This week the main focus remained the First Budget of the Modi Sarkar. The budget focused on the key factors Growth and Fiscal Consolidation. The budget provided focal view of various reforms for improvement of Infrastructure, Manufacturing, Financial, Real Estate and Agriculture sectors. Although the budget provided Strong long term vision but it lacks the detailed description of implementation measures. Many factors from the previous budgets were repeated indicating a lack of clear & definite vision to achieve the targets set.
The markets saw a sharp sell off post the budget, on the expected lines. The Nifty breached its crucial support of 7480-7440. Nifty opened the week at 7780, made a high of 7808, low of 7447 and closed the week at 7459. Thus the Nifty closed the week with a loss of 292 points.
Nifty has completed a Bearish Engulfing on the weekly charts. This is a bearish reversal pattern and suggests that the short term trend has turned down. On the daily charts, Nifty has formed a big black body candle on Friday which is the fourth consecutive bearish candle. Thus daily as well as weekly charts suggest bearishness in the near term.
As a result of this week’s market action, the much awaited Correction has started for the rally from 6628 to 7808 and it will intensify once Nifty closes below 7441. The Fibonacci support levels are 7361-7223-7085 for the Nifty. The 38.2% support at 7361 coincides with the intermediate bottom at 7360, creating a strong support. On a higher timeframe, considering the rally from low of 5933 till 7808 the Fibonacci supports are 7092-6871-6649. Thus we can see that the 7090 levels is strong support. A breach of this will reverse the rally from 5933.
This week, Nifty has completed a Rising Wedge pattern. A bearish breakout was achieved when nifty closed below 7480. This is a leading bearish reversal pattern which suggests that the Nifty is now headed towards a target of 7180.
This week Nifty has closed below the short term average of 20dma (7594). However, it continues to remain above the medium term average of 50dma (7386) and the long term average of 200dma (6549). Thus the trend in the short term timeframe has turned bearish while that in the medium term and the long term timeframe continues to remain up.
RSI @44 also suggests bearish momentum. Stochastic Oscillator also continues in Sell mode as %K is below %D. The MFI also continues to remain below the equilibrium line suggesting negative money flow. OBV has given a Sell signal as it closed below the previous bottom. The Buy signal in Bollinger Band got negated this week when the indices closed below the mean. Interestingly RSI, MACD and MFI are showing negative divergence of the first degree. Thus Oscillators are indicating bearishness in the short term.
Options data suggests that the market is expecting a trading range between 7800 and 7300. Friday saw strong buildup at 7500 Call which indicates strong resistance there.
Stock of the Week:
SBIN
The stock has been consolidating for past 5 week. It has finally broken the range of 2770-2430. The stock can be shorted with the stop loss of 2540 closing basis for the target of 2360-2315- 2250.
The markets saw a sharp sell off post the budget, on the expected lines. The Nifty breached its crucial support of 7480-7440. Nifty opened the week at 7780, made a high of 7808, low of 7447 and closed the week at 7459. Thus the Nifty closed the week with a loss of 292 points.
Nifty has completed a Bearish Engulfing on the weekly charts. This is a bearish reversal pattern and suggests that the short term trend has turned down. On the daily charts, Nifty has formed a big black body candle on Friday which is the fourth consecutive bearish candle. Thus daily as well as weekly charts suggest bearishness in the near term.
As a result of this week’s market action, the much awaited Correction has started for the rally from 6628 to 7808 and it will intensify once Nifty closes below 7441. The Fibonacci support levels are 7361-7223-7085 for the Nifty. The 38.2% support at 7361 coincides with the intermediate bottom at 7360, creating a strong support. On a higher timeframe, considering the rally from low of 5933 till 7808 the Fibonacci supports are 7092-6871-6649. Thus we can see that the 7090 levels is strong support. A breach of this will reverse the rally from 5933.
This week, Nifty has completed a Rising Wedge pattern. A bearish breakout was achieved when nifty closed below 7480. This is a leading bearish reversal pattern which suggests that the Nifty is now headed towards a target of 7180.
This week Nifty has closed below the short term average of 20dma (7594). However, it continues to remain above the medium term average of 50dma (7386) and the long term average of 200dma (6549). Thus the trend in the short term timeframe has turned bearish while that in the medium term and the long term timeframe continues to remain up.
RSI @44 also suggests bearish momentum. Stochastic Oscillator also continues in Sell mode as %K is below %D. The MFI also continues to remain below the equilibrium line suggesting negative money flow. OBV has given a Sell signal as it closed below the previous bottom. The Buy signal in Bollinger Band got negated this week when the indices closed below the mean. Interestingly RSI, MACD and MFI are showing negative divergence of the first degree. Thus Oscillators are indicating bearishness in the short term.
Options data suggests that the market is expecting a trading range between 7800 and 7300. Friday saw strong buildup at 7500 Call which indicates strong resistance there.
Stock of the Week:
SBIN
The stock has been consolidating for past 5 week. It has finally broken the range of 2770-2430. The stock can be shorted with the stop loss of 2540 closing basis for the target of 2360-2315- 2250.
Low of 2366 and then Stop loss triggered
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