Nifty

#2 Article 3…2…1…. Go!!!!

Last time I wrote for “V-Share” was in September issue 2012 with title “ Nifty on a Hat-Trick”  and since then we have seen a good rally on the index as well as the stocks as I expected. Let’s have a quick look at my picks than:
Script
As on 24th August 2012
As on 25th February 2013
Change
Axis Bank
1075
1402
30.00%
Maruti Suzuki
1190
1448
21.67%
Infosys
2444
2920
19.47%
M&M
762
896
17.58%
Wipro
365
418
14.52%
Bank of Baroda
644
731
13.51%
HDFC
722
802
11.08%
IDFC
142

156
9.86%
Reliance Industries
782
851
8.82%
Nifty
5386
5854
8.07%
Tata Power
98.3
98.3
0.00%
Bhel
231
208
-10.00%

Siemens
670
547
-18.40%
So analyzing my picks above, we could notice that only 3 stocks underperformed the index while rest 9 stocks have out-performed. Just having a quick look we could notice that both the stock which gave negative returns are from capital good sector and Top performing stocks are from retail industries.  Basic cyclic wave theory suggest the same thing which has happened in last 5month’s bull run i.e., Retail sectors lead the rally and capital good sector is the last to rally. So keep a eye on good picks from capital sector though its high risk to enter them at CMP.
 Hell lot of things has happened since September last year at the domestic and global  too but all has factored in positively for the markets. Our new finance minister had just completed one month than but now after completing almost half a year we could see the result on the index. Increase in Gold import duties, rise in fuel price, rise in railway fares, FDI in aviation, FDI in retail, easing bank rates, Improvement in IIP data , Ease of Inflation etc all has been factored positively as people know that it is good for our economy to survive.
3…2…1…GO!!!  Just 3 days to go for budget to be announced and NIFTY like a racing car could speed up its movement post budget. Our current FM had presented Budget 13yrs back and I guess it had brought cheer amongst traders and same could be expected this February. Majority of the traders are of the opinion that post budget we could see downside but I am of the opinion that opposite could happen and we may see some rally post budget. Decontrol of the fuel price was taken as negative sentiments for some investors but if we look behind that we were infact late to do this. This was the biggest deep which made fiscal deficit valley deeper. As per my view was the right time to liberalize diesel prices. Coming to import duty than I am opinion that it isn’t the right way to increase revenue rather government should liberalize or ease export of agri commodities as india’s 80% of populitions main income is from Agri. But of-course people at the center are more experienced than me and would have some better plans in coming months and I expect 28th February to be a start to it.
Coming to NIFTY’s chart we could see that it has been in good wave since the low of 4770. If I am not wrong market is currently in 4th wave of the larger wave 3 of one more degree larger wave 3. Looking at the Indicator MACD , nifty is in the confused state while RSI is suggesting some pullback and bull momentum. This week of the year is always confusing for the analysts. On weekly chart of NIFTY 5820 is the strong support and it made low near to the same level today. This support factor has not breached by nifty since it is trading above the same since late june. So if this week we see close below the same than free fall could be upto 5630-5690 which could be taken as buying opportunity for long term rather going short. Overall we are ought to be in Bull run until nifty closes below 5400. Looking simply at the long term averages, nifty has been taking support exactly at 100EMA since last three sessions and below that we could see support at 5630 where 200 EMA as well as wave formation is taking support.
Stock picks:
I would like to make few changes to my picks .Exit BHEL, SIEMENS, TATAPOWER , IDFC ,WIPRO and Bank of Baroda. I would recommend to add Adani Enterprise, TCS, Dena Bank, Tata Motors, Ranbaxy and Ambuja Cement. I have few reasons for these changes. First of all i have introduced my exposure to cement sector and Pharma Sector. Secondly, have chose 2 stocks out of the index as they might out- perform. Thirdly, I have replaced few profit stocks of index with other safe index stocks to protect our exposure to non index stocks. 
Strategy on nifty:
For those who are already having some long position on NIFTY should average above 5950 or if we see weekly close below 5820 than should wait for the range 5630-5690 to buy more. Positional traders shouldn’t go short at any movement currently as I am not expecting more downside than 5630-5690. Close all longs at 5550 and go short only below 5400.  Next tgt on NIFTY is 6550.
Note: All the data and graph is as of 25th February 2013 closing
Disclaimer: I may have personal position in index and above mentioned stocks. Views and News mentioned above may have Errors and omissions. My views are biased more towards technical analysis. Please read and study the market carefully before investing on my idea. For any suggestion contact me on my email.

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