Archives : MID-CAPS TO OUT-PERFORM; CONVERGENCE SETS IN - 31/08/2018

MID-CAPS TO OUTPERFORM; CONVERGENCE SETS IN - 31/08/2018.

 

NIFTY TO TAKE A BREATHER.

 

The Rally continues week after week despite shouts by sceptics warning about the impending danger. Market has gone one way up in the last two months without looking back and lots of market participants are watching in disbelief as the market continues to make newer highs. Now after a rally of almost 4000 points on Sensex and 1200 on Nifty, there are signs that the rally might take a breather. But as always every decline has been arrested at the first support and it is likely to maintain similar behaviour. Nifty is headed towards short term target 11907, as long as it remains above the strong Support of 11499-11486 which is a bullish Gap in both daily as well as weekly timeframe.

 


MID-CAPS TO OUTPERFORM; CONVERGENCE SETS IN - 31/08/2018.

 

NIFTY TO TAKE A BREATHER.

 

The Rally continues week after week despite shouts by sceptics warning about the impending danger. Market has gone one way up in the last two months without looking back and lots of market participants are watching in disbelief as the market continues to make newer highs. Now after a rally of almost 4000 points on Sensex and 1200 on Nifty, there are signs that the rally might take a breather. But as always every decline has been arrested at the first support and it is likely to maintain similar behaviour. Nifty is headed towards short term target 11907, as long as it remains above the strong Support of 11499-11486 which is a bullish Gap in both daily as well as weekly timeframe.

 

MID-CAP 50 - FALLING WEDGE BREAKOUT.

 

The Mid-Cap50 Index (CMP - 5345) completed a Bullish Falling Wedge pattern (Target - 6147) two weeks back, on the weekly timeframe. The out-performance was visible this week, as the Mid-Cap Index went up by around 2.5% whereas Nifty was up by just about a 1%. The Convergence between the Front-line Indices and Mid-Cap Index has set in and the stage seems set for the out-performance of Mid-Caps. This week, the Mid-Cap50 Index has crossed the threshold of 61.8% and is now headed towards its life-high level of 5722, with intermediate Resistance coming in at 5474.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 38472, made a high of 38989, low of 38416 and closed the week at 38645. Thus it closed the week with a gain of 394 points. At the same time the Nifty opened the week at 11605, made a high of 11760, low of 11595 and closed the week at 11680. Thus the Nifty closed the week with a gain of 123 points.

 

On the daily charts, Nifty has formed a small White body Spinning Top whereas Sensex has formed a small Black body Spinning Top. Once again, weekly charts are seeing a formation similar to last week i.e. a small White body candle with an upper shadow. The daily as well as weekly formations suggest that the Bias still remains positive but some supply is setting in at higher levels.

 

Two weeks back saw a creation of third Bullish Gap between Sensex 38050-38022 and Nifty 11499-11486. This Gap will provide strong Support to the indices as this Gap has been formed on both daily as well as weekly timeframes. The current Rally has seen two more Bullish Gaps which have provided support to the market and in the process the indices have formed a higher bottom before bouncing back. A break of the above mentioned Bullish Gap will lead the market down to test the Support of second Bullish Gap between Sensex 37643-37582 and Nifty 11370-11368. The first Bullish Gap is at Sensex 37131-37061 and Nifty 11210-11185, which is an extremely strong Support for the market.

 

Both Sensex and Nifty have completed a Rounding Bottom formation and the Target as per that pattern falls at Sensex 40403 and Nifty 12391. Also both the indices had completed a Bullish Cup and Handle pattern which has a target of Sensex 39503 and Nifty 11907. The above targets will be achieved as long as Sensex remains above 34937 and Nifty above 10557.

 

This week, both the indices were above the short term average of 20dma (Sensex – 38088 and Nifty – 11506) as well as medium term average of 50dma (Sensex – 36959 and Nifty – 11166). Also both the indices continue to remain above the long term average of 200dma (Sensex – 34946 and Nifty – 10676). Thus the trend in short term, medium term as well as long term time-frame remains Bullish.

 

MACD as well as Price ROC are both positive and in Buy mode. RSI (69) suggests strong bullish momentum. Stochastic Oscillator %K (81) is below %D and hence in Sell mode. ADX has increased to 43, suggests a very strong Uptrend. Directional Indicators continue in Buy mode as +DI is above –DI. MFI (55) suggests Positive Money Flow. OBV is making higher top higher bottom formation. Buy Signal continues in Bollinger Band as well. Thus Oscillators suggest a strong bullish bias.

 

Options data for September series indicate highest Call Open Interest is at the strike of 11800 whereas the highest Put build-up is at the strike of 11600. Thus Options data suggests a narrow trading range with resistance at 11800 & support at 11600.

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy NestleIndia

11582

11432

11812

12049

TorrentPharma

1812

1772

1877

1962

Buy MindTree

1114

1088

1154

1197

Buy VinatiOrg

1412

1379

1466

1533

Buy UnionBank

89

87

93

97


INDEX LEVELS:


 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

11390

11499

11595

11680

11760

11881

11962

Sensex

37559

37932

38251

38645

38989

39416

39777


WATCH OUT FOR:

 

MidCap 50 Falling Wedge
 
Torrent Pharma
 
Union Bank
 
 

 

 

 

 

 

 

 

 

 

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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