The market has more or less been consolidating in tha past two weeks. The IIP data has hit a 9-month low, which is a big trend breaker from previous data. The earnings season starting from Tuesday with Infosys results is expected to bring the movement in the markets. The week is packed with earnings from various other heavy weights like Reliance, other IT majors. Nifty opened the week at 6694, made a high of 6819, low of 6650 and closed the week at 6776. Thus the Nifty closed the week with a gain of 82 point.
On the daily charts Nifty have been forming neutral candlestick formations for the past two days. Considering the last three days candlestick formation, it becomes Rising Three Methods pattern, a Bullish Continuation pattern. Aconfirmtion is required in the form of big white body candle. This candle must close at or above the 6796 (highest closing). The market has a strong support at 6700 and hence a breach of 6700 will signify start of correction for 5933 to 6819 move.
The Bullish Flag pattern completed by Nifty(Breakout point 6560) has a target of 6915. This target reains valid till Nifty trades above the 6432 levels. The market has left a Gap at 6413-6403 and according to the GAP theory, this measuring gap has a target of 6880. The market is still consolidating between the upper trendline of rising channel and the upper trendline of Rising wedge. Last week market tried to breach the upper channel trendline but a firm breakout is not seen. If markets rally this week, then it can indicate the follow up buying providing much needed confirmation for breakout. However I still expect market to consolidate till the elections are over.The markets have given breakout of the Ascending triangle on the monthly charts ending the six year consolidation. The market is expected to test the breakout point 6360 sooner or later before resuming its journey towards the target of 10480.
Current rally has started from the low of 5933. Thus a breach of Sensex 19963 and Nifty 5933 will derail the current bullish rally. This week, Nifty managed to remain above the short term average of 20dma (6640), the medium term average of 50dma (6373) and the long term average of 200dma (6079). Thus the trend in the short term, the medium term and the long term timeframe continues to remain bullish.
RSI @73 continues to remain overbought territory for past three weeks. MFI @68 suggests positive money inflow for the market. Stochastic Oscillator %K is in overbought zone and has signaled a Buy as %K is above %D. ADX @44 has become steady and suggests maturing uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Since the Oscillators are in overbought territory, one can expect some weakness in the short term. From investor point of view every dip should be used to buy into the market.
Open Interest Put Call Ratio O.I.PCR for the current month has increased to a level of 1.45 which indicates a bullish bias. Highest Open interest build up is seen at 6700 Put and 6900 Call. This suggests that the market expects a trading range with support coming in at 6700 levels and resistance around 6900 levels.
Infosys seems pretty subdued this time and it is expected to remain so after the results too. Strong support for Infosys is seen at around 3026 levels. Correction will start only if Sensex closes below 22379 and Nifty 6705; till then it remains a buy on decline market.
Stock of the week:
Hexaware Technologies Ltd
The Stock has broken out of a textbook example of bullish Cup & Handle pattern. The Stock can be bought at cmp 170.4 and on subsequent declines till 164 levels. The stoploss should be placed below 160 for the target of 178-184-194.
On the daily charts Nifty have been forming neutral candlestick formations for the past two days. Considering the last three days candlestick formation, it becomes Rising Three Methods pattern, a Bullish Continuation pattern. Aconfirmtion is required in the form of big white body candle. This candle must close at or above the 6796 (highest closing). The market has a strong support at 6700 and hence a breach of 6700 will signify start of correction for 5933 to 6819 move.
The Bullish Flag pattern completed by Nifty(Breakout point 6560) has a target of 6915. This target reains valid till Nifty trades above the 6432 levels. The market has left a Gap at 6413-6403 and according to the GAP theory, this measuring gap has a target of 6880. The market is still consolidating between the upper trendline of rising channel and the upper trendline of Rising wedge. Last week market tried to breach the upper channel trendline but a firm breakout is not seen. If markets rally this week, then it can indicate the follow up buying providing much needed confirmation for breakout. However I still expect market to consolidate till the elections are over.The markets have given breakout of the Ascending triangle on the monthly charts ending the six year consolidation. The market is expected to test the breakout point 6360 sooner or later before resuming its journey towards the target of 10480.
Current rally has started from the low of 5933. Thus a breach of Sensex 19963 and Nifty 5933 will derail the current bullish rally. This week, Nifty managed to remain above the short term average of 20dma (6640), the medium term average of 50dma (6373) and the long term average of 200dma (6079). Thus the trend in the short term, the medium term and the long term timeframe continues to remain bullish.
RSI @73 continues to remain overbought territory for past three weeks. MFI @68 suggests positive money inflow for the market. Stochastic Oscillator %K is in overbought zone and has signaled a Buy as %K is above %D. ADX @44 has become steady and suggests maturing uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Since the Oscillators are in overbought territory, one can expect some weakness in the short term. From investor point of view every dip should be used to buy into the market.
Open Interest Put Call Ratio O.I.PCR for the current month has increased to a level of 1.45 which indicates a bullish bias. Highest Open interest build up is seen at 6700 Put and 6900 Call. This suggests that the market expects a trading range with support coming in at 6700 levels and resistance around 6900 levels.
Infosys seems pretty subdued this time and it is expected to remain so after the results too. Strong support for Infosys is seen at around 3026 levels. Correction will start only if Sensex closes below 22379 and Nifty 6705; till then it remains a buy on decline market.
Stock of the week:
Hexaware Technologies Ltd
The Stock has broken out of a textbook example of bullish Cup & Handle pattern. The Stock can be bought at cmp 170.4 and on subsequent declines till 164 levels. The stoploss should be placed below 160 for the target of 178-184-194.
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