Divis Lab - waiting for break out !!

Today , on the last day of derivatives expiration of July contracts ,the Nifty revolved around the weekly pivot and also could not go beyond the important resistance level of 4353 indicated yesterday.

Consider crucial support now at 4275 and resistance at 4353-4360 levels.

DIVISLAB is one stock which has remained low key during the past few days and the price chart formations suggest that a break out can be expected any time.



The break out level is at Rs 1440/- and short term traders can enter the stock on break out for a target of near Rs 1600/-. Keep stop loss at 1375 being important support level on intraday charts.

Even the basic and advanced indicators should support the possible break out and a volume pick up should add to the speed of the move.

I hope inflation figures to be announced today post market are 'in line with expectations' though they may be able to give only a temporary impact. The fact that RBI has cut the Repo and CRR recently suggest that it is clearly worried. It has done so, even though they are aware that it may slow down the growth rate - but the RBI governor has to choose the lesser evil and inflation containment is a clear priority.

Happy trading

CA Rajiv D Khatlawala

NIFTY - good recovery !!

The NIFTY opened in up gap today and closed near the day's high, recovering yesterday's fall almost entirely.

The weekly pivot is at 4308 and the Nifty has closed above that.

Upmoves may face resistance initially at 4353 and on a break above this level, the likely target is at 4425.

The weekly charts suggests that medium term investors may now get worried only and only if 4075 is broken. Upward momentum will build up on a close above 4425 to retest the last week's high of 4539.

Short term players may, however, keep a stop loss at 4240 for any long positions.

The fall in Crude, among other things, is giving support to the market and if inflation figures are 'not bad'then above mentioned up targets are highly likely.

Happy trading !!

CA Rajiv D Khatlawala

BajajHind - turning sweeter!

The Nifty not only filled the gap created on the 'vote of confidence' day (I had indicated on Friday that it would try to fill the Gap) but also closed well below it at 4185. Consider 4265 as crucial level of resistance now. Below that level, assume the short term trend to be weak. And yes, my advanced course students were already aware 'why' I had indicated short selling below 4380!

Coming to scrip specific moves, I presume sugar stocks are likely to outperform the market. BAJAJHIND is one such stock which can become positive in a corrective upmove in the market.



Immediate resistance is at 160 and I expect that a break above Rs 160.75 should give a target of initially Rs 185-188 and then Rs 200/-. Consider Rs 146 as crucial support for any long positions.

You would notice that Rs 140 is the historical support level for a long time for the stock.

Happy trading!

CA Rajiv D Khatlawala

GOLD - corrective fall over ?

{SORRY FRIENDS, I COULD NOT POST ON MY BLOG YESTERDAY (Monday evening) DUE TO INCONSISTENT INTERNET CONNECTIVITY}

The Nifty remained sideways on Monday and has opened in down gap near 4250. In fact on Friday I had mentioned that the Nifty will try to fill the GAP made on the 'Vote of confidence' Day and this has happened today morning (Tue).

Turning our focus on GOLD at the current juncture, it makes interesting study on how trend lines can be useful in technical analysis.



In the above chart, you will observe that in the current corrective fall in GOLD from the high of 13500 levels, it has taken support at the resistance line drawn from the high of Mar 17th. This is a classic case of resistance becoming support price level.

Unless this 'resistance-turned-support' line in broken on down side, we can expect up momentum.

So any long positions should not be exited unless this level of Rs 12500/- is broken. Moreover, other indicators (not shown in the chart) suggest that a close now above Rs 13050/- will be further positive for the security. In dollar terms , a close above $935.50 will be positive and $920 will be the crucial support level.

And don't forget the general inverse relationship between Gold and equity!!

Happy trading !

CA Rajiv D Khatlawala

Crude Oil - 'Next is What?'

The NIFTY moved as expected and indicated. It closed down 112 points to close at 4320. I expect the Gap created on the 'Vote of confidence' day will soon get filled.

In the meanwhile, CRUDE OIL seems to be completing it's correction (oh no !!).

After reaching my target of Rs 5200/- yesterday, it bounced back to close at Rs 5307 thereby creating , what is known as a 'hammer' pattern in Japanese Candlestick terminology.



This bounce back should sooner or later give a move of another Rs 300/- in the short term i.e. to a price near Rs 5600/-.

Also If you observe the RSI which was in a negative divergence has now reached oversold region - a characteristic which I have explained in my book. The the possibility of a rebound to Rs 5600 is more likely.

Consider Rs 5200 as the crucial support for any long trade and only if that is broken expect further weakness.

Presume the week was quite profitable for all the bulls out there !!!!!

Happy trading

CA Rajiv D Khatlawala

Zinc - Readying to rise ?

The Nifty got resistance at 4540 against the indicated level of 4560. It closed down at 4430 points. Today's low will be an important support and a break below that will trigger further selling. I presume all of you have book profits yesterday itself ( as suggested in previous blog posts)

My target in CRUDE OIL hits Bulls Eye- a few days back I had indicated that a break below 5800/- on MCX can take it to Rs 5200/-. Today it touched a low of 5191 and is currently at 5285/-.

The Metal ZINC (on MCX)is in an interesting bottom formation at current levels.



Though Zinc prices are under pressure, price falls are not creating significant lows. In fact it may be forming a rounding bottom having taken support at 76-77 levels for past few days.

Initial resistance is at 85/- and once this is crossed, I expect the prices to go towards 91/-.

Even Hindustan Zinc seems to be waiting for cues from the Zinc commodity. It is near to a break out on daily charts which is at Rs 575/-. Watch it in coming days !



Happy trading !!

CA Rajiv D Khatlawala

NIFTY - a 'nuclear blast off'!!

Woops !!!

The Nifty opened as expected with a huge gap and sustained its upmove. It rose well beyond my target of 4400 indicated on Friday.

Well, for most of my recent recommendations, the targets have been achieved or surpassed. Presume all of you could benefit.



The Nifty rise was huge - almost 235 points. But similar rallies have occurred at least four times in the past six months!!

The Nifty has cleared the 38.20% retracement and now may face resistance from the crucial 50% retracement which is placed at 4560. In all probabilities , the Nifty should form a 'doji' suggesting a halt to the upmove.

Whether it happens , time will tell. But it may be a good habit to keep booking profits. At the back of the mind , remember these are the corrective up moves that we are witnessing in an overall down trend.

Inflation data is due tomorrow . And I suppose market will now look out for economic data , the political situation being cleared yesterday.

While I may sound conservative, keep booking profit while you get them or at least protect yourself with derivatives!

Happy trading

CA Rajiv D Khatlawala

BHEL - - targeting 1800+

The Nifty moved up today too as expected. It has got resistance at the short term falling trendline at 4260.

Tomorrow's opening will in all probability be a gap- no marks for that - but which side is a 'million dollar question'!!

Among the various stocks which seem to have found their feet in the recent fall during the past month is BHEL



From the above chart you would observe that there are multiple supports at 1340 levels. The RSI and MACD have also shown positive divergence and i expect some more upmove.

Moving average resistance will be near to the 1800-1850 level and i expect that at that level the positive divergence should get completed.

The stock closed at Rs 1600 and the break out level is at Rs 1615. keep a stoploss at Rs 1490 and exit near 1800-1840 levels

Happy trading !

CA Rajiv D Khatlawala

UNITECH - corrective move ahead!!

{ The recent recommendations of NTPC and PowerGrid have achieved targets , albeit a little too fast than I expected. Hope readers could benefit }

The count down to the The D Day, or shall we say "The 'V' Day", has started. The whole nation's discussions and anxieties are revolving on whether the Govt will succeed in getting the 'Vote of Confidence' or not.

Market participants, who as a group are by nature quite sensitive to such events, are all the more more anxious and also cautious as to the outcome.

The Nifty has been moving up in last two days in the run up for the V Day - as expected and indicated in my blog a couple of days back. Whether my evaluation- that the market should rise before the event and then retrace irrespective of the outcome, proves right , time will tell. Till then fingers crossed !

In the meantime, one stock which has been beaten down and is showing some signs of revival is UNITECH.



It closed at 152/- today and I expect that a break out above Rs 158.50 should give it enough momentum to test levels between 182-195. Consider Rs 140 as important support for any longs

Happy Trading !

CA Rajiv D Khatlawala

NIFTY - expected but impressive move

YES!!!
The move in NIFTY was expected. And those who have already attended my courses or those who track Nifty closely, must have already guessed - Positive Divergence in the Nifty.



This has occurred before the 'No-Confidence Vote' and my expectation is that Monday too should be positive. However in that rise it would be well prudent to book profits and go on the sidelines. Markets, when they rise before an event, usually tend to reverse even if the outcome of the event is positive for it! So be careful. .

Also political events tend to be temporary as regarding the markets. In the overall scenario, it is the economic situation which is important.

The current rise could get terminated before or near 4370-4400 levels. Technically, the divergence will get completed by that time.

I would not want to consider this positive divergence in the Nifty / Sensex as a sign of 'trend reversal' since major trends usually don't change so fast. A correction of a four year rally generally doesn't get reversed in 6 months.

So take advantage of the up move and keep booking profits. As they say "One in the hand is better than two in the bushes"

CA Rajiv D Khatlawala

Power Grid - S/T target Rs 90/-

The Nifty / Sensex rallied well on the back of a weak Crude Oil. You would have observed that Crude Oil has broken the crucial support of Rs 5800/- on the MCX as indicated yesterday. I presume that if Crude now closes below 5745 on MCX we can expect further selling pressure in Crude Oil.

And that is in a way good news for the markets. Most of the traders are literally 'searching' for good news. And I only hope that the Inflation figures - whatever they might be, does not negate the 'Crude' advantage!

One stock which is showing signals of stabilising is POWER GRID. It has closed at Rs 82.50 today and I expect that a break above Rs 83.25 should give short term traders an opportunity of a move to Rs 90-91. Keep stop near 79.


(( Click on the Chart to see expanded form))

On the price reaching Rs 90-91, medium term traders infact can book partial and hold for a rise to Rs 98-99/- with an increased stop at Rs 85/-.

Short term traders with predominantly bullish attitude can take advantage of current movement in many B1 stocks. But remember to exit when it's time, else you may be left out 'holding the baby'!!!

Happy trading!

CA Rajiv D Khatlawala

Crude Oil - Signs of Fatigue? ?

It seems that the stock markets are not in a mood to stabilize. Today when everyone was expecting that the Nifty will take support at 3840 , it broke and fell almost 50 points below that level before recovering back to 3830 on close.On intraday charts, 3880 and 3950 are the key resistances while 3798 is the support.

CRUDE OIL fell yesterday by more than $5. On the MCX , Crude Oil contract closed just below 6000/-. There is strong resistance at 6300+ levels while the key support for Crude now is at 5800/-.



A break below 5800/- is likely to lead to further selling pressure. Retracement target itself is initially at 5200/-.

Also if you observe on the chart, there is negative divergence on the MACD and i expect that a break below Rs 5800 will 'confirm' this MACD divergence.

Investors who track Crude to get a direction on the Stock market may now get worried only and only if Crude breaks above Rs 6325/- on the MCX.

It seems that 'the price of crude' is now tired of going uphill and needs some rest ('correction')

Happy observing!

CA Rajiv D Khatlawala

Revisiting Dollar Rupee . . .

What a sell off !!! The Nifty and Sensex tanked again by about 5%. Throughout the day there was sustained selling pressure and it looked likely that corrective rally may not be sustained.I had indicated crucial support at 3965 and the Nifty opened at that level and continued to move downward.

Through out the day , I was constantly watching the movement of the Nifty vis a vis the Dollar Rupee and they were clearly moving in opposite direction. The Dollar rupee opened the day at 43.08 and steadily increased to 43.29 ; as the Nifty / Sensex continued to fall during the same intraday period.



Sometime back I had analyzed the Dollar Rupee and indicated higher level on break out above Rs 43/-. The Dollar rupee seems set to touch 43.70-43.75 level in the near future (which may again not be a good sign for the stock markets).

However I expect strong resistance / selling in Dollar rupee at 44/- which is it's 61.80% retracement level as well as previous few quarters support level.

Incidentally my first target of GOLD (on MCX ) of Rs 13500/- has been surpassed and it is currently quoted at 13650+ (partially helped by a rising dollar-rupee)

I think we should watch our currency closely for more signals !!

CA Rajiv D Khatlawala

DLF - Inv H&S in the making ??

The Nifty moved as expected. Upmoves are getting resistance. The trading range is broadly 4150-4180 and 3980. If you have observed it is a channelised upmove which usually does not sustain.

In the meanwhile, one stock which seems to be hammered out of proportion is DLF Limited. The relentless fall in the stock a few days ago prompted me to check whether sentiments have gone extreme - which they usually go.



The price movement for the past few days in the stock is suggesting a very strong possibility of an inverse head and shoulder formation - which is in fact a reversal pattern.

If this is true, the stock may take support near to 420-430 levels in order to create the second ('right') shoulder. The neckline break out is at 490/- and a break beyond this should give us a target of 590-600/- in the medium term.

Volumes (not shown in the chart) are also picking up heavily at these lower levels and rather than indicating selling pressure, they may actually be suggesting us 'accumulation'!

Keep this stock on your radar !

CA Rajiv D Khatlawala

The indecisive week gone by ---

Strange are the ways of the markets ! or so it seems !

Infosys did come of with some good numbers but was witnessing a continous selling pressure since morning! and then the second blow came when the IIP figures came out.The tech sector turned out to be the biggest loser. It reminds us again (and again) that our analysis may go wrong but Mr. Market is always right. Price is King !

The Indian Industry has clocked the lowest growth rate in the last SIX years ! Many investors who were hoping that the worst is over - came in for a shock, yet again.

I presume that the IIP growth rate is a bigger problem than inflation. but unfortunately both are related. Measures to reduce inflation may, sooner or later, affect IIP negatively. The result is a loop! And to top it, we have the relentless rise of CRUDE and the slowing world economy.

The Nifty which opened and closed the current week at the same level and this is termed as 'doji' in candlestick terminology. A Doji suggests indecisiveness in the market.

For the coming week, key resistance level will be 4150 while the key support area will be 3965.

Happy finger crossing!

CA Rajiv D Khatlawala

CNX IT- Corrective Down move complete!

AH ! , here is one of the few sectors in this market, which we can term as 'bullish'. And I have been already suggesting the Satyams and Wipros of the world!!

The CNX IT index which was in a downward corrective move from 4775 to 3900 levels, seems to have completed the correction (up to 61.80% retracement level) and is already readying for the next upmove.

You will notice that the fall from the level of 4775 was due to the negative divergence on the RSI and the RSI going to the oversold level is suggestive of the completion of the divergence

I expect the move upwards will be slow (the participants of my workshop know why the move will be slow!!).

Consider crucial support at just below 3900. Today's closing is near to 4100 and hence the risk should be low. Moreover the 'results season' is already due and I will not be surprised if many software companies turn out good numbers and give out 'cautiously optimistic ' earnings guideline.

Check out your favorite techies .....

Happy stock picking !

CA Rajiv D Khatlawala

NIFTY - in a corrective mood !

We were anticipating the current corrective rise since late last-week. The Japanese Stick Sandwich pattern formed on the day the Sensex fell 600 points, had already suggested a corrective upmove - mentioned on this blog. I have also indicated that now unless 3840 is broken, expect a corrective move.

The index opened in up gap, courtesy the $5 fall in Crude Oil, and remained positive during the day. Short covering is the obvious reason - no marks for guessing that!

The immediate question is what next. If you notice the range of the 'stick sandwich pattern' it is about 200 points in Nifty and hence we may well target a Nifty level of 4300. This, in fact, is also very near the retracement level of the recent down move.

In the chart you would observe that Nifty should complete it's current corrective move between 4300-4400 and at those levels, long positions must be exited.

(By the way, just remind yourself that you are right now not in a bull market, as earlier!!)

Happy trading

CA Rajiv D Khatlawala

GSPL - rebounding from support

The Nifty opened in down gap of more than 110 points ;recovered during the day but failed to close positive.

Currently the trend must be presumed sideways till the time 3840 Nifty is broken on down side. Though the Nifty closed at 3990, I expect upward resistance initially at 4060 and crucial resistance at 4125.

One Stock which has been taking good support inspite of the recent fall in the indices is GSPL (Guj State Petronet).



The stock has good support at Rs 50-Rs 55 price level which incidentally is also it's historical support area for the past one and half years.

A break above Rs 61.25 should give a up target of Rs 68-70 in the short term. Keep a stop at 54.50/-.

In the expected sideway move in the indices ; traders may want to dig out stocks which may give them upmoves of 10-12%

Happy trading!

CA Rajiv D Khatlawala

Reliance - Weak close . Caveat Emptor!!

Reliance was one stock which was under-performing the market in intra day since morning and has given a weak close today. This may not be good news for the indices in general.

Reliance has been in a clear down move and what is formed at present is a 'triangle' pattern on the line chart. Triangles suggest a temporary halt to the ongoing move, before the original move resumes.

A break now below 1980/- will be further weak for the stock. Select technology stocks and other specific stocks are remaining strong, thus keep the Index on positive side.
But we cannot ignore the weakness in Reliance- being a heavyweight.

Moreover on the political front, the situation may still be fluid and this is what is keeping the markets in a nervous state!

For those contemplating Reliance - CAVEAT EMPTOR ('Buyer's Beware)

CA Rajiv D Khatlawala

NTPC - should show some power!

Well, the Japanese (candlestick) were right !!!

In spite of yesterday's weak Nifty close, I had indicated that based on the 'stick sandwich' pattern, the likely hood of today's move was upward. And this was in spite of the bad inflation figures.

When technicals indicate weakness, a bad inflation can make the markets fall ; and when technicals are strong or oversold in present case, the same inflation figures lead to a rise in the market!

One stock (among the various which I identified) which are showing signs of some upward moves based on divergences on indicators like the RSI is NTPC



It seems to have made a good support level of Rs 148 levels and it has closed at Rs 154/- today (Friday). I expect that a break out of Rs 160 will be further positive and one can then target 178-185 levels. Keep in mind the support level of 148 in any case.

The RSI and MACD too are showing divergences, suggesting that the scrip has been relentless hammered and needs a correction!

Happy trading and have a good weekend !

CA Rajiv D Khatlawala

A short term reversal on the cards ??

Yes I know what you are thinking. Talking about a reversal when the Sensex tanked by 570 points and Nifty by 173 points - reversing yesterday's 700 point charge.

But reversal is what the Japanese Candle sticks method is saying. The three candle pattern (formed in last three days ) is called a 'Stick Sandwich' pattern which is suggestive of a short term reversal according to the Japanese!

The theory goes that if these three crucial days low is not broken, expect a short term upward movement. Time of course will tell us.

I will be watching out for the crucial 3980 spot Nifty level for tomorrow. Also, if the crucial 3850 support is not broken then we may say that the Japanese are right!

Happy roller coaster rides!

CA Rajiv D Khatlawala

NIFTY up 196pts .. What now?

Reversal ? or Correction?


So intra-day traders had a field day today ! and others sighed some relief!

In fact , on intraday charts, since morning we could 'sense' a classic reversal pattern giving a target on upside of about 90 points. It later rallied more than 125 points beyond the break out!

Nifty which was again getting far off from it's moving average. Moreover trendline resistance is near the weekly pivot point - 4200. This level may may as resistance level. A break above 4200 gives a target of 4280-4300...

I presume the 'correction' should then get completed.

Consider good support in down move at 4000.

I presume readers could take advantage of the 'corrective fall' in Satyam and Infosys as evaluated some days back.

Happy trading

CA Rajiv D Khatlawala

GOLD - heading for a new high !!

AAAH ! The Sensex broke below 13000. As the saying goes - "Bull Markets have no resistances and Bear markets have no supports"

And this was even as Crude Oil , Dollar - Rupee , GOLD and Silver and other metals continue to rise relentlessly.

I presume for the past few months , there was a clear shift from Indian markets to these other markets. In fact in one of my workshops we had analyzed in February 08, that a clear shift is visible from Indian stock markets to Gold.... !

GOLD which was stagnant for some time has now shown good movement both in Indian rupees as well as in Dollar terms.



After taking support at the 50% retracement level of Rs 12000 levels, it has started upmove and has broken it's trendline on upside.

I expect that a close above Rs 13075/- will be decisive and lead it further at least to it's previous high of 13500/- and then beyond it. (In $ terms, a close above 934 will be positive)

Happy trading

CA Rajiv D Khatlawala