Archives : GST - A REALITY; FINALLY - 05/08/2016.

GST – A REALITY; FINALLY - 05/08/2016.

SELL ON NEWS.

History was created when the Rajya Sabha cleared the historic GST bill on Wednesday. It resulted in profit booking as both the indices came crashing down. Followers of Classical theory were not surprised as the profit booking witnessed in the market only underlined the principle that ‘Price Discounts Everything’. The ‘Sell on News’ phenomena continued till Thursday before the market staged a strong comeback on Friday. Strong Support exists at the first Bullish Gap between 8479-8475 for the Nifty; as long as this support holds one can expect Nifty to reach the Flag target of 8869.


GST – A REALITY; FINALLY - 05/08/2016.

SELL ON NEWS.

History was created when the Rajya Sabha cleared the historic GST bill on Wednesday. It resulted in profit booking as both the indices came crashing down. Followers of Classical theory were not surprised as the profit booking witnessed in the market only underlined the principle that ‘Price Discounts Everything’. The ‘Sell on News’ phenomena continued till Thursday before the market staged a strong comeback on Friday. Strong Support exists at the first Bullish Gap between 8479-8475 for the Nifty; as long as this support holds one can expect Nifty to reach the Flag target of 8869.

TECHNICALLY SPEAKING.

Sensex opened the week at 28083, made a high of 28284, low of 27627 and closed the week at 28078. Thus it closed the week with a minor gain of 27 points. At the same time the Nifty opened the week at 8654, made a high of 8711, low of 8518 and closed the week at 8683. Thus the Nifty closed the week with a gain of 45 points.

On the daily charts, both Sensex and Nifty had formed a Homing Pigeon by Thursday. It is a bullish reversal pattern which requires confirmation. The confirmation was received in the form of white body candle on Friday. Last two days i.e. Thursday and Friday form a Bullish Kicking pattern for the Nifty. On the weekly charts, Nifty has formed a small white body Spinning Top whereas Sensex has formed a Doji which are neutral formation. Thus next weeks candle formation will determine further price movement. Thus daily candlestick pattern indicate Bullish bias whereas weekly formations are not conclusive.

This week, both the indices took support at the Bullish Gap between Sensex 27667-27647 and Nifty 8479-8475. This Gap acted as a strong support for third time and hence it becomes a very critical Support in the near term. Expect the upward movement to continue as long as this gap holds.

On a higher timeframe a very strong Support exists in the form of Bullish Weekly Gap between Sensex 27358-27294 and Nifty 8407-8398. This above Weekly Bullish Gap is also a Measuring Gap and the target for which falls at Sensex – 28741 and Nifty – 8833.

As the Sensex and Nifty continue to remain above their critical 61.8% Retracement level (Sensex – 27148 and Nifty 8243) of the entire fall from Sensex 30024 to 22494 and Nifty 9119 to 6825. This marks the end of Correction phase and is now signalling a move towards testing life highs of Sensex 30024 and Nifty 9119.

Both the indices completed a Bullish Flag pattern and the target for the pattern falls at Sensex – 28859 and Nifty – 8869. Both the targets will be achieved as long as Sensex remains above 27034 and Nifty above 8287.

MACD continues in Sell mode despite being in positive zone. Price ROC has just turned positive and has signalled a Buy. RSI (61) suggests bullish momentum. Stochastic Oscillator %K (50) has just gone above %D; hence it is a fresh Buy. ADX has improved to 29 which suggest that Uptrend is getting stronger. Directional Indicators continue in Buy mode as +DI is above –DI. MFI (45) suggests Negative Money Flow. Thus majority of Oscillators are still suggesting a slight bullish bias in the near term.

This week, both the indices tested the short term average of 20dma (Sensex – 27891 and Nifty – 8572) but managed to hold and close above it. Both the indices continue to remain well above the medium term average of 50dma (Sensex – 27231 and Nifty – 8357) and even the long term average of 200dma (Sensex – 25762 and Nifty – 7857). Thus the trend in the short term, medium term and even the long term timeframe continues to remain Bullish.

Options data for August series indicate highest Call Open Interest build-up at the strike of 9000 and highest Put build-up at 8500. Thus Options data suggests a wide trading range with resistance coming in at 9000 and support at 8500.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy SRF

1465

1518

1550

500

Rs.42,500

Buy IGL

648

671

676

1100

Rs.30,800

ReLInfra

607

641

613

1300

Rs. 7,800

Buy UPL

624

649

630

1200

Rs. 7,200

Buy Bata

605

629

613

1100

Rs. 8,800

Total

Rs.97,100.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8398

8476

8594

8683

8788

8891

8996

Sensex

27034

27385

27667

28078

28417

28822

29183

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajAuto

2862

2801

2955

3051

Buy ACC

1721

1681

1783

1847

Buy TorntPharma

1519

1486

1569

1623

Buy AxisBank

567

554

588

610

Buy Hindalco

143

139

149

156

WATCH OUT FOR:

Tornt Pharma

MRF

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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