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Monthly Market, Sectoral and Stock Perspective - Technicals Dec 08, 2012

The markets closed at a 19-month high in November. Technical indicators show the markets are in a firm uptrend on short, intermediate, and long term timeframes. Some short-term weakness is possible after the recent breakout and correction from overbought levels. However, the intermediate uptrend remains intact, and the markets could see one more leg of an upmove before topping out. Key support levels are watched closely to confirm the continuation of the uptrend.

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43 views

Monthly Market, Sectoral and Stock Perspective - Technicals Dec 08, 2012

The markets closed at a 19-month high in November. Technical indicators show the markets are in a firm uptrend on short, intermediate, and long term timeframes. Some short-term weakness is possible after the recent breakout and correction from overbought levels. However, the intermediate uptrend remains intact, and the markets could see one more leg of an upmove before topping out. Key support levels are watched closely to confirm the continuation of the uptrend.

Uploaded by

GauriGan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Monthly Market, Sectoral And Stock Perspective Technicals

Dec 08, 2012

Markets close at a 19-month high


The month of Nov 2012 saw the markets trading in a tight range between the 18256-18973/5548-5777 levels. The
main indices broke out of this range towards the end of the month thereby confirming a continuation of the
intermediate uptrend. M-o-M, the Sensex/Nifty gained 4.50/4.63%.
Technical state of the market
Indicator Used/Pattern observed

Market Strength

Volumes, Market breadth

Comments
M-o-M volumes were lower on both the
BSE/NSE. This was probably due to the range
bound price action seen in the first half of Nov
12.
Market breadth mirrored the price action in the
markets. Was positive during upmoves and
negative during down moves.

Retail Research

Technical state of the market.contd.

Trendiness

Indicator Used/Pattern observed

Comments

ADX, Moving averages

Reflecting the uptrend in the markets on all time


frames (Short term, Intermediate and long
term), the Sensex/Nifty are trading above the
13-day (Red line) and 13-week simple moving
averages. They also continue to trade well
above the 200-day EMA (Purple line).
The Daily and Weekly ADX readings are in rising
mode and not overbought, indicating that the
current uptrend is not matured and still has
further upside potential.

Volatility

20 day Bollinger Band, Average True


Range (ATR)

The Sensex/Nifty have reacted from the upper


band of the 20-day Bollinger Band. This
indicates some short-term weakness is likely for
these main indices.
On the weekly charts too, the Sensex/Nifty are
approaching the upper band of the 20-week
Bollinger Bands, which calls for caution.

Momentum

14 Day RSI, MACD, Stochastics

14-day RSI readings on the weekly and monthly


charts are in rising mode and not overbought.
This implies further upside potential for the
markets in the intermediate and long term.
The 14-day RSI is however easing from
overbought levels of 70, implying some shortterm weakness is possible.

Outlook
While the markets are in a firm uptrend on all time frames (Short term, Intermediate and long term), Fridays
correction could lead to some further short-term weakness. The reaction from the upper band of the 20-day Bollinger
Bands and the easing of the 14-day RSI is also supporting our view of short-term weakness. It is important that any
weakness finds support at the 19257/5855 levels, as these are the short-term trend reversal levels of the market.
We believe that any correction is likely to be short lived, as the intermediate uptrend is very much intact. Intermediate
bull rallies usually top out on the back of euphoria. As we are yet to see such euphoria, there is a good possibility that
the markets could witness at least one more leg of an upmove before topping out.
Our intermediate upside target expectations for the markets is at 20665/6181. These levels coincide with the previous
intermediate highs of the Sensex/Nifty and also the upper levels of the upward sloping channel that has held the
major lows of the Sensex/Nifty since June 2012 (See the chart on the first page).
Our hypothesis of a continuation of the intermediate uptrend would fail if the Sensex/Nifty dive lower and break the
intermediate supports of 18255/5548.

Retail Research

Here are the key levels to watch for the coming week;
Trading Strategy: Markets are in a firm uptrend on all time frames. Use any short-term weakness to buy
aggressively as we expect the intermediate uptrend to continue with upside target expectations of 20665/6181.
Action Points
Sensex
Nifty
Action
Current Close
19424
5907
Close above would lead to
Immediate Resistances
19811-20218
5950-6070
continuation of intermediate
uptrend
Close below could lead to short
Immediate Supports
19186-19137
5838-5815
term weakness.
18255/5548 are Intermediate
Further Downsides
18508-18255
5623-5548
trend reversal levels
Previous intermediate highs of
Further Upside Targets
20665-21109
6181-6336
the Sensex/Nifty
Sectoral studies
Indices

Last
close

M-o-M %
Chg

ST/ IT/ LT trend

BSE Cons Durab

8031.2

15.8

ST, IT & LT up

BSE Realty

1998.4

12.8

ST, IT & LT up

BSE Banks

13951.9

7.8

ST, IT & LT up

BSE FMCG

6037.9

6.2

ST, IT & LT up

BSE Mid Cap

6902.0

5.1

ST, IT & LT up

BSE 500

7472.5

5.0

ST, IT & LT up

BSE Auto

10814.5

4.9

ST, IT & LT up

BSE Sensex
BSE Healthcare

19339.9
7946.5

4.5
4.3

ST, IT & LT up
ST, IT & LT up

BSE Small Cap

7275.7

4.1

BSE IT

5888.4

3.0

BSE Metal

10355.2

2.0

BSE Capital Goods

11080.2

2.0

BSE Power

1980.3

1.4

BSE Oil/Gas

8252.1

-1.2

Comments

Stocks likely to
outperform

At Lifetime Highs
Momentum not OB
STR at 7989
Momentum not OB HDIL, DLF could
Next targets at 2212.
rise
Momentum not OB
Next targets at 14275
At Lifetime Highs
STR at 5983
Broken out of narrow
range on wkly charts.
Next targets at 7309.
Broken out of narrow
range on wkly charts.
Next targets at 7651
Momentum not OB Tata Motors could
STR at 10757
rise

Broken out of narrow


range on wkly charts.
Next targets at 7753.
Looking weak on
ST & IT Up, LT Down
weekly charts.
STR at 5604.
Bounced from a
ST, IT & LT up
double bottom.
Targets at 10903
ST, IT & LT up
Made higher bottoms
ST, IT & LT up
on wkly chart.
Momentum not OB
ST Up, IT & LT Down
ST, IT & LT up

Infy and TCS


could fall more

ST = Short Term, IT = Intermediate Term, LT = Long Term, OB = Overbought, RSC = Relative Strength Comparative, STR =
Short Term Reversal Level, SMA = Simple Moving Average

Retail Research

BSE Mid Cap Index Weekly Chart

BSE IT Index Weekly chart

Retail Research

Stock Pick Buy Crisil


Daily Chart

Crisil was trading within the `900-980 range for three months between Sept-Nov 2012. On 03rd Dec 2012, the
stock broke out of this range on the back of higher than average volumes.

Technical indicators are giving positive signals as Crisil trades above the 13-day, 50-day SMA and 200-day
EMA. The daily ADX readings are climbing and at 32.4 indicate that the current uptrend is not yet matured
and has more upside potential.

Short-term momentum readings have picked up as the 14-day RSI has moved up from oversold levels and cut
its 9-day EMA from below.

The weekly technical set up too is looking encouraging on the weekly charts. The 14-week RSI is climbing and
not overbought and the weekly MACD readings have turned up.

We recommend a positional buy and our entry levels are between `1000-1026. Stop loss is at `940, while
upside targets are at `1,200; CMP is `1,024.55. Holding period is 2-4 weeks.

Note: Once the market opens for trade, the analyst will review it and decide to give the call through an internal mail/SMS at the
same or different levels of entry, target and stop loss or not give the call at all. Clients could get in touch with the analyst through
their designated dealers to check about this.
Analyst: Subash Gangadharan ([email protected])

HDFC Securities Limited, I Think Techno Campus, Building B, Alpha, Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves,
Kanjurmarg (East), Mumbai 400 042 Fax: (022) 3075 3435
Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This
document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to
buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it
should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may
from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended
for non-Institutional Clients

Retail Research

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