Sandeep Singh Ahluwalia | Aug 14, 2019 09:19
Yesterday morning on my Telegram and Twitter handle I had shared a chart of Maruti Suzuki in which I had highlighted a resistance zone which signalled to investors that the road ahead would be tough and would most likely result in a price reversal. This proved to be true as the stock yesterday went in for a toss as it had a huge downward spiral which resulted in bullish investors suffering a significant body blow.
Coming to the reason I highlighted the following area. The first reason is that there are several resistance zones present within this small price area which signals to investors that the bulls will struggle in the days to come. The first resistance level is at Rs 6,178.95 which is a tough candle resistance zone and this was confirmed by Friday’s candle. I say this as even though the candle on Friday was a large bullish one, its upper wick suggested a different storyline. This is as it showed that the candle attempted to cross the resistance lines but was rebuffed strongly and the wick also formed at a supply zone which made the situation worse for the bulls. Moreover, we see a further sturdy resistance level at Rs 6,230.65 and one more resistance zone up ahead at a falling window. Hence, due to these resistance zones, I do not expect the stock to get any significant upwards legroom in the coming sessions.
Thus, the big question now is what is next for the stock. Here I will highlight the upside and downside potential of the stock. This is as I need some further technical confirmation before I initiate a long or short position on the equity. Moreover, several external factors make me nervous in taking an immediate long-term position. One of the factors is the policy position as of now. This is as this Thursday is the Independence Day and Prime Minister Modi will make a statement that will attempt to enforce a positive sentiment as was done by his interview over the long weekend. However, am not sure of its effect as we see that the bullish interview given by the Prime Minister over the weekend wasn’t accepted well by the Indian financial market as the market fell hard in the first trading session of the week. Thus, I would rather wait and see how the speech made on Thursday is swallowed by the institutional investors in the stock market. The second external factor that makes me rather hesitant as of now is the meetings the Finance minister is having with various industries. I expect these meetings to have a positive outcome but I would like to see the magnitude of change made by the ministry before I dive into a long term bullish or bearish position. The third factor is that I expect the volatility level to be extremely high this week owing to the confusion in investor sentiment as there is an ongoing tug of war between all parties whether we call it the FII’s and DII’s or the large funds and the common investor. All this will cause a lot of traders to get whipsawed when they enter intraday as most stop losses will be hit constantly and this will be only made worse by the rising volatility.
On the upside, if Maruti Suzuki breaks above the resistance levels highlighted then is only when I will consider going long on the stock and I find it highly unlikely that this will occur. I am betting more on the downside as the Indian financial market is officially in a bear market and I do not see any significant positive news coming in anytime soon. On the downside, there are two immediate support zones which have been highlighted in the chart above which can be utilised as price targets. However, the profitability level will all depend on the futures and options strategy you do due to the high level of volatility being seen these days. Lastly, keep a track of the Twitter handle as everyday new charts will be uploaded and you may join the free Telegram channel posted on my Twitter handle.
Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Therefore, you must trust your analysis and judgment the equity before making investment decisions. The report provided is for informational purpose only and should not be interpreted as a proposition to buy or sell any securities.
Written By: Sandeep Singh Ahluwalia
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