Archives : GOOD, BUT NOT PATH-BREAKING - 03/02/2017.

GOOD, BUT NOT PATH-BREAKING - 03/02/2017.

‘NO NEWS’ IS GOOD NEWS.

 The market was awaiting the Union Budget with lots of hopes and fear. Post Demonetization, market was expecting some strong policy initiatives, but the Budget proved to be more Populist than Reformist. Market was in fear as it expected some tinkering in the Long Term Capital Gain Tax structure or even an increase in STT. But the Budget was devoid of both the devils and hence it was a relief to the market participants. ‘No bad news’ was perceived as good news, and the market rallied.

NIFTY HEADED TOWARDS 9000.

Post Budget, both the indices rallied and overcame the Trend Reversal level of Sensex 27994 and Nifty 8558. Nifty has completed a bullish pattern and is now headed towards 9000 mark. But in the short term the market may consolidate as the daily Momentum Oscillators are overbought. But any dips towards Sensex 28000 and Nifty 8550 mark should be used as a buying opportunity.


GOOD, BUT NOT PATH-BREAKING - 03/02/2017.

‘NO NEWS’ IS GOOD NEWS.

 The market was awaiting the Union Budget with lots of hopes and fear. Post Demonetization, market was expecting some strong policy initiatives, but the Budget proved to be more Populist than Reformist. Market was in fear as it expected some tinkering in the Long Term Capital Gain Tax structure or even an increase in STT. But the Budget was devoid of both the devils and hence it was a relief to the market participants. ‘No bad news’ was perceived as good news, and the market rallied.

NIFTY HEADED TOWARDS 9000.

Post Budget, both the indices rallied and overcame the Trend Reversal level of Sensex 27994 and Nifty 8558. Nifty has completed a bullish pattern and is now headed towards 9000 mark. But in the short term the market may consolidate as the daily Momentum Oscillators are overbought. But any dips towards Sensex 28000 and Nifty 8550 mark should be used as a buying opportunity.

                                                                                                 

TECHNICALLY SPEAKING.

Sensex opened the week at 27866, made a high of 28299, low of 27590 and closed the week at 28240. Thus it closed the week with a gain of 358 points. At the same time the Nifty opened the week at 8635, made a high of 8757, low of 8537 and closed the week at 8740. Thus the Nifty closed the week with a gain of 99 points.

On the weekly charts, both Sensex and Nifty have formed a real white body candle in line with the bullish trend. On the daily chart, both the indices have formed a small body Spinning Top which is a neutral formation. Thus daily candlestick pattern suggest a pause in the rally but the weekly pattern suggest continuation of bullishness.

This week, post the Budget, market heaved a sigh of relief as there was no negative news and as a result the indices rallied and in the process overcame the 61.8% Retracement level of Sensex 27994 and Nifty 8558. Since the indices are now trading above the Trend Reversal level, we can assume that the indices will now target the previous top.

This week, both the indices have completed a Bullish Flag pattern which is a Bullish Continuation pattern. The target as per this pattern falls at Sensex 28997-29165 and 9017-9029 for the Nifty. The above targets are likely to be achieved as long as Sensex remains above 27590 and Nifty above 8537.

MACD and Price ROC are both positive and continue in Buy mode. RSI (72) still suggests bullish momentum. Stochastic Oscillator %K (96) is above %D, indicating a Buy. But both RSI and Stochastic Oscillator are overbought. ADX is at 36 which suggest that the Uptrend is very strong. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (70) suggests Positive Money Flow. OBV continues in Buy mode and continues to make higher top, higher bottom formation. Thus majority of Oscillators are suggesting a bullish bias in the near term. The Momentum Oscillators are in Overbought territory and we can expect some pull-back or consolidation in the near term, but that should be used as an opportunity to Buy.

This week, both the indices continued to remain above the short term average of 20dma (Sensex – 27416 and Nifty – 8473), medium term average of 50dma (Sensex – 26820 and Nifty – 8268) and even the long term average of 200dma (Sensex – 27412 and Nifty – 8356). Thus the trend in the short term, medium term and even the long term timeframe continues to remain upwards.

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

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8400

8506

8614

8740

8826

8913

8996

Sensex

27034

27488

27845

28240

28631

29077

29522

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Cipla

607

592

630

654

Buy CoaL Ind

326

318

338

351

Buy Exide

209

204

217

226

Buy Jindal Stl

91

88

96

102

Buy BheL

142

139

147

153

WATCH OUT FOR:

Exide

BOI

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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