CREALTH NIFTY VIEW
Nifty closed at 10681 at all time high which has been the trend in recent times. Nifty had formed a descending channel pattern and had given a breakout of it on the day of the Gujarat election results as it closed above 10375. The target of the channel breakout was 10700 which was almost achieved last day. Hence now we expect fresh rally only above 10700 as the pattern target will end as a strong resistance.
Gyan Word – Descending Channel Pattern
A descending channel or downtrend is the price action contained between two downward sloping parallel lines. Lower pivot highs and lower pivot lows are a bearish signal. In a downtrend, a trade might be entered at the trendline and exited at the channel line. A lower low below a descending channel can signal continuation. A higher high above the low of an ascending channel can signal trend change.
CREALTH SECTORIAL VIEW
Bank Nifty is facing strong resistance at 25750-25800 as the highest OI build up is at 25800 and 25900 CE. Though Bank Nifty has bounced back from 25200 which will act as a strong support. Once Bank Nifty closes above 25800 it can move upto 26300-26400 which is the next resistance. On the downside if Bank Nifty closes below 25200 then it would be signs of worry and it can move down to 24700-24600.
Nifty IT, Nifty Pharma, Nifty FMCG are the three other sectors which looks good as they include many good heavyweights which were underperformers of 2017. As Nifty Mid Cap, Small Cap index has lead the last rally hence it better to invest/rely on heavyweights rather than small, mid caps as any correction in global markets will be badly affecting the above two indices.
STOCK SPECIFIC VIEW
Bullish Stocks – NMDC.
NMDC has given a V Pattern breakout on weekly charts. 148-150 was a strong resistance zone which it had tested 2-3 times in the past few years but couldn’t give closing above it. This time it has been able to give a weekly closing above 150 with huge volume and Open interest buildup with bullish crossover on momentum indicators which confirms the breakout.
We expect a 10-15% upside from current levels in 45-60 days as per the charts. Anyone investing/trading in it should maintain a closing basis sl of 147. As it has rallied a bit in last few days hence it may consolidate first before the fresh rally starts.
Bearish Stocks – No one.
CREALTH SUGGESTION TO TRADERS & INVESTORS
Our suggestion to all traders is to book profits and avoid long in Nifty and Bank Nifty with until and unless 10720 or 25800 is broken on closing basis. If anyone wants to short then it is advisable to do it only below 10590 as 10600 PE has the highest OI build-up. We expect some profit booking to come around 10710-10720. Our suggestion to investors is to keep booking profits in high beta stocks and buy quality stocks like ITC, Tata Motors which are undervalued at cmp and has not participated in the rally of 2017.
Disclaimer – All the above writings are our own technical view, research and not a recommendation to buy/sell! We are not Sebi registered Investment Advisers. Our clients may have position in the above mentioned stocks. We are not liable for any profit/losses. Every person should do their own research before investing/trading or consult your financial adviser.
Note: The article/calls and advice are subject to caveats. Postman News doesn’t bear any losses on these advices as such.