Thursday, May 15, 2014

Support @ 7046

Dear All,

Results for the 16th Lok Sabha will be announced on Friday, May 16, 2014, between 8 am and 5 pm, which could trigger some bit of volatility in the Nifty and the Sensex, while the numbers are being announced.

The Current rally is built on the hopes of an NDA-led government and if they fail to get clear majority or even if there is a fractured mandate, the markets may crash from anywhere between 10 and 15 per cent and may even hit the lower circuit

The recent run-up seen in benchmark indices is evident from the fact that the markets are pricing in some probability of the BJP-led NDA government at the Centre. Most exit polls are projecting that a BJP-led alliance may come to power with the range predicted to be 250-280 seats.

The markets haven't moved much in the past two trading sessions. This points to the fact that investors may have already factored in a Modi win.

"It seems the NDA may form the next government at the Centre. The Nifty around 7100 levels suggests a lot of good news is already factored in. Having said that, if there is a fractured mandate, with the NDA bagging around 220 seats, then the markets will be in shock," said Raamdeo Agrawal, joint managing director of Motilal Oswal.

"The market expects the NDA to garner around 240-250 seats, as a base case. I do not think the market is anticipating anything below or higher than that. Even a verdict of 260 would be a minor positive surprise," said Rahul Singh, Head of Research, Standard Chartered Securities India Ltd.

If the NDA manages to get less than 200 seats on Friday, it will be indeed very disappointing for the market participants and in that case, a third front might try to form the government with direct or in-direct support from the UPA, which could significantly increase the risk of instability and policy logjam, say experts.

"This is a less likely scenario, but in case that happens, benchmark indices may slump by 15-20 per cent. Investors should place their bets on defensives and stocks with earning upgrades," Macquarie said in a report.

>>> NIFTY <<<

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Move above 7140 should help the bulls to recover. Else 7046 which is 23.6% retracement of the previous upmove should support.

>>> Rcom <<<

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Rcom - Sell call fetched to us 10,000. Now if the resistance line as shown on chart, not able to cross, then expect more and more fall in coming days.

>>> NTPC <<<

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NTPC - we are long for the second time in the week and gave us a good return. PRICE and RSI break out shows more bull move coming. Cheers!!!