Archives : NIFTY IN 4 DIGITS, NOW A REALITY - 23/03/2018.

NIFTY IN 4 DIGITS, NOW A REALITY - 23/03/2018.

 

GLOBAL TRADE WAR TRIGGERS A MELTDOWN.

 

After the US imposed tariffs on the import of Chinese goods, jitters were felt in global markets. Indian market was no different as it followed global trend and as a result the Sensex closed below its 200dma and Nifty went into 4 digits. We have been advocating bearishness since end of January 2018, and our view must have surely helped our readers by making them ready for the bear market. The indices are now headed towards their target of Sensex 30521 and Nifty 9381. But in the near term, Bearish Gap between Sensex 32720-32963 and Nifty 10027-10105 will act as Resistance.

 


NIFTY IN 4 DIGITS, NOW A REALITY - 23/03/2018.

 

GLOBAL TRADE WAR TRIGGERS A MELTDOWN.

 

After the US imposed tariffs on the import of Chinese goods, jitters were felt in global markets. Indian market was no different as it followed global trend and as a result the Sensex closed below its 200dma and Nifty went into 4 digits. We have been advocating bearishness since end of January 2018, and our view must have surely helped our readers by making them ready for the bear market. The indices are now headed towards their target of Sensex 30521 and Nifty 9381. But in the near term, Bearish Gap between Sensex 32720-32963 and Nifty 10027-10105 will act as Resistance.  

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33268, made a high of 33354, low of 32483 and closed the week at 32596. Thus it closed the week with a loss of 580 points. At the same time the Nifty opened the week at 10215, made a high of 10227, low of 9951 and closed the week at 9998. Thus the Nifty closed the week with a loss of 197 points.

 

On the daily charts, after opening with a gap down, Sensex has formed a small black body Spinning Top whereas Nifty has formed a small white Star like body. On the weekly charts, both the indices have formed a big black body candle in line with the down trend. On the monthly charts, Nifty has formed a Bearish Engulfing pattern. This is a Bearish Reversal pattern which can induce bearishness for the next few months. Thus candlestick analysis indicates bearishness across daily, weekly as well as monthly timeframes.

 

On Friday, both the indices opened with a big gap down, breaching the long term average of 200dma and left behind a Bearish Gap between Sensex 32720-32963 and Nifty 10027-10105. This Gap will act as a strong Resistance in the near term.

 

Both the indices have completed a Bearish Cup and Handle pattern on the daily charts and whose target falls at Sensex 30521 and 9381. On the weekly charts, both the indices have formed a Bearish Flag pattern with similar targets.

 

We are in midst of a strong Correction of the intermediate 13 months rally from low of Sensex 25717 and Nifty 7893. The Retracement levels for that are placed at Sensex 32347-31081-29815 and Nifty 9919-9533-9146. We also need to consider the last two years rally which started from a low Sensex 22494 and Nifty 6825. The relevant Correction levels are placed at Sensex 31115-29469-27823 and Nifty 9511-8999-8486. Strong confluence zone is formed between Sensex 31081-31115 and Nifty 9533-9511, which can possibly act as Target for the market.

 

Both the indices have formed a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap is aided by 50% Retracement of the current fall (Sensex – 34963 and Nifty 10724) and also the 50% Retracement of Intermediate Rise from low of Nifty 10033 i.e. at Sensex 34962 and Nifty 10737. Thus as seen, the weekly Bearish Gap is aided by strong Resistances which will make the confluence zone into a strong Resistance zone.

 

This week, finally both the indices breached and closed below the long term average of 200dma (Sensex – 32864 and Nifty – 10172).  Besides they continue to stay well below the short term average of 20dma (Sensex – 33552 and Nifty - 10305 as well as medium term average of 50dma (Sensex – 34336 and Nifty – 10548). Thus the trend in short term and medium term timeframe remains bearish, whereas the trend in the long term timeframe has now turned Bearish.

 

MACD and Price ROC are both negative and in Sell mode. RSI (32) suggests bearish momentum. ADX is at 28 suggests that the Down Trend is getting strong. Directional Indicators are in Sell mode as +DI remains below –DI. MFI (35) suggests Negative Money Flow. OBV continues in Sell mode. Thus Oscillators are suggesting a bearish bias for the near term.

 

Options data for March series indicate highest Call Open Interest is now at the strike of 10500 whereas the highest Put build-up still remains at the strike of 10000. Thus Options data suggests a trading range with resistance at 10500 & support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9685

9783

9892

9998

10105

10227

10336

Sensex

31430

31769

32247

32596

32963

33354

33691

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Raymond

892

913

859

823

GodfreyPhilips

799

818

769

737

Sell DLF

203

208

195

186

Sell Vedanta

276

282

267

257

Sell YesBank

287

294

276

264


WATCH OUT FOR:

 

Godfrey Philips
 
DLF
 
Raymond

 

 

 

 

 

 

 

 

 


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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