==>> Gap Theory

Firstly, I would like to thank the Publisher of ‘Informed Investor’ to give me a chance to write for their weekly edition.

For the week ended 26th June 2009, FII’s remained Net seller in the cash markets. According to the provisional figure provided on the site FII’s sold stocks worth Rs 3200 CR. But on the other hand DII’s were Net buyers for Rs2600 CR till 25th June 2009. As the last week for the F&O contract expiry, Volumes had picked up in the market.
Roll overs in the F&O were pretty good. Rolls in the stocks were better than the rolls in the Nifty future. Nifty registered its lowest ever rolls at just 55%. Sectors like Sugar, Auto & Shipping were the top performer in the rolls.

Technically speaking. As per the Fibonacci Theory, if we take the levels of Nifty from its all time high to its low that was made in the month of Oct 2008, i.e. 6289.80 and 2252.75, the 50% retracement level comes nearly about 4315-4325 levels. This week Nifty tried its luck for 3 times, to close above the same, but could not conquer the same. Nifty fell down to make of low of 4143 for the week. Finally Nifty closed above 4315-4325 levels on Friday at 4375 up by133.65 points or 3.15%. Nifty made a high of 4383 and low of 4143 levels. Nifty above 4405 will touch 4448-4529. The gap, that has been created in the Nifty and the Sensex chart after the rally that has been witnessed when the UPA govt came in the power, are not yet filled up, so that still remains the concern for the market. But as the Nifty has crossed and closed above 4325 levels, the rally will continue for a while. In the weekly chart a ‘Hammer’ Pattern has been made at the lower levels. That may confirm the upside move for the Nifty. Sensex Retracement levels were is 14525 levels. Sensex closed above the same at 14764.64 up by 419 points or 2.92%. Since the 1st week of June when the Nifty was at 4550 levels this writer had continuously warned the readers in the personal blog (www.technicalsvishaldangaich.blogspot.com) that, the markets will soon witness some correction. Since then, Nifty from the high of 4688 dropped down to make a low of 4143 levels.

Finally the Rains are there. Rains too are a major concern for the Indian markets. Till now rainfalls in the month of June are below normal by 52%. The Indian Meteorological Department has predicted that the Rainfall this year will be below normal. Some of the states have been worst hit by around 70-80% deficit in rainfall. If India does not get sufficient rains in the year, it may cause a serious issue. The State which produces Soya bean, Cotton, sugarcane, corn & other pulses, will be worst hit. The prices may sky rocket in the near future. But as the rains have started, in some state, that might definitely give some relief.

Stocks to watch are

BUY Power grid cmp 110 tgt 116-125 SL 104 SL 104.5
BUY ADLABS cmp 366 tgt 374-386-390 SL 359
Hero Honda looks week, at close below 1405.
BUY REL Capital cmp 937 tgt 972-1015 SL 949
BUY TCS above 396 tgt 405- 434 SL 389