Weekly Nifty For 27th-31st Oct 2014

    The Diwali Dhamaka Started with a bang on Monday with 117 points gap up. With this the market gave breakout of falling wedge with target of 8103. The government's decision of De-allocated Coal Block e-auctioning along with raising Defense FDI limit to 49% & allowing private Indian companies to build defense equipments was real Diwali Fire-cracker. The global markets kept its support and market gained 3%.

    Nifty opened the week at 7857, made a high of 8031, low of 7857 and closed the week at 8014. Thus the Nifty closed the week with a gain of 235 points. The market has formed a big white body candle after three consecutive spinning tops. This is bullish sign. On the daily charts the market has formed a spinning top on Wednesday & Thursday. This is neutral formation, but with high bottoms.

    This week the market gave breakout of falling wedge pattern on the daily charts. The pattern price target lies at 8103 and remains valid as long as the market stays above 7830. The market has already tested the 61.8% of the Fibonacci Retracement of the fall from 8180 to 7722. A decisive close above this level will take the market towards the 8130 levels.

    Nifty had broken down the Rising channel last week formed over last five months. As per this breakout, Nifty is now headed lower towards a potential target of 7381. This pattern target remains intact as long as nifty trades below the 8180 levels. The markets are correcting the upward rally from an intermediate low of 6638 to a high of 8180 and the relevant Correction levels are at 7591-7409-7227.

    On the lower side, there exists a critical Bullish Rising gap on the daily charts between 7598-7592 which aided by an intermediate bottom (7540) and 38.2% Retracement of the intermediate rally (7591), forms a strong confluence zone. Thus this confluence zone formed between 7598-7540 will act as Support Zone.

    Nifty continues has finally broken back abov the medium term average of 50dma (7934) and the short term average of 20dma (7925). However, both the indices continue to remain well above the long term average of 200dma (7128). Thus all the trend in the short and medium term as well as the long term are bullish.

    RSI @52 has moved above the equilibrium line, suggesting fresh buy signal. MFI has also moved above the equilibrium line at 53, suggesting money flowing into the market. ADX has reduced to 18, suggesting a further decrease in the strength of uptrend. Directional Indicators continue in buy mode as +DI @26 has crossed above –DI @24. OBV is in buy mode and has moved above the previous two tops. Bollinger band indicates prices have moved into a neutral territory as the sell signal is negated. Thus Oscillators are suggesting a bullish bias in the short term.

Option data suggests that highest Put Open Interest build-up has shifted from strike of 7800 to strike of 7900 and highest Call build-up is seen at the strike of 8100. Thus Option data suggests short term trading range with support coming in at 7900 and resistance around 8100. On Thursday, 8050 Call has seen strong Open Interest buildup which suggests immediate resistance at the level of 8050.

Stock of The Week:
Larson & Tubro


              The stock has been falling in a channel for past 4 months, has finally broken out on the weekly charts. The pattern target lies at 1800 with the stop loss of 1475. For the short term the stock can be bought at cmp and on fall towards 1520 with the stop loss of 1500 on closing basis for the target of 1583-1600-1627-1644.