The market has started the per-budget rally. The Bulls took market by horn as the market closed for the week at record highs, completing a Bullish Flag pattern. The market has high expectations from the first ever budget from the Modi Government. This government has been projecting a pro industry image from the start. At the same time it has to tackle the monsters of falling growth, rising inflation, depreciating currency. The budget must find a balance between the dos and don't s. A dent to market expectations can set the market tumbling downhill and there can be a sharp sell off.
Nifty opened the week at 7534, made a high of 7758, low of 7531 and closed the week at 7751. Thus the Nifty closed the week with a gain of 243 points. The Mat Hold pattern was completed when the index formed a big Opening White body Marubuzo which closed above the high of the previous three weeks i.e.7700. Mat Hold is a Bullish Continuation pattern where the previous three weeks were spent in consolidating and this week’s big white body candle indicates that the prior uptrend has now resumed. On the daily charts the index has formed a white body candle with a long lower shadow which indicates buying at lower levels. Thus daily as well as weekly formations point towards a strong bullish bias in the near term.
The market took support at the short term moving average of 20dma before bouncing back. It has left behind a bullish Rising Gap between 7677-7649. This gap will act as a Support Zone. This gap was tested on Friday, when Nifty took support at this gap before bouncing back. A breach of this gap will take market towards the second gap at 7441.
When the index closed above its previous tops of 7700, it has completed a Bullish Flag pattern on the weekly charts, which is a bullish continuation pattern. The target as per this pattern is expected to be around 8282. The targets are likely to be achieved as long as the Nifty stays above 7441.
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 has completed a Bullish Saucer formation and the target as per that is 8145.
Nifty has managed to overcome the short term average of 20dma (7599). It continue to remain well above the medium term average of 50dma (7298) and the long term average of 200dma (6507). Thus the trend in the short term has turned bullish while that in the medium term and the long term timeframe continues to remain up.
RSI at 69 suggests that the bullish momentum is very strong. Stochastic Oscillator continues in Buy mode as %K is above %D. MFI is at 47 has increased somewhat but is still below the equilibrium line, suggesting that there is negative money flow. OBV has started moving higher but is yet to cross the previous top. The Directional Indicators continue in Buy mode as +DI is above –DI but they are converging. A fresh Buy signal got generated on Bollinger Band when the Nifty closed above the upper Bollinger Band on Wednesday. ADX has dropped slightly and is now at a level of 40 which suggests that the strength of the current uptrend is still high. Thus most Momentum Oscillators have turned positive.
Highest Call writing is seen at the strike of 8000 and highest Put writing is seen at the strike of 7500. Thus the market is expecting a trading range between 7500 and 8000. Friday saw strong buildup at 8200 Call and 7400 Put suggesting that in the short term we may see an expansion in trading range and thus one can expect an increase in Volatility. Thus India VIX, which is still at a low level of around 18, is expected to increase till the budget. If it closes above 22, it will lead to breakout and will pave the way towards 28.
Stock Of the Week:
OFSS
The stock has been trading in a falling channel as shown above. It has given break out on the weekly charts. The pattern target lies at 3600 with the stop loss of 3000. The stock took resistance near the 3365 level last week. The RSI is also near the 60% resistance level. Thus buy the stock on declines till the 3150 level for the short term target of 3275-3365-3425 with the stop loss of 3130 on closing basis.
Nifty opened the week at 7534, made a high of 7758, low of 7531 and closed the week at 7751. Thus the Nifty closed the week with a gain of 243 points. The Mat Hold pattern was completed when the index formed a big Opening White body Marubuzo which closed above the high of the previous three weeks i.e.7700. Mat Hold is a Bullish Continuation pattern where the previous three weeks were spent in consolidating and this week’s big white body candle indicates that the prior uptrend has now resumed. On the daily charts the index has formed a white body candle with a long lower shadow which indicates buying at lower levels. Thus daily as well as weekly formations point towards a strong bullish bias in the near term.
The market took support at the short term moving average of 20dma before bouncing back. It has left behind a bullish Rising Gap between 7677-7649. This gap will act as a Support Zone. This gap was tested on Friday, when Nifty took support at this gap before bouncing back. A breach of this gap will take market towards the second gap at 7441.
When the index closed above its previous tops of 7700, it has completed a Bullish Flag pattern on the weekly charts, which is a bullish continuation pattern. The target as per this pattern is expected to be around 8282. The targets are likely to be achieved as long as the Nifty stays above 7441.
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 has completed a Bullish Saucer formation and the target as per that is 8145.
Nifty has managed to overcome the short term average of 20dma (7599). It continue to remain well above the medium term average of 50dma (7298) and the long term average of 200dma (6507). Thus the trend in the short term has turned bullish while that in the medium term and the long term timeframe continues to remain up.
RSI at 69 suggests that the bullish momentum is very strong. Stochastic Oscillator continues in Buy mode as %K is above %D. MFI is at 47 has increased somewhat but is still below the equilibrium line, suggesting that there is negative money flow. OBV has started moving higher but is yet to cross the previous top. The Directional Indicators continue in Buy mode as +DI is above –DI but they are converging. A fresh Buy signal got generated on Bollinger Band when the Nifty closed above the upper Bollinger Band on Wednesday. ADX has dropped slightly and is now at a level of 40 which suggests that the strength of the current uptrend is still high. Thus most Momentum Oscillators have turned positive.
Highest Call writing is seen at the strike of 8000 and highest Put writing is seen at the strike of 7500. Thus the market is expecting a trading range between 7500 and 8000. Friday saw strong buildup at 8200 Call and 7400 Put suggesting that in the short term we may see an expansion in trading range and thus one can expect an increase in Volatility. Thus India VIX, which is still at a low level of around 18, is expected to increase till the budget. If it closes above 22, it will lead to breakout and will pave the way towards 28.
Stock Of the Week:
OFSS
The stock has been trading in a falling channel as shown above. It has given break out on the weekly charts. The pattern target lies at 3600 with the stop loss of 3000. The stock took resistance near the 3365 level last week. The RSI is also near the 60% resistance level. Thus buy the stock on declines till the 3150 level for the short term target of 3275-3365-3425 with the stop loss of 3130 on closing basis.
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