Archives : 2017 - A YEAR OF TRANSITION - 30/12/2016.
2017 – A YEAR OF TRANSITION - 30/12/2016.

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SECOND HALF OF 2017 TO BE STRONG.

This is the season of Reforms and our PM is set to continue the Reform process in 2017 as well. The Demonetization process kick started in November will definitely not be one off; as the Government will now up the ante against black money and corruption, by introducing more measures to curb the menace. As these tough measures follow, there will be turbulence in the market especially in the first half of the year. One can expect things to stabilize in the second half and hope for a bullish rally. 2017 will see the market absorbing the impact of such landmark reforms.


2017 – A YEAR OF TRANSITION - 30/12/2016. 

SECOND HALF OF 2017 TO BE STRONG.

This is the season of Reforms and our PM is set to continue the Reform process in 2017 as well. The Demonetization process kick started in November will definitely not be one off; as the Government will now up the ante against black money and corruption, by introducing more measures to curb the menace. As these tough measures follow, there will be turbulence in the market especially in the first half of the year. One can expect things to stabilize in the second half and hope for a bullish rally. 2017 will see the market absorbing the impact of such landmark reforms.

TECHNICALLY SPEAKING.

Sensex opened the week at 25992, made a high of 26678, low of 25753 and closed the week at 26626. Thus it closed the week with a gain of 586 points. At the same time the Nifty opened the week at 7965, made a high of 8197, low of 7893 and closed the week at 8185. Thus the Nifty closed the week with a gain of 200 points.

On the weekly charts, both Sensex and Nifty have formed a Bullish Engulfing pattern. On the daily charts, both the indices have formed an Opening White body Marubuzo. Thus daily as well as weekly candlestick patterns suggest bullish bias in the near term.

Both the indices took support at the critical level of Sensex 25700 and Nifty 7900 and staged a bounce back. The current rally can be termed as a Pull-back and not a reversal of the prior trend. The Pull-back levels are placed at Sensex 27001-27397-27794 and Nifty 8304-8431-8558.

The test of the current Pull-back will be at the Resistance zone between Sensex 26745-26871 and Nifty 8247-8261 which is due to the confluence of the long term average of 200dma along with the medium term average of 50dma.

A break below the Support level of Sensex 25700 and Nifty 7900 will complete Bearish Head and Shoulders pattern and the target as per that falls at a minimum of Sensex - 23794 and Nifty – 7283 and on the higher side at Sensex – 22404 and Nifty – 6867. As per Pattern analysis, both the indices had already formed a Bearish Rising Wedge formation and the extended target as per that formation falls at Sensex 25073 and Nifty 7656.

The fall in the intermediate timeframe is a Retracement of the entire rise from Sensex 22494 to 29077 and Nifty from 6825 to 8968. Thus, the relevant Correction levels are placed at Sensex 26562-25786-25009 and Nifty 8150-7897-7644.

MACD continues in Buy mode despite being in the negative zone. Price ROC has just turned positive and is signalling a Buy. RSI (54) suggests bullish momentum. Stochastic Oscillator %K (61) is above %D, indicating a continuation in Buy mode. Sell signal in Bollinger band has been negated as the indices managed a close above the mean of 20dma. ADX is at 35 which suggest that downward trend is still intact. Directional Indicators continue in Sell mode as +DI remains below –DI, but are converging. MFI (38) suggests Negative Money Flow. OBV continues in Sell mode, making lower Top, lower Bottom formation. Thus Oscillators are suggesting a mixed picture with no clear bias.

This week, both the indices conquered the short term average of 20dma (Sensex – 26370 and Nifty – 8111). However both the indices are just below the medium term average of 50dma (Sensex – 26745 and Nifty – 8247) and the even the long term average of 200dma (Sensex – 26871 and Nifty – 8261). Thus the trend in the short term has turned upwards, whereas the trend in the medium term and even the long term timeframe remains down.

Options data for January series indicate highest Call Open Interest build-up at the strike of 8200 and highest Put build-up remains at 8000. Thus Options data suggests a trading range with resistance coming in at 8200 and support at 8000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7893

7992

8077

8185

8287

8398

8510

Sensex

25549

25902

26262

26626

27034

27457

27845

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Maruti

5319

5201

5499

5677

Buy IGL

918

898

948

979

Buy GaiL

439

429

454

470

Buy TechMah

488

477

505

523

Buy OiLIndia

452

442

467

483

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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