivot points
www.pivotpointtrading.com

PIVOT POINTS are essentially price levels calculated based upon the previous day's (or period's) High , Low and Closing price levels.

Normally they are used by day traders (those who don't use much of technical analysis) to provide them with a clue of price levels where prices may find support and resistance.

However even investors may use them for similar purposes. Personally I use the Pivot point to indicate the market's bias - whether one should be bullish or bearish. Thus if prices are below the main 'pivot' point trend is assumed weak and if above then it is considered strong.

The R1 and S1 points indicate Resistance and Support levels. Thus as prices approach R1, the trader / investor would get cautious of profit booking / resistance to price rises and vice-versa.

In the following Nifty chart I have computed and shown the 'WEEKLY PIVOT' point and the Weekly R1 and S1.



For the first three days of the current week, the Nifty remained below the Weekly Pivot and today (thursday ) it has broken above it. Weekly R1 is placed at 5169 and as prices approach this level it should help short term traders to book profits. Weekly S1 is at 4883

However , I may add here that my own use of Pivot points is only of treating it as a reference level and not for taking any actual trading / investing decision.

I shall revisit the Pivot Points and their importance in subsequent posts too.

Happy Trading

CA Rajiv D Khatlawala

Nifty - Closing Chart ( Line Chart)

Many of the blog readers have asked me about the importance of a closing price - relative to the OHLC charts. It is for this reason that I am tempted to evaluate the Nifty Closing price chart in the current article.




The above is the Closing price chart or line chart which plots the Daily Nifty closing price ; without depicting the High / Low and Open of the day.

You may observe that in the current move , the Nifty has taken support at the trend line joining the higher closing lows. Accordingly a close now below 4950 will break the trend line . Till then , the chart indicates sideways move - especially as the MACD has given a sell signal by crossing its signal line.

The above chart indicates that the momentum is falling and hence taking positional trades for a few days may not be a prudent strategy!

Happy trading

CA Rajiv D Khatlawala

IFCI - waiting for a break out !

IFCI ... a midcap stock which has usually been in news as a takeover target has seen quite a correction from its pre Jan08 level of Rs 121 to the current levels of Rs 60/-.

The scrip is currently moving a 'flag' type pattern oscillating between Rs 55 and Rs.64 for the past 14 trading sessions.

Break out on the upper side is at Rs 64 and the scrip should then target Rs 85 levels. Keep a stoploss at 56/- (after break out occurs). . .

Volumes too are relatively higher suggesting active interest in the stock by close circles. Moreover, If the expected break out of Rs 64/- comes with higher volumes, the better.

With the Nifty /Sensex showing weakness, it is likely that the investor / trader and speculator interest will shift to such 'news based' stocks

Happy trading !
CA Rajiv D Khatlawala

Nifty - A weekly chart Analysis

PRAY ... that we don't see 4600 in next few weeks !!



YES.

That is what the Nifty Weekly charts are telling us to do. Pray!

Today's IIP figures again were below the mark at a measly 3% against 8.60% in the corresponding month in previous year...

This led me to re-visit the Nifty weekly charts for some indications and what i see (or believe what I see) is a head and shoulder reversal pattern developing in the weekly chart !!!

The neckline is near 4600 Nifty and it is highly likely that the current rise to near 5300 was to create the 'right' shoulder!. And yes we must not forget that the pre Jan 08 rally to 6300+ Nifty had all the characteristics of a typical 'head' formation

If , and I repeat If, this happens, we are facing a neckline break out below 4600 which could lead the market to witness further selling pressures....

Wooops - not a great way to start the week - watching a H&S on the weekly index charts

Time will tell, but for the time being, lets watch out for the Nifty range of 4800 - 5200 to be broken to give us further directions

Happy 'finger crossing'

CA Rajiv D Khatlawala

DISH TV ... Watch it !!!!

It was indeed encouraging for me that one of the readers 'M' who, like all of you tracks my blog regularly , has suggested that I also evaluate the stock Dish TV.

Accordingly I have evaluated the stock :



DishTV which touched a high above Rs 105 in Jan this year has since retraced to Rs 50 levels.

Recently there was a volume spurt when the stock price rose from Rs 56 to Rs 65 in a single day (marked on the chart). Thereafter it has corrected back to near Rs 52 levels.

Consider Rs 50.50 as an important support level in the ongoing correction.

A break out now above Rs 58 should trigger partial entry in the stock and one can add more if the stock rises above 62.50 . Keep stoploss at Rs 51 after the entry in the trade. A break out with higher volumes will be more confirmatory.

Target on the upper side should be Rs 80-83/-.

Though the Nifty / Sensex has closed weak ... One can expect upward bais in select mid cap stocks.

Happy trading!

CA Rajiv D Khatlawala

IDEA CELLULAR ... near Breakout!

What an Idea !!



The IDEA Cellular stock which touched a high of Rs 150 before the Jan Crash, has consolidated well in the Rs. 100 and Rs 110 range for the past few days...

Moreover there has been a marked increase in volume at around Rs 100/-levels suggesting accumulation.

Expect a break out beyond Rs 112/- to give you a short term target of Rs 135 and a medium term target of a re-test of Rs 150 levels. Keep a stoploss at Rs. 99/-..

You will also observe that the MACD has gone in to positive territory and the price formation itself is creating an ' Inverse H & S' pattern which is a trend reversal pattern.

Happy investing!

CA Rajiv D Khatlawala

CNX IT Sector Index !!

CNX IT Sector - showing signs of trend reversal

Technology stocks have been on my radar since I suggested bullish targets for the Dollar (against the rupee), they have been performing quite well .

In fact I presume they have been out-performing the overall market , with not many people realizing it! (as usual?)

The above chart of CNX IT index is showing signals of completing it's one-and-half year down correction. In fact, though the Index has not yet broken above it's resistance trendline, many individual stocks in the sector have already changed trends toward positive.

The above indicates that the IT sector is likely to continue to outperform the broader market.

Let's all dig out some interesting stocks in this sector !!!


Happy digging !!

CA Rajiv D Khatlawala

Ranbaxy - Investors' Delight!!

The above is the WEEKLY Chart of Ranbaxy Labs.

We may observe that the long term falling trendline has been broken near Rs 450/- and other indicators too ( not shown here) are showing signals of upmove.

Considering that the stock has given break out and other signals on the weekly chart , it becomes a good stock for investing , rather than for trading.

Investors may target a minimum level of the previous high (Rs 650) ... Stoploss for investors will now be at Rs.375/-.

Also considering the fact that Pharma companies are beneficiaries of a depreciation in the Rupee and also that they tend to witness 'defensive' buying in a falling market, even fundamental investors may find it attractive .

(I presume you all have noticed that the Dollar has gone near the target level of Rs 41 today... In my article dated 23rd April I had given this target when spot was around Rs 40.06... You may scroll down for the detailed analysis...)

Happy INVESTING !

CA Rajiv D Khatlawala

RPL - Target reached - What now ? ?

In the first week of April 08, we had suggested entry in RPL at 177 for a target near Rs 210/-. The scrip made a high of Rs 206 recently.

If you have observed, the scrip has actually retraced the two-day crash of Jan 08 . It took the scrip about three months to retrace the 2-day crash...

Thus resistance is likely to be strong at current levels ( Rs 203-206) and the possibility of a down move from here seems higher.

Watch out for the Rs 198 levels below which further selling is likely. Also if it closes below Rs 197, expect a down target towards 186-183 levels in the medium Term !

Happy Trading !!

CA Rajiv D Khatlawala

CRUDE OIL - may fall further !!

Crude Oil which touched a high of almost $120 in international markets has fallen heavily in last couple of days .
However signals were already available on the price charts of an 'impending downmove'. ( The power of charts, shall we say ????)

The above chart of Crude Oil on MCX clearly shows a 'negative divergence' on the RSI and MACD two commonly used indicators.

After touching a high of Rs 4785 it has fallen to current level of Rs 4500.Indications are strong that in coming days it may most likely test sub-Rs 4400 initially and then still lower levels of Rs sub-Rs 4200/-.

When Crude was at $120 levels, analysts on major TV channels suggested $150 in the next few weeks, while the Price charts are saying something opposite!!

It will be interesting to track both - the analysts target as well as the targets of the price charts

Happy observing ! (i presume none of you trade crude)
CA Rajiv D Khatlawala