HDFC LTD. WEEKENDED 04.05.2012

HDFC WEEKLY CHART

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This stock has been trading in a narrow range of Rs. 80 for the past 13 weeks. In sync with the market weakness, this stock too has been declining and has closed weak today at 665. However, it remains inside the triangle marked on the attached chart. The downside breakout level is at 650 level.

This is one of the leading Housing Finance Co. with almost 70% of its equity held by FII's. Another noteworthy point in favor of this stock has been that the Company has converted the warrants at Rs. 600 per share and interestingly, this stock has not broken this level for the past 1 year - despite the continued weakness in the market. The Company is scheduled to declare its results/dividend on Monday, 7th May 2012.

As a contrarian trade - considering the current market weakness. one can consider buying the stock at lower levels with stop loss of Rs. 630 or Rs. 600 depending on individual risk profile. In event of good results and market turn around, this stock can see a break out on the higher side at 685 and can offer good profit potential.

Considering that this month's FNO settlement (31st May) is still far away, one can even consider buying call option with strike price of Rs. 680 or Rs. 700 which closed today at Rs. 2.65 & Rs. 6.95 respectively.

As the markets remain weak, please do not forget to keep a suitable stop loss. One can minimize the risk by buying call option as referred above.

Have a nice weekend!

Ketan Asher.

Review of Bank Nifty Future

On 2nd May, I had put up a chart on Bank Nifty Future and had recommended a sell below 10200. Interestingly, the results have been too good and too fast. It closed t weak today at 9793. I would like to remind the readers - particularly those who have sold reading my post, to consider covering the shorts at around 9500 levels as it could provide good support - considering that it is 50% level as well as previous bottom.

BANK NIFTY FUTURE EOD 30TH APR 2012

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BANK  NIFTY  FUTURE :

In the attached Chart, I have marked a triangle which shows that we are close to the apex of the triangle and break out is just a few days away. 

As can be seen on the chart, the upside breakout happens above 10530. While one would like to believe that the break out will be on the up side - with good results announced by leading private sector banks and much awaited cut in repo rates by RBI. However, the fact remains that this optimism is not reflected in the Bank Nifty chart, as we closed today with a  doji on the Monthly candle (not shown)  chart.

In view of the above, one needs to be prepared for a down side breakout in the coming few days and this will get confirmed  once Nifty Future  trades below 10000. On the downside, Bank Nifty Future will find support at 9835 (previous bottom), 9500 and 9200 over the coming days/weeks.

One can consider going short below 10200 with stop loss of 10300.

While the downside target of 8400 looks  unlikely today, one needs to be prepared for it once Bank Nifty Future  trades below 10000.  I am sure the reasons too will follow. Moreover,  you will also find that I have marked arrows on the attached chart which show  'gaps' - and these too have to be filled sooner or later. 

With Best Wishes,

Ketan  Asher.

NIFTY FUTURE QUARTER ENDED MAR 2012

NIFTY FUTURE QUARTERLY

As per the basic charting principles, as the time frame increases - so does the significance of the signals given by the chart. As quarterly chart is next in line to the Annual chart, its significance can not be undermined.

The key features of the Mar 2012 quarter are:

1. During the quarter Nifty Future made a range of 1108 points (High 5700 & Low 4592).

2. After previous 4 quarters of lower top lower bottom formation, we have for the first time, higher top and higher bottom formation - a big positive indeed.

3. The low of the Mar 2012 quarter has taken support on the lower parallel line of the Andrew's Pitchfork drawn in blue.

4.. One negative indication on the chart is given by the upper shadow of the candle. This when seen with the lower top and lower bottom formation on the monthly chart, does not augur well for the sustained up move. The upper shadow indicates selling pressure at higher levels.

5. The major move can now be expected only above previous quarter high (5700) and previous quarter low (4592).

6. During the current quarter (June 2012), on the up side Nifty future will face resistance of the trend line (shown in blue) at 5600. On the down side it will break the lower parallel line of the Andrew's Pitchfork at 4750. Thus giving a range of 850 points before which we can expect any major directional move.

To summarise, I would say that Nifty Future may face strong resistance at 5600 on the up side (considering the upper shadow in Q.E. Mar 2012 candle and Nifty may spend time in this 850 point range during this quarter before we can see any major move.

With Best Wishes for a new Financial Year.

Ketan Asher.