Archives : BULLS CONTINUE TO DOMINATE - 27/10/2017.

BULLS CONTINUE TO DOMINATE - 27/10/2017.

 

NIFTY HEADED FOR 10537-10815.

 

It was a historic week wherein the Government took a bold step and announced a massive Rs.2.11 Lakh crores package for the Recapitalization of ailing PSU banks. In one of the most reformative step taken in recent history, it is believed that this Recapitalization will rebuild the ailing PSU banks and will give them a new lease of life. As a result, the market opened with a big gap up on Wednesday and the entire rally was led by PSU banks which registered a massive single day increment of nearly 30 to 40%. Bullish pattern formations have been completed and one can expect Nifty to achieve target of 10537-10815 in the intermediate term.



BULLS CONTINUE TO DOMINATE - 27/10/2017.

 

NIFTY HEADED FOR 10537-10815.

 

It was a historic week wherein the Government took a bold step and announced a massive Rs.2.11 Lakh crores package for the Recapitalization of ailing PSU banks. In one of the most reformative step taken in recent history, it is believed that this Recapitalization will rebuild the ailing PSU banks and will give them a new lease of life. As a result, the market opened with a big gap up on Wednesday and the entire rally was led by PSU banks which registered a massive single day increment of nearly 30 to 40%. Bullish pattern formations have been completed and one can expect Nifty to achieve target of 10537-10815 in the intermediate term.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 32411, made a high of 33286, low of 32312 and closed the week at 33157. Thus it closed the week with a gain of 768 points. At the same time the Nifty opened the week at 10176, made a high of 10366, low of 10124 and closed the week at 10323. Thus the Nifty closed the week with a gain of 177 points.

 

On the daily charts, both the indices have formed a small black body candle which cannot be termed as bearish but it has more of a neutral bias. On the weekly charts both the indices have formed a Big White body candle, which will have bullish connotations. Thus candlestick study indicates a bullish bias in the near term.

 

Last week saw both the indices creating one more Bullish Gap between 32804-32502 for the Sensex and 10240-10237 for the Nifty. In the near term this gap will act as strong Support.

 

Past week saw both the indices completing a Bullish Flag pattern. The target as per this pattern falls at Sensex 34317 and Nifty 10851. These targets will be achieved as long as the Sensex and Nifty remain above 32312 and 10123 respectively. In the process, the Bearish Rising Broadening pattern got negated as the both the indices managed to close above their failure point.

 

The key level to watch out for in this entire upward rally is the support taken at the higher bottom which is at Sensex 31128 and Nifty 9685. A break of this support will interrupt the higher top higher bottom formation sequence for the indices for the first time since December 2016. As a result, we will be looking at the Correction of the entire rally which started from Sensex 25717 and 7896 for the Nifty.

 

 

The current Rally has produced two major Bullish Gaps. The first Bullish gap is on daily charts, between Sensex 29780-29681 and Nifty 9250-9225 will act as strong Support. The second Bullish Gap which is more critical as it is also a Weekly Gap i.e. between Sensex 29356-29098 and Nifty 9060-8977 hold the key to the long term trend.

 

On the weekly formation, both the indices had completed a Cup and Handle formation and the targets are Sensex 34677-37554 and Nifty 10536-11413. If one considers the Cup and Handle formation of 7 years from 2007 to 2014, the target for that pattern falls at Sensex 34715 and Nifty 10462. The Golden Ratio target of the current pattern weekly pattern of 2 years is at Sensex 34677 and Nifty 10536. Thus in the medium term one can expect a test of the above targets i.e. Sensex 34677-34715 and Nifty 10462-10536.

 

MACD and Price ROC are both positive and in Buy mode. RSI (67) suggests bullish momentum. ADX has reduced to 18, which suggests sideways trend. Directional Indicators continue in Buy mode. MFI (84) suggests Positive Money Flow. OBV continues to make higher top higher bottom formation. Thus Oscillators are suggesting a bullish bias for the near term.

 

This week, both the indices continue to remain not only above the short term average of 20dma (Sensex – 32201 and Nifty – 10081) and the medium term average of 50dma (Sensex – 31968 and Nifty – 9999), but also the long term average of 200dma (Sensex - 30469 and Nifty – 9456).  Thus the trend in short term, medium term as well as the long term timeframe continues to remain Bullish.

 

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

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy DalmiaBharat

2895

2828

2996

3099

Buy BharatForge

671

654

697

725

Buy AdaniPort

432

419

452

473

Buy JsWSteeL

265

259

274

284

Buy WalchandNgr

234

228

243

253

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10043

10123

10237

10323

10444

10537

10662

Sensex

32037

32396

32804

33157

33478

33889

34317

 

WATCH OUT FOR:

 

Bharat Forge Saucer

 

 

 

 

 


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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