Archives : NIFTY SUPPORT SEEN @ 7380-7406 - 08/04/2016.

NIFTY SUPPORT SEEN @ 7380-7406 - 08/04/2016.

EXACTLY AS PER EXPECTATIONS.

“The more likely scenario is a rate cut of 25bps, which will result in a sell-off and a short term top being registered.” This line has been quoted from the previous week’s article and this week the market or more precisely the RBI acted as per expectations. The RBI governor announced a Rate cut of 25bps and as predicted the market sold-off and made a short term top at Nifty 7777. The Bears have seized the initiative and as a result the short term trend has turned bearish. Strong support can now be expected at the Bullish Gap between 7406-7380.


NIFTY SUPPORT SEEN @ 7380-7406 - 08/04/2016.

EXACTLY AS PER EXPECTATIONS.

“The more likely scenario is a rate cut of 25bps, which will result in a sell-off and a short term top being registered.” This line has been quoted from the previous week’s article and this week the market or more precisely the RBI acted as per expectations. The RBI governor announced a Rate cut of 25bps and as predicted the market sold-off and made a short term top at Nifty 7777. The Bears have seized the initiative and as a result the short term trend has turned bearish. Strong support can now be expected at the Bullish Gap between 7406-7380.

TECHNICALLY SPEAKING.

Sensex opened the week at 25333, made a high of 25424, low of 24608 and closed the week at 24673. Thus it closed the week with a loss of 596 points. At the same time the Nifty opened the week at 7733, made a high of 7764, low of 7526 and closed the week at 7555. Thus the Nifty closed the week with a loss of 158 points.

On the daily charts, both the indices have formed a small white body candle with small shadows almost like a neutral formation. On the weekly charts both the indices have formed a real black body candle thereby completing an Evening Star pattern which is a bearish reversal pattern. Thus weekly candlestick pattern study indicates a bearish bias in the near term.

As expected the market faced strong resistance at the 61.8% Retracement and the Corrective Upward Rally halted. Post that the market has resumed the primary downtrend after making a high of Sensex 25479 and Nifty 7777. While proceeding on the downside, the relevant Retracement levels are placed at Sensex 24339-23987-23634 and Nifty 7414-7301-7189.

While moving lower, both the indices have left behind couple of Bullish Rising Gaps and the first Gap which the indices are likely to encounter falls at Sensex 24383-24280 and Nifty 7406-7380. This Gap will act as strong Support Zone as the 38.2% Retracement (Sensex – 24339 and Nifty – 7414) also coincides with the above mentioned gap along with the medium term average of 50dma (Sensex – 24346 and Nifty – 7408).

MACD continues in Sell mode, despite being in the positive zone. Price ROC has turned negative and continues in Sell mode. RSI (47) indicates Bearish momentum. Stochastic Oscillator %K (33) has gone below %D; hence continues in Sell mode. ADX has dropped further to below 20 and is at 14, suggesting that the current Trend has no strength. Directional Indicators is in Sell mode as +DI has gone below –DI. MFI (51) still suggests Positive Money Flow. OBV continues to make higher Top, higher Bottom formation. Thus majority of Momentum Oscillators are suggesting a negative bias in the near term.

This week, both the indices breached the short term average of 20dma (Sensex – 24966 and Nifty – 7611) and closed below it. Both Sensex and Nifty continues to remain above the medium term average of 50dma (Sensex – 24346 and Nifty – 7408) but are below the long term average of 200dma (Sensex – 25973 and Nifty – 7881). Thus the trend in the short term has turned bearish; whereas the trend in the medium term timeframe continues to remain up and the trend in the long term timeframe continues to remain bearish.

Options data for April series indicate highest Call Open Interest build-up at 8000 and highest Put build-up at 7500. Thus Option data suggests a trading range with resistance coming in at 8000 and support at 7500.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7271

7380

7470

7555

7666

7777

7852

Sensex

23692

24043

24340

24673

25002

25479

25810

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

HeroMot

2951

3065

3013

200

Rs.12,400

Buy DLF

120

127

122

5000

Rs.10,000

Buy IRB

236

246

240

2000

Rs. 8,000

Buy BoI

100

105

102

3000

Rs. 6,000

Buy PNB

87

91

89

4000

Rs. 8,000

Total

Rs.44,400.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajFin

7133

7017

7309

7487

Buy AjantaPh

1463

1429

1514

1569

Buy HavellsInd

332

324

345

359

Buy HDiL

75

72

80

86

Buy SupremePet

120

116

127

135

WATCH OUT FOR:

Havells

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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