Nifty Weekly For 16th - 20th September 2013

             Continuing previous week momentum, the week started on positive note with BSE Sensex moving ~700 plus points and ~ 170 plus points in NSE Nifty on Monday, but then market sentiments weakened with range bound movements on bourses . Economic indicators like IIP which reported 2.2% YoY growth and also revision of June numbers to contraction of 1.8% as against earlier reported contraction of 2.2% could not bring cheers to market sentiments. Retail inflation eases marginally to 9.52% in August from 9.64% in July. On W-o-W basis, BSE Sensex gained 463 points to close at 19733 while NSE Nifty closed higher 170 points to 5851 levels. FIIs were net buyers to the tune of Rs 8.6 bn while DIIs sold to the tune of Rs 9.7 bn. Globally, jobless claims in the U.S. declined last week to the lowest level since April 2006. The U.S. budget deficit also narrowed in August from a year earlier.

              Sensex opened the week at 19448, made a high of 20055, low of 19444 and closed the week at 19732. Thus it registered a weekly gain of 462 points. At the same time the Nifty opened the week at 5738, made a high of 5932, low of 5738 and closed the week at 5850. Thus the Nifty closed the week with a gain of 170 points.

              Both the indices completed a Bearish Engulfing at the top on Thursday. Both candles also form a Tweezer Top formation. Friday saw a Doji being formed on the daily charts on Sensex, whereas the Nifty has formed a small white body candle. Both are neutral formations. The weekly charts have formed an Opening White body Marubuzo with a long upper shadow. The long upper shadow indicates that the market is taking a pause. Thus both daily as well as weekly charts continue to look promising but in the short term a sideways consolidation looks likely.

              Both indices opened the week with a big Gap-up and sustained that gap, thus forming an Upward Rising Gap between Sensex 19293 – 19444 and Nifty 5688-5738. This gap has not only been formed on the daily charts but also on the weekly charts, hence it will provide strong support to the market in the near term. Also the presence of 200dma for the Sensex (19363) and 50dma for the Nifty (5709) inside this gap, will add to the strength of the support.

                The above mentioned Gap can be classified as a Measuring Gap (Sensex 19293 – 19444 and Nifty 5688-5738) in the current upward rally (the rally has started from a low of Sensex 17448 and Nifty 5118). If this gap holds, then as per Gap theory, the target for the upward rally works out to be Sensex 21289 and Nifty 6308.

              This week both Sensex and Nifty overcame the strong Resistance zone due to the confluence of 200dma (Sensex – 19363 and Nifty – 5839) and the 61.8% Retracement (Sensex – 19299 and Nifty – 5805) of the entire fall, thus suggesting a reversal in trend.

           This week both Sensex and Nifty have managed to conquer the medium term average of 50dma (Sensex – 19211 and Nifty – 5709) as well as the long term average of 200dma (Sensex – 19363 and Nifty – 5839). Also both the indices are already above the short term average of 20dma (Sensex – 18744 and Nifty – 5528). Thus the trend in the medium term and long term timeframe has turned positive whereas the short term trend is already up.

              MACD and ROC are both positive and continue with its Buy signal. RSI (59) continues to stay above the equilibrium line suggesting that the bullish momentum is intact. Similarly MFI (55) continues with its Buy signal as it is above the centerline which suggests money flowing into the market. Stochastic Oscillator has given a fresh Sell signal in overbought territory as %K (91) went below %D. ADX has reduced and is flat at 20 suggesting a reduction in strength of the trend. The Directional Indicators continue with its Buy signal as +DI is above -DI. OBV continues in Buy mode, making higher top higher bottom formation. Bollinger band has given a Buy signal on Tuesday when both the indices managed to close above the upper Bollinger band. Thus majority of the Oscillators are pointing towards more bullishness in the short term.

              The Nifty O.I. PCR suggests bullishness and is at 1.52. For the current month series, highest Open interest build up is at 5300 Put and 6000 Call. This suggests that the market expects a wide trading range with support coming in at 5300 levels and resistance around 6000 levels. Friday saw high amount of Put writing at 5600 strike which suggests immediate support coming in at around Nifty 5600 levels.