The market remained remained volatile but within the range 7840-8050. The RBI credit policy on Tuesday can be treated as a non event. The Supreme court verdict out on the coal block allocation, many main stream companies are facing the brunt of the deallocation of their coal blocks. Till the time a new transperent policy for the reallocation of these coal blocks in not out, the market is likely to range bound with negative bias.
Nifty opened the week at 7978, made a high of 8030, low of 7923 and closed the week at 7945. Thus the Nifty closed the week with a loss of 23 points. Both the daily and weekly charts have formed small black body candles in line with the short term bearishness.
In the immediate term, the markets are correcting the upward rally from an immediate low of 7540 to a high of 8180 and the relevant Correction levels are at 7935-7860-7784. Last week both the indices managed to bounce back after taking support at the 50% Retracement level. The market also managed to achieve the target of rising channel breakdown at 7840.
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. The short term trend for the market is already down but the medium term trend is likely to reverse if the Nifty closes below 7540 and Sensex below 25232. The market has already achieved the Rounding bottom target of 8145. Now it is headed towards next target which is Flag pattern target. The target for this pattern is at 8304. The targets will be achieved as long as the Nifty remains above 7855.
This week, Nifty has managed to remain above the medium term average of 50dma (7904), but continues to remain below the short term average of 20dma (8044). It however remains well above the long term average of 200dma (7037). Thus the trend in the short term remains down, whereas the trend in the medium term and long term timeframe continues to remain bullish.
RSI continues to remain below the equilibrium line at 46, suggesting bearish momentum. MFI even though has moved higher but still remains below the centerline and is at 43, suggesting money flowing out. ADX has reduced further to 22, suggesting a further decrease in the strength of uptrend. Directional Indicators continue in Sell mode as +DI remains below –DI. OBV continues in sideways mode but is yet to make a lower bottom. Bollinger band continues with its Sell signal given last week. Thus Oscillators are suggesting a bearish bias in the short term.
Option data suggests that highest Put Open Interest build-up is at the strike of 7800 and highest Call build-up is seen at the strike of 8200. Thus Option data suggests short term trading range with support coming in at 7800 and resistance around 8200. On Friday, 7500 Put has seen strong Open Interest buildup which suggests next strong support below the level of 7800.
Stock of The Week
Infosys.
The Stock has been given a breakout of rounding bottom pattern on the daily charts. The pattern target lies at 4750 level with the stop loss of 3600 on closing basis. For the short term the stock can be bought with the target of 3867-3935-3975-4000 with the stop loss of 3788.
Nifty opened the week at 7978, made a high of 8030, low of 7923 and closed the week at 7945. Thus the Nifty closed the week with a loss of 23 points. Both the daily and weekly charts have formed small black body candles in line with the short term bearishness.
In the immediate term, the markets are correcting the upward rally from an immediate low of 7540 to a high of 8180 and the relevant Correction levels are at 7935-7860-7784. Last week both the indices managed to bounce back after taking support at the 50% Retracement level. The market also managed to achieve the target of rising channel breakdown at 7840.
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. The short term trend for the market is already down but the medium term trend is likely to reverse if the Nifty closes below 7540 and Sensex below 25232. The market has already achieved the Rounding bottom target of 8145. Now it is headed towards next target which is Flag pattern target. The target for this pattern is at 8304. The targets will be achieved as long as the Nifty remains above 7855.
This week, Nifty has managed to remain above the medium term average of 50dma (7904), but continues to remain below the short term average of 20dma (8044). It however remains well above the long term average of 200dma (7037). Thus the trend in the short term remains down, whereas the trend in the medium term and long term timeframe continues to remain bullish.
RSI continues to remain below the equilibrium line at 46, suggesting bearish momentum. MFI even though has moved higher but still remains below the centerline and is at 43, suggesting money flowing out. ADX has reduced further to 22, suggesting a further decrease in the strength of uptrend. Directional Indicators continue in Sell mode as +DI remains below –DI. OBV continues in sideways mode but is yet to make a lower bottom. Bollinger band continues with its Sell signal given last week. Thus Oscillators are suggesting a bearish bias in the short term.
Option data suggests that highest Put Open Interest build-up is at the strike of 7800 and highest Call build-up is seen at the strike of 8200. Thus Option data suggests short term trading range with support coming in at 7800 and resistance around 8200. On Friday, 7500 Put has seen strong Open Interest buildup which suggests next strong support below the level of 7800.
Stock of The Week
Infosys.
The Stock has been given a breakout of rounding bottom pattern on the daily charts. The pattern target lies at 4750 level with the stop loss of 3600 on closing basis. For the short term the stock can be bought with the target of 3867-3935-3975-4000 with the stop loss of 3788.
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