Archives : Market Witnessing A Corrective Rally - 19/02/2016.

MARKET WITNESSING A CORRECTIVE RALLY - 19/02/2016.

NIFTY RECLAIMS 7200.

Just when it seemed that the Bulls had thrown in the towel, market staged a smart recovery to help Nifty reclaim 7200. As expected, Market took support at the 200WMA and bounced back. We are witnessing a Corrective rally which seems headed towards Resistance zone of 7323-7363. One should not confuse this rally as a reversal of trend as it is only a pull-back rally, which has its genesis in short covering and not fresh buying. Hence there are very bright chances that this rally will be sold into and Nifty may slip well below 7000 again.


MARKET WITNESSING A CORRECTIVE RALLY - 19/02/2016.

NIFTY RECLAIMS 7200.

Just when it seemed that the Bulls had thrown in the towel, market staged a smart recovery to help Nifty reclaim 7200. As expected, Market took support at the 200WMA and bounced back. We are witnessing a Corrective rally which seems headed towards Resistance zone of 7323-7363. One should not confuse this rally as a reversal of trend as it is only a pull-back rally, which has its genesis in short covering and not fresh buying. Hence there are very bright chances that this rally will be sold into and Nifty may slip well below 7000 again.

TECHNICALLY SPEAKING.

Sensex opened the week at 23223, made a high of 23774, low of 22920 and closed the week at 23709. Thus it closed the week with a gain of 723 points. At the same time the Nifty opened the week at 7057, made a high of 7226, low of 6960 and closed the week at 7210. Thus the Nifty closed the week with a gain of 230 points.

On the daily charts, both the indices have formed a white body candle for second consecutive day forming a pattern called Side by Side White Lines. This is a Bullish Continuation pattern. On the weekly charts, both the indices have formed a Bullish Harami pattern, which a Bullish Reversal pattern which requires confirmation. Thus daily as well as weekly candlestick studies indicate a bullish bias in the near term.

The Pull-Back Rally started last week, after taking support at the 200 WMA. The rally continues this week and the relevant Retracement levels are placed at 23518-23801-24085 for the Sensex and 7148-7235-7321 for the Nifty.

The Bearish Gap between 24111-24196 for the Sensex and 7323-7363 for the Nifty will act as a strong Resistance zone going forward as it also includes the 61.8% Retracement level (Sensex – 24085 and Nifty – 7321) and the 20dma (Sensex – 24039 and Nifty – 7306). Thus the current Pull-Back rally will find it difficult to cross this Resistance zone.

In the higher timeframe, both the indices are retracing the strong long term upward rally which started from Sensex 17448 and Nifty 5118. The relevant Correction levels are placed at Sensex 25220-23736-22252 and Nifty 7591-7119-6646. The 61.8% Fibonacci level (Sensex – 22252 and Nifty – 6646) will be tested once this Pull-Back Rally gets completed.

Last week, both the indices achieved the Bearish Head and Shoulders (daily chart) target of Sensex 23276 and Nifty 7092. Both Sensex and Nifty remain on track to achieve the higher degree Head and Shoulders (weekly chart), the target for which falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC are both negative and continue in Sell mode. RSI (44) suggests bearish momentum. Stochastic Oscillator %K (41) continues to remain above %D and hence in Buy mode. OBV continues to make lower top lower bottom formation and hence in Sell mode. MFI (33) indicates negative money flow in the market. ADX (38) indicates that the downtrend may undergo some consolidation before regaining strength. The Directional Indicators continue in Sell mode as +DI remains below –DI. Thus majority of Oscillators are suggesting a bearish bias.

This week, both the indices remained below the short term average of 20dma (Sensex – 24039 and Nifty – 7306), medium term average of 50dma (Sensex – 24768 and Nifty – 7532) and even the long term average of 200dma (Sensex – 26392 and Nifty – 8000). Thus the trend in the short term, medium term and long term timeframe continues to remain bearish.

Options data for February series indicates highest Call Open Interest build-up at the strike of 7400 and highest Put build-up at the strike of 7000. Thus Option data suggests a trading range with resistance coming in at 7400 and support at 7000.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell Britannia

2564

2471

2545

200

Rs. 3,800

Sell SRF

1094

1053

1046

400

Rs.19,200

Sell TorntPh

1235

1181

1235

400

Rs. -

Sell HCLTech

798

767

798

500

Rs. -

Sell IBuLHsg

601

576

585

800

Rs.12,800

Total

Rs.35,800.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

6869

6980

7108

7210

7323

7425

7540

Sensex

22600

22986

23381

23709

24141

24460

24867

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy JsWSteeL

1083

1057

1122

1162

Buy ABB

1102

1075

1143

1185

Buy PidiliteInd

626

610

651

677

Buy CairnInd

131

127

138

145

Buy AshokLeyLnd

91

88

96

101

WATCH OUT FOR:

Pidilite

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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