Weekly analysis : DESPITE VOLATILITY; BULL MARCH CONTINUES - 19/01/2018

DESPITE VOLATILITY; BULL MARCH CONTINUES - 19/01/2018.

 

NIFTY OVERCOMES THURSDAY’S SCARINESS.

 

To say that the week gone by was a Volatile week, would be an understatement. There were two things that defined the week and that being Volatility and Uncertainty. Despite big gap up opening on Thursday, market gave away majority of its gains and formed a black body candle. But it overcame the bearishness on Friday, when both Sensex and Nifty formed a bullish white body candle and closed above the high of previous day’s bearish candle. But the real scare was outside of the frontline indices when on Thursday, the mid-cap and small-cap stocks collapsed like nine pin. Even though some recovery has happened on Friday in the mid-cap index, one needs to be careful as we are not yet completely out of the woods.

 


DESPITE VOLATILITY; BULL MARCH CONTINUES - 19/01/2018.

 

NIFTY OVERCOMES THURSDAY’S SCARINESS.

 

To say that the week gone by was a Volatile week, would be an understatement. There were two things that defined the week and that being Volatility and Uncertainty. Despite big gap up opening on Thursday, market gave away majority of its gains and formed a black body candle. But it overcame the bearishness on Friday, when both Sensex and Nifty formed a bullish white body candle and closed above the high of previous day’s bearish candle. But the real scare was outside of the frontline indices when on Thursday, the mid-cap and small-cap stocks collapsed like nine pin. Even though some recovery has happened on Friday in the mid-cap index, one needs to be careful as we are not yet completely out of the woods.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34687, made a high of 35542, low of 34687 and closed the week at 35511. Thus it closed the week with a gain of 919 points. At the same time the Nifty opened the week at 10718, made a high of 10906, low of 10666 and closed the week at 10894. Thus the Nifty closed the week with a gain of 213 points.

 

On the daily charts, both the indices have formed a real white body candle on Friday which has overcome the bearishness of Thursday’s black body candle. On the weekly charts, Sensex has formed a big Opening White body Marubuzo, whereas Nifty has formed a big white body candle. Thus daily as well as weekly candlestick pattern suggests a bullish bias in the near term.

 

This week, both the indices opened with an Upward Gap between Sensex 34687-34638 and Nifty 10713-10690. This gap is likely to act as Support in the near term. Similarly two weeks back, the indices had formed a bullish Gap between Sensex 34020-33995 and 10520-10513 on the Nifty. On the lower side, this Gap will act as support.

 

When both the indices overcame their previous highs of Sensex 34137 and Nifty 10552, a Bullish Flag pattern got completed. The target as per this pattern falls at Sensex 35679 and Nifty 11030. These targets will be achieved as long as Sensex remains above 33703 and Nifty above 10404. On the daily timeframe, both the indices have also completed a Bullish Saucer formation and the target for that falls at Sensex 35165 and Nifty 10947. On the weekly timeframe, a Bullish Flag pattern has been completed and the target as per that pattern falls at Sensex 35649 and Nifty 11293. On the weekly formation, both the indices had completed a Cup and Handle formation and the targets are Sensex 37554 and Nifty 11413.

 

Last month the indices suffered a classic Bear trap. It resulted in the indices making an intermediate higher bottom at Sensex 32565 and Nifty 10033. This is the support level from where the market has bounced back. The indices need to sustain above this level for the above mentioned targets to be achieved.

 

This week, both the indices continued to stay above the short term average of 20dma (Sensex – 34355 and Nifty - 10603) as well as the medium term average of 50dma (Sensex – 33721 and Nifty – 10408). Both the indices still remain well above the long term average of 200dma (Sensex – 32013 and Nifty – 9931).  Thus the trend in short term as well as medium term timeframe is Upward, whereas the trend in the long term timeframe continues to remain Bullish.

 

MACD and Price ROC are both positive and continue in Buy mode. RSI (76) suggests continuation of Bullish momentum. Stochastic Oscillator %K (92) continues in Buy mode. ADX has turned 21 which suggest that the Up Trend is gaining strength. Directional Indicators are in Buy mode. MFI (77) suggests Positive Money Flow. OBV continues in Buy mode making higher top higher bottom formation. A buy has been signalled by Bollinger band on Monday. Thus Oscillators are suggesting a bullish bias for the near term.

 

Options data for January series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up has shifted higher at the strike of 10500. Thus Options data suggests a trading range with resistance at 11000 & support at 10500.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10588

10690

10782

10894

10989

11077

11162

Sensex

34311

34700

35118

35511

35968

36362

36689

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy L&T

1371

1343

1413

1457

Buy Kotak Bank

1060

1035

1098

1138

Buy Goa Carbon

1037

1012

1076

1119

Buy NiiTTech

728

712

753

779

Buy Biocon

569

556

590

613

 

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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