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