Weekly Nifty For 15th July to 19th July 2013

           Indian market settled sharply higher on Friday, led by Infosys Q1FY14 result and strong global cues. Further, RBI’s move to curb fall in rupee also helped improve market sentiments. BSE Sensex added 282 points on Friday’s trade to settle at 19958, while NSE Nifty crossed 6000 mark and settled at 6009, up 74 points. IT, technology and capital goods led the advance. India trade deficit came at $12.2 bn Vs $20.1 bn in May with exports falling 4.6% y-o-y and imports down 0.4%. Gold imports for June have declined by 80.6%, backed by India’s sharpened measures to curb gold imports. During the week, FIIs bought to the tune of Rs 1.8 bn, while DIIs sold to the tune of Rs 2.7 bn. Globally, US has reported rise in jobless claims.

               Sensex opened the week at 19418, made a high of 19991, low of 19185 and closed the week at 19958. Thus it registered a strong weekly gain of 463 points. At the same time the Nifty opened the week at 5833, made a high of 6019, low of 5775 and closed the week at 6009. Thus the Nifty went up by 142 points on a weekly basis.

              Both the indices formed a big white body candle on the weekly charts indicating bullishness. On Friday, both Sensex and Nifty opened with a big gap up and managed to form a small white body candle on Friday, with a big lower shadow. This is indicating buying at lower levels. Both the indices have left behind a Bullish Rising gap between Sensex 19093-18925 and Nifty 5749-5699. This gap acted as a support twice this week as the Sensex and Nifty bounced from just above this gap. Both the indices have managed to close above the 61.8% Retracement level (Sensex 19688 and Nifty 5976) of the fall from Sensex 20443 to 18467 and Nifty 6229 to 5566 which suggests that the correction is over and the prior uptrend has resumed.

          Also this week, a Bullish Cup and Handle pattern got completed when Sensex closed above 19598 and Nifty above 5904. This is a Bullish Reversal pattern and the target as per this pattern falls at Sensex 20729 and Nifty 6242. This week both the indices have managed to close above the medium term average of 50dma (Sensex – 19553 and Nifty – 5917) besides already being above the short term average of 20dma (Sensex – 19205 and Nifty – 5789) and also above the long term average of 200dma (Sensex – 19257 and Nifty – 5838). Thus the trend in the medium term timeframe has turned up, whereas the trend in the short term and long term timeframe continues to remain bullish.

          Market has managed to bounce back number of times from above the Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447. This gap was tested many times in the last three months and has proved to be a strong support for the market. Thus, this gap holds more significance because a breach of this gap will signal the end of the long term rally.

             MACD and ROC both continue with their Buy signals; besides being in the positive zone. RSI (61) is moving higher suggesting increase in bullish momentum. MFI (63) has increased and moved higher suggesting money flowing into the market. ADX has fallen further to 16 suggesting that the current trend has lost all of its strength. The Directional Indicators continue with their Buy signal as +DI remains above –DI. OBV continues in Buy mode besides making higher top higher bottom formation. Thus majority of the Oscillators are suggesting continuation of short term bullishness.

              The Nifty O.I. PCR has further increased and is now a respectable 1.71. This suggests that the Put writers are now gaining in confidence over call writers and hence the higher value of the indicator. In the current month series, Friday saw a lot of Put writing at the strike of 5900 and Call writing at 6200, which suggests immediate support at 5900 level and strong resistance around the level of 6200.