Weekly Technical Report Indices

September 10, 2013

Last Close

% chg over previous week

19,270

3.50

5,680 5,451 5,344 6,908 10,416 11,333 7,443 5,713 6,491 9,149 7,856 8,148 8,573 1,437 5,405 1,211 4,414

3.80 2.85 2.95 3.51 2.10 9.99 5.05 1.73 2.35 2.04 -2.14 4.66 5.20 3.60 8.32 3.15 -1.08

BSE Sensex NSE NIFTY BSE Midcap BSE Smallcap BSE 500 BSE Auto BSE Bankex BSE Capital Goods BSE Consumer Durables BSE FMCG BSE Health care BSE IT BSE Metals BSE Oil and Gas BSE Power BSE PSU BSE Realty BSE Teck

Short-term view (up to 1 week) The Sensex had got room up to 19,558 and 19,721 on the upper side. The Nifty had got room up to 5,805 and 5,860 on the upper side. Mild rally can be expected. Mild rally can be expected. Mild rally can be expected. Sideways. Mildly Bullish Mildly Bullish Mildly Bearish Sideways. Neutral. Mildly Bearish Do not create fresh long positions. Mildly Bullish. Mildly Bullish. Mildly Bullish. Bottoming Out Mildly Bearish

Comments (stocks in line with short term view)

Buy L & T

Short Infosys

Summary th The Sensex as well as Nifty made an intermediate bottom on 28 August 2013 and if we calculate time from this intermediate bottom, 10th September 2013, will be the 8th trading session, which is also an important Fibonacci number.

So we feel the Sensex could top out within coming 1 or 2 trading sessions and now we will try to analyse price projections in the chart bellow. We are assuming that the Sensex is in upward wave ‘B’ and this wave ‘B’ so far is a common flat as it had retraced the wave ‘A’ by more than 80% which is clearly visible on the daily charts. Whenever the common flat is developing the maximum length of wave ‘B’ will be between 110% to 120% which is marked on the chart below and which comes to 19,558 and 19,721 and which is the maximum value wave ‘B’ can achieve when common flat is unfolding. If we apply the same logic and rules to the Nifty we get 5,805 and 5,856 as the maximum upward targets for the current rally and for any reason these upward targets are surpassed then we will have to give up our assumption that the common flat is unfolding. Currently we are assuming that for last 3 trading sessions the Nifty is in wave ‘c’ and this will be the last upward wave and once it is over the larger wave ‘C’ will unfold in the downward direction. All the time and price projection are made based on Neo wave theory and as per this in coming 1 or 2 trading sessions the upward wave ‘c’ in the form of 1-2-3-4-5 will get over. Gap theory is considered as a very important concept in the technical analysis and we will use it for predicting the future th course of the Sensex, this gap was formed on 4 September 2013, and there after 1 trading session has passed and according to the theory 2 more trading sessions are to be watched so the bears will try their level best to pull the prices down so that this gap will be filled. And this matches with the time analysis which is made in this report, 61.8% is a very important Fibonacci ratio in technical analysis. In the chart below we have drawn 61.8% retracement of the downward moves which had taken place on different degrees and the ending point in all the 3 cases is the same which is a th bottom which was made by the Nifty at 5,119 on 28 August 2013. And we get a range of 85 points in case of the Nifty and which also gels with the different technical tools which are used in this report to analyse the Sensex and the Nifty. In short one should take a note of this values and whenever a weakness is witnessed around this values, one can create short positions in the Nifty.

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Week Ahead Elliott wave perspective

We have given a Neo Wave count for the Sensex on the chart above, and according to it wave ‘b’ is unfolding for last 11 trading sessions and it is sub divided into a-b-c. Wave ‘A; of the larger degree got over in 5 trading sessions, and wave ‘B’ which is currently going on had so far taken 11 trading sessions and we feel the number 13 which is a Fibonacci number is only 2 trading sessions away will be the time wise target for the current rally. th The Sensex as well as Nifty made an intermediate bottom on 28 August 2013 and if we calculate time from this intermediate th th bottom 10 September 2013, will be the 8 trading session, which is also a important Fibonacci number.

So we feel the Sensex will top out within coming 1 or 2 trading sessions and now we will try to analyse price projections in the chart bellow.

We are assuming that the Sensex is in upward wave ‘B’ and this wave ‘B’ so far is of a common flat as it has retraced the wave ‘A’ by more than 80% which is clearly visible on the daily charts. Whenever the common flat is developing the maximum length of wave ‘B’ will be between 110% to 120% which is marked on the chart above and which comes to 19,558 and 19,721 and which is the maximum value wave ‘B’ can achieve when common flat is unfolding. We have given the Nifty chart differently below.

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If we apply the same logic and rules to the Nifty we get 5,805 and 5,856 as the maximum upward targets for the current rally and for any reason this upward targets are surpassed then we will have to give up our assumption that the common flat is unfolding.

Currently we are assuming that for last 3 trading sessions the Nifty is in wave ‘c’ and this will be the last upward wave and once it is over the larger wave ‘C’ will unfold in the downward direction and all the time and price projection which are made are based on Neo wave theory and according to it in coming 1 or 2 trading sessions the upward wave ‘c’ in the form of 1-2-3-45 will get over.

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Gap theory is considered as a very important concept in the technical analysis and we will use it for predicting the future th course of the Sensex. This gap was formed on 4 September 2013, and thereafter 1 trading session has passed and according to the theory 2 more trading sessions are available so the bears will try their level best to pull the prices down so that this gap will be filled. And this matches with the time analysis which is made in this report,

61.8% is a very important Fibonacci ratio in technical analysis. In the chart above we have drawn, 61.8% retracement of the downward moves which had taken place on different degrees and the ending point in all the 3 cases is the same and which is a bottom which was made by the Nifty at 5,119 on 28th August 2013. And we get a range of 85 points in case of the Nifty which also gels with the different technical tools which are used in this report to analyse the Sensex and the Nifty. In short one should take a note of these values and whenever a weakness is witnessed around these values one can create short positions in the Nifty.

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Long term moving averages

Moving average 200 day Simple

Value 19,335

We always use moving averages for the confirmation of our analysis and the simple 200 day moving average is currently place at 19,335 which is marked on the chart above and which also coincides with our other analysis. Oscillators

Oscillator Current value Average value MACD – 9days 7.08 -93.83 RSI – 14 days 56.61 46.80 ROC – 10days 7.05 -0.22 For last 3 trading sessions the Sensex as well Nifty are rising and thus as a result of this all the oscillators are cutting their respective averages from below which is a bullish indication and at the same time we were continuously and consistently reporting that the rally is expected so that this indicators can create a room for them self for going down.

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Stochastic

DKF5 DKF8 DKF89

97.88 98.70 60.81

80.05 88.14 49.70

For last 7 trading sessions the Sensex is moving in the upward direction and as a result of this, it is now nearing its overbought limit in coming 1 or 2 trading sessions.

Week Gone By:

Week Monday Tuesday Wednesday Thursday Friday

Open 18,692 19,003 18,315 18,858 19,072

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High 18,942 19,007 18,613 19,118 19,294

Low 18,886 18,166 18,188 18,847 18,929

Close 18,235 18,235 18,568 18,980 19,270

Description White Candle Black Candle White Candle White Candle White Candle

Remark Up Day Outside Day Inside Day Up Day Up Day 6

Sectoral Indices

As we have marked on the chart above the last 3 trading sessions the BSE Bank Index is participating in the current rally whole heartedly as we were expecting and now the maximum upward target which can be expected is 11,794 and from this level we feel this index will face stiff resistance from the trend line drawn on the chart above.

NSE Bank Nifty had formed a bullish ‘Island Reversal’ pattern on the daily charts and which is formed at the bottom as this index was coming down for 75 trading sessions and up ward corrections were almost absent or negligible nature. Once the upward target is achieved it will start coming down and at that point of time this bullish ‘Island Reversal’ pattern will come in the picture.

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Analyst: Adwait Sapre ([email protected]) HDFC Securities Limited, I Think Techno Campus, Building ‘B’, “Alpha”, Office Floor 8, Near Kanjurmarg Station, Opposite Crompton Greaves, Kanjurmarg (East), Mumbai – 400042, Fax: (022) 30753435 Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional Clients

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