Weekly analysis : SENSEX @ LIFE-HIGHS; MID-CAPS LANGUISH - 13/07/2018

SENSEX @ LIFE-HIGHS; MID-CAPS LANGUISH - 13/07/2018.

 

NIFTY RECLAIMS 11000.

 

The breakout finally occurred last week after a consolidation of nearly two months and as expected the breakout was in the upwards direction. Nifty immediately raced past the 11000 mark and even closed the week above that mark. Interestingly, Sensex is already at life-highs, whereas Nifty is just a percentage point away from getting there but the same cannot be said about the Mid-cap Index which is more than 17% away from its life-high levels. The Divergence between the Nifty and Mid-Cap 50 Index was already glaring but now the divergence is reaching unexpected proportions. This Divergence cannot last long as the Nifty seems to be headed higher, which will see Mid-caps finally getting a much required push.

 


SENSEX @ LIFE-HIGHS; MID-CAPS LANGUISH - 13/07/2018.

 

NIFTY RECLAIMS 11000.

 

The breakout finally occurred last week after a consolidation of nearly two months and as expected the breakout was in the upwards direction. Nifty immediately raced past the 11000 mark and even closed the week above that mark. Interestingly, Sensex is already at life-highs, whereas Nifty is just a percentage point away from getting there but the same cannot be said about the Mid-cap Index which is more than 17% away from its life-high levels. The Divergence between the Nifty and Mid-Cap 50 Index was already glaring but now the divergence is reaching unexpected proportions. This Divergence cannot last long as the Nifty seems to be headed higher, which will see Mid-caps finally getting a much required push.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 35835, made a high of 36740, low of 35779 and closed the week at 36541. Thus it closed the week with a gain of 884 points. At the same time the Nifty opened the week at 10838, made a high of 11078, low of 10807 and closed the week at 11018. Thus the Nifty closed the week with a gain of 246 points.

 

On the daily charts, both Sensex and Nifty has formed a black body candle on Friday. This black body candle cannot be classified as bearish. On the weekly charts, both the indices have formed a big White body candle. This candle formation marks the end of bullish consolidation and is pointing towards further upside. Thus more than daily, weekly charts are suggesting a bullish bias.

 

Last week, finally Nifty broke-out of the two month trading range in the upward direction and as expected Sensex made new life-highs whereas Nifty is very close to doing so.

 

Last week, both the indices left behind a Bullish Gap between Sensex 36019-35977 and Nifty 10876-10860. This Gap is not just a Bullish Upward Gap but can also be classified as Measuring Gap. Thus as per Gap Theory, the target for the Rally falls at Sensex – 37059 and Nifty – 11179.

 

Few weeks back, both the indices completed a Bullish Rounding Bottom pattern on the daily charts. It is a Bullish pattern and the target as per that falls at Sensex 36737 and Nifty 11311.

 

This week, both the indices were above the short term average of 20dma (Sensex – 35659 and Nifty – 10789) as well as medium term average of 50dma (Sensex – 35382 and Nifty – 10732). However, both the indices still remain above the long term average of 200dma (Sensex – 34110 and Nifty – 10478). Thus the trend in short term, medium term as well as long term time-frame is Bullish.

 

MACD continues and Price ROC are both positive and in Buy mode. RSI (66) suggests bullish momentum. Stochastic Oscillator %K (90) is below %D and hence in Sell mode. ADX has fallen to 17, suggesting a sideways consolidation and no strength in trend. Directional Indicators are in Buy mode as +DI is above –DI. MFI (60) suggests Negative Money Flow. OBV is making higher top higher bottom formation. Thus Oscillators suggest a bullish bias.

 

Options data for July series indicate highest Call Open Interest is at the strike of 11200 whereas the highest Put build-up is at the strike of 10600. Thus Options data suggests a trading range with resistance at 11200 & support at 10600.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10736

10837

10929

11018

11117

11229

11311

Sensex

35419

35806

36169

36541

36889

37223

37554

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Britannia

6475

6365

6644

6817

Bajaj Finance

2468

2429

2529

2593

Buy HDFC

1972

1938

2023

2075

Buy MindTree

1066

1045

1098

1131

Buy Yes Bank

376

368

388

401

 

WATCH OUT FOR:


Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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