Aban Offshore - Rectangular Pattern Break-Out

Aban offshore has broken out of a Rectangular Pattern on Friday with high volumes & looks set for a target of 500-506 levels.
Rectangular Pattern is a continuation pattern & it took 3 months for the pattern to form & a breakout was seen on friday, October 28th 2011.
8th November 2011, would be the Q2 results of ABAN. Q1 results were bad, the Company posted a net loss of Rs. 21 Crores compared to a net profit of Rs. 24 Crores (Q4 results of FY'11)

Daily Chart of Aban Offshore

CMP: 425
Target: 419+(419-332)=506.
Initial Stop Loss: Closing below 419.
Time Frame: Maximum 3 months.
Indicators: MACD has turned into buy mode. RSI is above 70 indicating strong strength in the movement.
Futures - On 28th Oct 2011, Friday the price increased 5% & with Increase in Price, there was addition in Open Interest too - Indicating built up of Longs.

Update 2011-Nov-18: On Nov 15th 2011, the stock moved below 419 & hence the pattern got invalidated & the Stop loss also got hit.

May The Trades Be On Your Side

Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

Keep a Stop Loss in each trade you Initiate.

NIFTY View - 28-Oct-2011

A Quick Update - NIFTY Weekly View

After a resolution was reached on European Debt Crisis, the European Markets all rallied by close to 4 to 5% yesterday. Dow, S&P Nasdaq closed up by 3% too. As Indian markets were closed yesterday. SGX NIFTY Closed at 5330 levels & today morning SGX NIFTY is pointing to an opening at 5420. So it'll be a gap up opening on NIFTY by roughly 175-200 Points :-). 

The look at Weekly charts of NIFTY shows that it'll approach a key resistance zone of 5420-5440 (Falling Top-Top Trendline). 

Also 200 EMA is near 5337. So the thing to watch out would be how NIFTY would move around this level & would it be able to close above it. Keep a close watch.

Be careful in initiating any fresh longs as a gap of 150-200 Points looks very unlikely to sustain.

200 D SMA is currently at 5408. So It can reach this levels Sustaining above 200D SMA would be the real strength of the Bulls as one would know 200 Day Simple Moving Average is a psychological level above which bulls will  be more powerful. 


For anyone who is still long in NIFTY one can keep a Stop Loss of 5320 as below this the Gap Filling process would start. Also if you observe the Daily Charts (Will Post Chart Later) We have made an Island Reversal Kind of Chart Pattern (This pattern would have been more valid if it was around 4700 levels than at these levels).

• Leave alone global macro scenario even the domestic situation is not that favourable.  
• Interest Rates at high & USD almost at 2 year high against the Rupee (The Stronger Dollar would hurt our Imports & would put a stress on our Fiscal Deficit). 
• In the recently concluded Monetary policy review, the RBI has already lowered the growth projection for the year.
• Inflation is still a concern with Food Inflation ruling above 10%. The base effect can kick in & bring the Inflation to around 8% by Feb-Mar. But till the Interest rates starts coming down the Capital Intensive space would be suffering by margin reduction & less order inflow.
• This is indeed a powerful rally but the rally was all the way sold by the Domestic Institutions(Mutual Funds). Its more of a Short Covering rally than actually a rally that was fuelled by delivery based buying. But this doesn't mean we can revisit 4700 levels & move much lower. For Interim term at least the bottom of 4700 seems to be in place & we wont be going to that level unless we have another Greece like bailout situation. 
• This is not to paint a bearish picture. As they say "Markets are always Forward Looking & they discount the future at least 6 months in earlier" - Meaning if Markets gets to know Interest rates would be coming down in 6 months from now they would start discounting that news & the favorable Interest rate sensitive sectors would start slowly to outperform the index.

NIFTY - 2 Years Weekly Chart - 1

NIFTY - 2 Years Weekly Chart - 2

                                              NIFTY - 2 Years Daily Chart 

Bottomline: Looking at the Weekly chart it looks unlikely to cross the Top-Top Trendline. So we might now enter into a sideways market again for few weeks before getting any trending moves like we got in this October.

May The Trades Be On Your Side

Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

Keep a Stop Loss in each trade you Initiate.

Breakout Candidates - 25-Oct-2011

Hindustan Unilever

Hindustan Unilever - 11-Oct-2011 - In this corresponding post I had identified a pattern that might occur if 320 on closing basis was broken. But as they say markets are supreme & patterns can get invalidated. The pattern did not become active as the stock price dint close below 320 in these 10 days (8 odd trading sessions). 

On Friday it bounced off a key support levels (Demand Zone). Today it broke out above the Resistance trendline & is ripe for a fresh move of 5% atleast & if the overall scenario remains good can move much higher. Also today its close competitor ITC came out with good numbers (Especially the FMCG segment delivering good gains on growth in margins).

HIndustan Unilever - 2 Year Daily Charts

Trading Strategy: Can Initiate Long positions around current levels or if it dips to 337-335 levels keeping an Initial Stop Loss levels of 330 levels for targets of 345-350 & higher if markets remain conducive. 

HLL is one of the Low Beta counter & hence any fierce rally in NIFTY may not translate in fierce rally in HLL & vice-versa.

Bajaj Auto

It's third time lucky for Bajaj Auto, after 2 unsuccessful attempt to breach 1650 levels, Bajaj Auto has managed to close above it today. 

Trading Strategy: Can Initiate Long positions on dips around 1670 levels with Initial Stop loss being  1650 for Medium to Long term targets of 1800+ Levels (Should be above 1650 levels). In short term still has strength to move up by another 5 percent if things remain conducive.

It would be prudent to take positions post RBI Meet morrow or to be even more safer on Friday.


13-Nov-2011 An Update: Both the Stocks rallied well. Infact HLL made a 10 Year high by closing above 370 levels. It's currently holding well at price of 395. Bajaj Auto to moved swiftly to 1820 levels & currently is consolidating around 1700-1750 levels.

May The Trades Be On Your Side

Nifty Weekly View - 23-Oct-2011

Happy Deepawali to all of you 

As we enter the Diwali Week, We have lot of events that would unfold in the next few days. Tuesday - RBI Meet, F&O Expiry. Wednesday - Muhurat Trading on the occasion of Laxmi Puja (An hour of trading in the evening from 4.30 PM to 6.00 PM), Thursday - Closed on occasion of Diwali. Wednesday also we have outcome of the EFSF meeting from the Euro Zone. So it's an action packed week.

Taking the events one by one. 

RBI Meet - Expectations are a rise in Interest rates (Repo Rates & Reverse Repo Rates) of probably 25bps or 50bps. 

Impact to the Markets - Rise of interest rates may make Index to move lower. If the rates are kept unchanged then it can be pleasant Diwali Gift to the markets & can rally.

F&O Expiry - October Expiry Month, i.e, From 30-Sep-2011 to till date NIFTY is up a meagre 35 Points. But it was a See-Saw move, NIFTY made a low of 4728 on 4-Oct-2011 & an High of 5160 on 17-Oct-2011. This being a truncated month with just 17 Trading Sessions & Expiry is happening 2 days before the last Thursday of the month on Tuesday due to Diwali.

OI Data suggests that Highest OI in CE's are at 5200 Calls & Highest OI in Puts are at 4800PE. So it's unlikely NIFTY moving beyond 5200 this expiry month nor move below 4800. NIFTY might expire somewhere between 5000-5100 levels.

EFSF meeting - There is a positive buzz surrounding it that there wont be any hurdles in funding for the crisis. With such expectations European Indices on Friday closed with comfortable gains of close to 1.5% and above. Even a small bit of disappointment in the outcome can create a panic in their markets & eventually this would spread to other markets as well.

NIFTY - Coming to our own NIFTY & its charts. The charts doesn't seem positive, courtesy the last hour selling we saw on Friday. NIFTY was rebounding well of the 50EMA (5070), once that broke there was a free fall of close to 40 odd points in less than 15 minutes. This was post L&T Q2 results, which were actually good but their guidance was way too low at 5% (which the markets were not expecting) & hence this counter saw heavy selling.

NIFTY Daily 3 Months Chart

From 05-Oct-2011 NIFTY started bouncing from a strong support levels of 4720-4700. Gained 400 odd points in 10 sessions. Last week it has lost roughly 100 points.

Its taking support at the upward sloping trendline but facing resistance at the Top-Top trendline. It got resisted from the same line on Wednesday & Friday too.

CMP: 5050

Supports: 5050, 4965, 4900

Resistances: 5110, 5160-80 zone, 5230-5320 (Gap Area)

50EMA: 5070, 20EMA: 5026

Indicators: MACD - Has just gone below the Signal line indicating the weakness.

RSI - Pointing southwards but holding on to 50 would be a positive sign for Bulls.

EMA: NIFTY has moved below 5EMA & 50 EMA (Bearish Sign), Took support just above the 20EMA. So going forward 50EMA will be the zone that would act as a strong resistance.

Bottomline: The week ahead looks to be a week that would be in favour of Bears more than the Bulls (atleast the Charts are pointing towards that). Keep a close tab on the news as that would be significant in opening up the Market Direction.

Trading Strategy: One can go Long in NIFTY, once the Top-Top trendline is broken on the upside & NIFTY moves above 50EMA. Stop loss being the Trendline itself.

One can Short once NIFTY breaks the Upward Sloping trendline & gets confirmation of it moving below 20EMA. Stop Loss being the 50EMA.

May The Trades Be On Your Side

Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

Keep a Stop Loss in each trade you Initiate.

Hindalco - 20-Oct-2011

Hindalco - Hanging on to the Cliff

Hindalco is not looking good on the charts. From here if 120 levels is broken, Chart suggests a fall to the magnitude of 20-25% price damage. On Monthly charts its precariously hanging on to the 120 levels. Below which its a clear shorting candidate.

Hindalco - Monthly Chart

Mind you it's a Monthly chart so it might take time to achieve the target. Follow the levels carefully. 


Trading Strategy:
Hindalco is currently at a key support level of 120. Any breach of it will cause significant damage to it's chart.
Short only after the Daily period Candlestick below 120. Initial Stop Loss level being 124 levels & once trade becomes profitable, Keep trailing the Stop Loss.
If Hindalco indeed bounces of the 61.8% retracement levels, then wait for it to reach 50% retracement levels (Around 145-150) levels & one can go short there.

May the Trade be on your side.

Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.