Archives : Tale Of Two Different Markets - 25/01/2018.

TALE OF TWO DIFFERENT MARKETS - 25/01/2018.

 

NIFTY MAKES NEW HIGH, MIDCAPS COLLAPSE.

 

These are very interesting times to be in the market as the Nifty continues its unabated Bull Run. Even as the Nifty continues its upward journey with full gusto, the same cannot be said about the mid-cap and small-cap indices which are lagging behind and giving away substantial part of its gains. The scenario depicts two different markets which seem to co-exist at the same time. The divergence in the movement of Nifty and Mid-cap indices has accentuated, which is not sustainable for long. Thus both the indices need to converge i.e. either the Nifty has to give way or the Mid-cap indices need to play catch up. Next week being the Budget week, it seems market might witness some pressure on the upside and volatility may give way to some downside. Market participants will do well to keep their positions hedged.

 


TALE OF TWO DIFFERENT MARKETS - 25/01/2018.

 

NIFTY MAKES NEW HIGH, MIDCAPS COLLAPSE.

 

These are very interesting times to be in the market as the Nifty continues its unabated Bull Run. Even as the Nifty continues its upward journey with full gusto, the same cannot be said about the mid-cap and small-cap indices which are lagging behind and giving away substantial part of its gains. The scenario depicts two different markets which seem to co-exist at the same time. The divergence in the movement of Nifty and Mid-cap indices has accentuated, which is not sustainable for long. Thus both the indices need to converge i.e. either the Nifty has to give way or the Mid-cap indices need to play catch up. Next week being the Budget week, it seems market might witness some pressure on the upside and volatility may give way to some downside. Market participants will do well to keep their positions hedged.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 35613, made a high of 36268, low of 35544 and closed the week at 36050. Thus it closed the week with a gain of 539 points. At the same time the Nifty opened the week at 10883, made a high of 11110, low of 10881 and closed the week at 11069. Thus the Nifty closed the week with a gain of 175 points.

 

On the weekly charts, both the indices have formed an Opening White body Marubuzo which is in line with the prevailing Bullish Trend. On the daily timeframe, Sensex has formed a small black body with a longer lower shadow, whereas Nifty has formed a pattern almost like Hanging Man, but it cannot be called due to the missing upward gap. Thus daily charts suggest tentativeness whereas weekly charts are showing greater strength.

 

This week, again both the indices formed another Bullish Upward Gap between Sensex 35683-35827 and Nifty 10994-10975. This gap is likely to act as Support in the near term. Interestingly the indices have formed lots of Bullish gaps which will likely act as support.

 

Interestingly, Sensex has formed third consecutive Bullish Weekly gap at 35544 - 35542. This comes on the back of another Bullish Weekly Gap at 34687-34638, which was created two weeks back. Similarly three weeks back another Bullish Weekly Gap was created between Sensex 34216-34188. These Gaps will act as strong Support in case of a Correction.

 

This week, both Sensex and Nifty achieved Bullish Flag pattern target (Sensex 35679 and Nifty 11030) and even Bullish Saucer pattern target (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 36649 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.

 

This week, both the indices continued to stay above the short term average of 20dma (Sensex – 34777 and Nifty - 10714) as well as the medium term average of 50dma (Sensex – 33963 and Nifty – 10475). Both the indices still remain well above the long term average of 200dma (Sensex – 32138 and Nifty – 9967).  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 (80) suggests continuation of Bullish momentum. Stochastic Oscillator %K (95) has just given a Sell. ADX has moved higher at 29 which suggest that the Up Trend is very strong. Directional Indicators are in Buy mode. MFI (78) suggests Positive Money Flow. OBV continues in Buy mode making higher top higher bottom formation. Buy signal continues in Bollinger Band. Thus Oscillators are suggesting a bullish bias for the near term, but momentum Oscillators are in overbought zone which suggests a possibility of some Retracement.

 

Options data for February series indicate highest Call Open Interest is at the strike of 11500 whereas the highest Put build-up is at the strike of 10500. Thus Options data suggests a trading range with resistance at 11500 & support at 10500.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10782

10881

10975

11069

11162

11244

11339

Sensex

34877

35221

35676

36050

36444

36889

37238

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HDFC Bank

1974

1936

2034

2097

Buy Lupin

949

927

983

1018

Buy Vedanta

345

337

357

370

Buy Minda Ind

1323

1292

1371

1423

Buy Infinite

379

371

393

409


 

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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