India markets literally saw the fireworks on the Election Result day. The markets rallied almost 7% on the D-day itself. However once the Euphoria of single sided sweep for BJP ended the markets came down to the 7200 levels from the highs of 7563. Mr. Narendra Modi has made history with clear majority to a single party in the parliament for the first time in past 30 years. The people of India have entrusted Mr. Modi with a great responsibility, now he has to deliver on this trust. The battle to put India
back on the robust Growth trajectory along with tackling other sensitive issues like
subsidy sharing lay ahead of the new government.
Nifty opened the week at 6863, made a high of 7563, low of 6862 and closed the week at 7203.
Thus the Nifty closed the week with a gain of 345 points i.e 4.79%. According to the basic principles of technical analysis “Price discounts everything” was depicted on
Friday. On Friday Nifty formed a small black body Spinning Top with a very long upper
shadow. Long upper shadow was a result of Buy on rumors Sell on News.
Nifty have formed a big Opening White
body Marubuzo with a long upper shadow on the weekly charts. The long upper
shadow indicates profit booking witnessed at higher levels. Whenever such
formations happen, trend remains intact but the price tends to consolidate in
the range of the upper shadow. However the immediate bias remains positive.
Nifty completed a Bullish Flag pattern on
daily charts, which has a target of 7706. Interestingly, both the index also completed a Flag
pattern on the weekly charts as well and the target as per that is 7805.
Market has left behind a Bullish Rising Gap on Tuesday between 7067-7020, which will act as strong support. As per Gap theory the target was at 7450 which was achieved on Friday itself. However a stronger
support zone exists between 6665-6650 which
has been tested successfully many times before, without getting breached and
hence the current uptrend will reverse only if this support zone gets breached.
When the market overcame the
previous top and made fresh lifetime highs, it marked the end of six year consolidation.
On the weekly charts Nifty have completed a Bullish Saucer
formation and the targets as per
that will fall at
7454 on the lower side and 8145 on the higher side.
The targets are likely to be achieved over a period of next 20 months. Current rally has started from a
low of 5933. Hence a breach of this level will reverse the current long term bullish rally.
Nifty are way
above the short term average of 20dma (6836), the medium
term average of 50dma (6681) and the long term
average of 200dma (6179). Thus the trend in the short term, medium term and the long term timeframe continues
to remain bullish.
RSI @78 continues to remain overbought
since Monday. MFI @51 has just crossed the centerline from below giving a
fresh Buy, suggesting positive money flow for the market. Stochastic Oscillator is in Sell mode
as %K has gone below %D. ADX @34
suggesting that the Uptrend is now stronger. The Directional Indicators continue
with their Buy signal as +DI is well above -DI. OBV too has started moving
higher and has crossed previous top. Buy signal continues on Bollinger Band
since Monday. Thus Oscillators are suggesting
a positive bias in the near term.
Volatility Index India VIX,
crashed by 33% from almost 37 levels to a low of 21 before closing at around
24. Nifty option data suggest high Put writing at the strike of 7000 and
strong Call writing at the strike of 7500. Thus one can expect a short term range of the market between
Nifty 7000 and 7500.
Stock of the week:
The stock ha given a break out of Cup and Handle pattern on the weekly charts on very high volumes. The target for which lies at 1290. The RSI has also given a Inverted Head & shoulders pattern break out. Thus reaffirming the buy signal. The stock can be bought for the target of 1187-1218 with the stop loss of 1160.
Stock of the week:
Aditya Birla Nuvo Limited
High of 1285 on Tuesday
ReplyDelete