Crude Oil Price 8th Feb 2016
Crude Oil prices on Friday 5th Feb 2016 closed lower by 2.62 percent at 31$/bbl. As per our analysis / Crude Oil prediction we do not see any significant weakness in crude oil prices from now on and we see a bottom formation taking place between 26-27$/bbl on the lower side. This does not mean that we are expecting a bullish cycle in crude oil but the bearish phase is now almost over and we see Crude oil being in a range bound move between 26-49$/bbl so on the lower side towards 26$/bbl traders and especially Crude Oil derivative traders must try and buy higher contracts at lower price area near 29$/bbl and look to book around 48$/bbl. We do not see crude oil moving beyond 49$/bbl in this move which has started a few trading days back. Post 15th March 2016 we could see crude oil again entering a weak phase so please understand that longer term we are not expecting crude oil to run it is only a short term phase and energy sector as a whole does not look promising for the year 2016.
For Indian Stock Market participants we could look at Buying some oil and gas companies like Cairn India around 112 or lower than 112 and book around 150+ in the next 45 trading days. Please note that this is purely a trade in and out strategy and we are at this stage not recommending a buy and hold in Cairn India or Crude Oil. Keep booking profits at regular intervals. If you buy for e.g. 1000 qty at then at 121 book 50 percent (book 500) and hold remaining qty, if by chance you get a lower price of lets say 115 again then look to reenter the stock. (Those who will be trading only on the basis of this post please note that we may change strategy as and when we see so please use appropriate risk management systems and trade) Markets are very dynamic and we can not hold a static view. There are too many moving parts and if we see any risk in our trade we may choose to get out then and there.
ONGC is another candidate that we could consider on the buying side but we feel it will be better to wait for some more downside in ONGC as Nifty will not let this one run for the time being as we are expecting Nifty to move below 7300 spot, only post Nifty moving lower than 7300 spot will we consider this counter.
Reliance is doing all the right things on the charts at least. Reliance has good support around 951-956 spot price and if we see positive cycle for reliance we will be buying Reliance also. The share price / reliance charts have been making decent higher tops and higher bottom and this kind of a structure looks good. The launch of Reliance Jio in April end 2016 will further help the cash flows of the company.
Good Trading To You!