Archives : NIFTY FAILS TO OVERCOME 8000 - 29/04/2016.

NIFTY FAILS TO OVERCOME ‘8000’ - 29/04/2016.

MAY STARTS ON A BEARISH NOTE.

Traditionally the month of May is a bearish month and it does not seem to be any different this time around. It was pointed out in the previous article that a failure to overcome the crucial Resistance Zone of Sensex 26256-26259, will result in resumption of downward slide. That is exactly what happened this week before Sensex and Nifty took support at the short term average of 20dma. In the short term, one can expect market to take some support at the Bullish Gap between Sensex 25358-25180 and Nifty 7772-7717.


NIFTY FAILS TO OVERCOME ‘8000’ - 29/04/2016.

MAY STARTS ON A BEARISH NOTE.

Traditionally the month of May is a bearish month and it does not seem to be any different this time around. It was pointed out in the previous article that a failure to overcome the crucial Resistance Zone of Sensex 26256-26259, will result in resumption of downward slide. That is exactly what happened this week before Sensex and Nifty took support at the short term average of 20dma. In the short term, one can expect market to take some support at the Bullish Gap between Sensex 25358-25180 and Nifty 7772-7717.

TECHNICALLY SPEAKING.

Sensex opened the week at 25891, made a high of 26100, low of 25424 and closed the week at 25606. Thus it closed the week with a loss of 232 points. At the same time the Nifty opened the week at 7894, made a high of 7992, low of 7788 and closed the week at 7849. Thus the Nifty closed the week with a loss of 50 points.

On the daily charts, Sensex has made a Bullish Doji whereas Nifty has managed a Bullish Spinning Top formation. A real white body candle formation on Monday will confirm a Bullish Reversal. On the weekly charts, Sensex fell short of forming a Bearish Engulfing pattern as the Black body candle this week is small. Thus daily candlestick pattern study suggests minor bullish bias.

The strong Resistance zone between Sensex 26256-26259 and Nifty 7972-7979, which is due to the confluence of 50% Retracement (Sensex – 26359 and Nifty - 7972) and previous intermittent tops (Sensex - 26256 and Nifty - 7979), acted as strong hurdle this week as the indices faltered at this level. Thus for further upward rally to continue, it is necessary for the indices to overcome the above Resistance zone.

Since the market failed to overcome the Resistance zone mentioned above, indices can be expected to find immediate Support at the Bullish Rising Gap between Sensex 25358-25180 and Nifty 7772-7717.

Both the indices have retraced from critical levels of Sensex 26100 and Nifty 7992. Thus failure of indices to overcome the Resistance zone has resulted in finding Retracement levels of the entire upward rally.  The relevant Retracement levels are placed at Sensex 24723-24297-23872 and Nifty 7546-7409-7271.

MACD has given a fresh Sell signal. Price ROC is positive and continues with its Buy signal. RSI (57) indicates bullish momentum. Stochastic Oscillator %K has gone below %D; hence in Sell mode. ADX has improved to 21, which indicates that the upward trend is now gaining strength. Directional Indicators continue in Buy mode as +DI remains above –DI. Bollinger Band continues in Buy mode. MFI (57) still suggests Positive Money Flow. OBV continues to make higher Top, higher Bottom formation. Thus majority of Oscillators are still suggesting a positive bias in the near term.

This week, once again both the indices grappled with the long term average of 200dma (Sensex – 25849 and Nifty – 7849) and none of them were able to close the week above it. However, both the indices took support at the short term average of 20dma (Sensex – 25431 and Nifty – 7781) and closed above it. Both the indices continue to remain above the medium term average of 50dma (Sensex – 24681 and Nifty – 7524). Thus the trend in the short and long term timeframe remains down, whereas the trend in the medium term timeframe continues to remain up.

Options data for May series indicate highest Call Open Interest build-up at 8200 and highest Put build-up at 7700. Thus Option data suggests a trading range with resistance coming in at 8200 and support at 7700.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7582

7667

7733

7849

7972

8060

8163

Sensex

24523

24867

25287

25606

26080

26471

26730

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

AmarRaja

928

963

960

800

Rs.25,600

CanaraBk

211

220

217

2000

Rs.12,000

Buy REC

171

184

185

2000

Rs.28,000

Buy OBC

98

103

99

3000

Rs. 3,000

RPower

52

56

54

12000

Rs.24,000

Total

Rs.92,600.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy SKSMicro

603

589

625

648

Buy TechMah

486

475

503

521

Buy OiL

332

326

341

351

Buy PetronetLNG

263

257

273

284

Buy NCC

78

76

82

87

WATCH OUT FOR:

NCC

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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