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Nifty technical outlook(vol 5) dbfs securities ltd

Rethish Varma
Rethish Varma

The document provides a technical analysis and outlook for the Nifty index in India. It indicates that the Nifty has breached its trend line support and may see a correction to around 5,800 or 5,600 levels depending on the upcoming budget and central bank policy decisions. The analysis advises investors to take a cautious approach and consider partial investments at those support levels.

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DBFS INSTITUTIONAL EQUITIES DOHA BROKERAGE INDIA / INDICES / NSE NIFTY Research Analyst Rethish Varma.S ib@dbfsindia.com +91 022 30279043 / 44 February 14, 2013 OBSERVE CAUTION Nifty - Technical Outlook Now the question is, whether it is 5800 or is it 5600? In our last technical report on Nifty dated 05th February 2013, we had indicated that we were in for a minor technical correction. We were expecting the market to grind lower and ultimately find a support at 5940 or even around 5920 levels. But defying all our expectations, the correction hasnt started showing signs of abating at the moment. We are anticipating the markets to drudge even lower from these levels. The near term trend of the markets would be determined by the budget and the RBI policy meet in March. If the finance minister delivers a pre-election subsidy finance budget buttressed by heavy subsidy that could heighten our fiscal deficit sharply, then we could very much see the nifty tumbling towards 5600 levels in the medium term. Last 9months chart of NSE Nifty (Data as on 13/02/2013 closing) associate of DOHA BANK associate of DOHA BANK Technical Outlook Technically from the charts, we can see that the markets are now clearly in a downward path. Following the trend line support for the last 9 to 10 months, it obviously points us to the overwhelming reality that the Nifty has breached its trend line support and could possibly witness a technical correction before or after the budget. What we saw on the Nifty was a one way streak from 4700 levels all the way towards 6100, so its quite comprehendible to expect a technical correction to a level of 38.2 percent Fibonacci retracement or a 50 percent retracement. If the budget comes out to be a populist one, then we could take support around 5800 and from there on the nifty would resume its next leg of uptrend which could take it to 6180 to 6300 plus levels. But if budget fails to meet the expectation of the investor community, then it could well breach 5800 and head towards the 50 percent Fibonacci retracement level of 5600 which is also happens to be the Niftys 200 Day EMA. In the light of the current developments we would like to advise investors to take a more cautious approach towards investing in markets, by waiting patiently and making partial investment at 5800 levels and subsequently at 5600 levels. Page 1
DOHA BROKERAGE February 14, 2013 Analyst Certification I Rethish Varma.S, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or view expressed in this research report. Disclaimers & Disclosures This research report provides general information only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not, and should not be construed as an offer to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the associate of DOHA BANK appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing associate of DOHA BANK public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. All such information and opinions are subject to change without notice. This document has been produced independently of any company or companies mentioned herein, and forward looking statements; opinions and expectations contained herein are subject to change without notice. Price and value of the investments referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions -including those involving futures, options and other derivatives as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a stocks price movement and trading volume, as opposed to focusing on a companys fundamentals and as such, may not match with a report on a companys fundamentals. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Doha Brokerage and Financial Services Limited (DBFS), its associate and group companies its directors or employees do not take any responsibility or liability, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this document, including but not restricted to, fluctuation in the prices of the shares and bonds, reduction in the dividend or income, etc. This document is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or would subject DBFS or its associates or group companies to any registration or licensing requirement within such jurisdiction. If this document is inadvertently sent or has reached any individual in such country, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purpose without prior written approval of DBFS. Before acting on any advice or recommendation in this document, a customer should consider whether it is suitable given the customers particular circumstances and, if necessary, seek professional advice. Certain transactions, including those involving futures, options, and high yield securities, give rise to substantial risk and are not suitable for all investors. DBFS, its associates or group companies do not represent or endorse the accuracy or reliability of any of the information or content of the document and reliance upon it is at your own risk. DBFS, its associates or group companies, expressly disclaims any and all warranties, express or implied, including without limitation warranties of merchantability and fitness for a particular purpose with respect to the document and any information in it. DBFS, its associates or group companies, shall not be liable for any direct, indirect, incidental, punitive or consequential damages of any kind with respect to the document. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of DBFS. Page 2
DOHA BROKERAGE February 14, 2013 Special Disclosure In accordance with the SEBI (Foreign Institutional Investors) Regulations and with guidelines issued by the Securities and Exchange Board of India (SEBI), foreign investors (individuals as well as institutional) that wish to transact securities in Indian bourses must have applied to, and have been approved by SEBI and the Reserve Bank of India (RBI). Each investor who transacts securities in Indian bourses will be required to certify approval as a foreign institutional investor or as a sub-account of a foreign institutional investor by SEBI and RBI. General Investment Related Disclosure Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. DBFS is also a Portfolio Manager. Portfolio Management Team (PMS) takes its investment decisions independent of the Equity research and accordingly PMS may have positions contrary to the client group research recommendation. associate of DOHA BANK Page 3

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Nifty technical outlook(vol 5) dbfs securities ltd

  • 1. DBFS INSTITUTIONAL EQUITIES DOHA BROKERAGE INDIA / INDICES / NSE NIFTY Research Analyst Rethish Varma.S ib@dbfsindia.com +91 022 30279043 / 44 February 14, 2013 OBSERVE CAUTION Nifty - Technical Outlook Now the question is, whether it is 5800 or is it 5600? In our last technical report on Nifty dated 05th February 2013, we had indicated that we were in for a minor technical correction. We were expecting the market to grind lower and ultimately find a support at 5940 or even around 5920 levels. But defying all our expectations, the correction hasnt started showing signs of abating at the moment. We are anticipating the markets to drudge even lower from these levels. The near term trend of the markets would be determined by the budget and the RBI policy meet in March. If the finance minister delivers a pre-election subsidy finance budget buttressed by heavy subsidy that could heighten our fiscal deficit sharply, then we could very much see the nifty tumbling towards 5600 levels in the medium term. Last 9months chart of NSE Nifty (Data as on 13/02/2013 closing) associate of DOHA BANK associate of DOHA BANK Technical Outlook Technically from the charts, we can see that the markets are now clearly in a downward path. Following the trend line support for the last 9 to 10 months, it obviously points us to the overwhelming reality that the Nifty has breached its trend line support and could possibly witness a technical correction before or after the budget. What we saw on the Nifty was a one way streak from 4700 levels all the way towards 6100, so its quite comprehendible to expect a technical correction to a level of 38.2 percent Fibonacci retracement or a 50 percent retracement. If the budget comes out to be a populist one, then we could take support around 5800 and from there on the nifty would resume its next leg of uptrend which could take it to 6180 to 6300 plus levels. But if budget fails to meet the expectation of the investor community, then it could well breach 5800 and head towards the 50 percent Fibonacci retracement level of 5600 which is also happens to be the Niftys 200 Day EMA. In the light of the current developments we would like to advise investors to take a more cautious approach towards investing in markets, by waiting patiently and making partial investment at 5800 levels and subsequently at 5600 levels. Page 1
  • 2. DOHA BROKERAGE February 14, 2013 Analyst Certification I Rethish Varma.S, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or view expressed in this research report. Disclaimers & Disclosures This research report provides general information only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not, and should not be construed as an offer to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the associate of DOHA BANK appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing associate of DOHA BANK public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. All such information and opinions are subject to change without notice. This document has been produced independently of any company or companies mentioned herein, and forward looking statements; opinions and expectations contained herein are subject to change without notice. Price and value of the investments referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions -including those involving futures, options and other derivatives as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a stocks price movement and trading volume, as opposed to focusing on a companys fundamentals and as such, may not match with a report on a companys fundamentals. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Doha Brokerage and Financial Services Limited (DBFS), its associate and group companies its directors or employees do not take any responsibility or liability, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this document, including but not restricted to, fluctuation in the prices of the shares and bonds, reduction in the dividend or income, etc. This document is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or would subject DBFS or its associates or group companies to any registration or licensing requirement within such jurisdiction. If this document is inadvertently sent or has reached any individual in such country, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purpose without prior written approval of DBFS. Before acting on any advice or recommendation in this document, a customer should consider whether it is suitable given the customers particular circumstances and, if necessary, seek professional advice. Certain transactions, including those involving futures, options, and high yield securities, give rise to substantial risk and are not suitable for all investors. DBFS, its associates or group companies do not represent or endorse the accuracy or reliability of any of the information or content of the document and reliance upon it is at your own risk. DBFS, its associates or group companies, expressly disclaims any and all warranties, express or implied, including without limitation warranties of merchantability and fitness for a particular purpose with respect to the document and any information in it. DBFS, its associates or group companies, shall not be liable for any direct, indirect, incidental, punitive or consequential damages of any kind with respect to the document. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of DBFS. Page 2
  • 3. DOHA BROKERAGE February 14, 2013 Special Disclosure In accordance with the SEBI (Foreign Institutional Investors) Regulations and with guidelines issued by the Securities and Exchange Board of India (SEBI), foreign investors (individuals as well as institutional) that wish to transact securities in Indian bourses must have applied to, and have been approved by SEBI and the Reserve Bank of India (RBI). Each investor who transacts securities in Indian bourses will be required to certify approval as a foreign institutional investor or as a sub-account of a foreign institutional investor by SEBI and RBI. General Investment Related Disclosure Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. DBFS is also a Portfolio Manager. Portfolio Management Team (PMS) takes its investment decisions independent of the Equity research and accordingly PMS may have positions contrary to the client group research recommendation. associate of DOHA BANK Page 3