Tag Archives: Nifty Weekly Technical Analysis

Does Market is topping out???

First my apology for such a long break, as due to some health issues I was not able to send weekly newsletters, I hope I may able to continue this activity in future. Purpose of writing today is just one email and few phone calls, yes. In the last week I received one email from one of my newsletter subscriber that “Sir, can I go short at these levels?”  Question was simple and straight, and if preferred I would have given answer in one word Yes or No, but I thought let me try to elaborate this answer with some points, and I know that this question is not only in senders mind but most of the traders must be thinking to find the answer. So I am making a small attempt to rationalize my answer, and its upto you whether to buy my idea or not.

I had an opportunity to speak to lot of market participants day in day out, few of them are extremely smart and couple of them are innocent and trades with irrational approach, and thats the reason why market is running, because if everybody starts thinking in same line then from where the equilibrium is going to come. So let me tell you what I hear from them “Sir, I shorted Nifty at 8300 levels can I rollover for next month”, “Boss, look at the PE of Nifty, it is trading near the highs and for sure market is going tocollapse, I am creating shorts, what max higher it can go, please tell me the level?”, there are few “Sir, didn’t get a chance to buy in market, can i buy at current levels, please suggest the stop loss”, “You know I was out of town (one of the excuse), so couldn’t create any longs, but now we’ll not miss the shorting opportunity” (now this guy may have capacity to stand in wrong direction of 100-300 points, but will book profit in just 50 or less than that, but have some emotional log to carry tops and bottoms) , and also there are few forecasters (who also forecast for day-hours-minutes), who are in just search of to call tops and bottoms, there are other who likes to remain contra every time and out of ten even if they go right 2-3 times they remain star of channel. Now after hearing so much diverse opinion few things comes in my mind – firstly, there is strong left out feeling in many retail and I also believe that there are few funds as well whose earlier call was that market is likely to collapse near 8000 levels, so by force this guys are going to work in the market, may be by compulsion or may be due to obsessions. Secondly, there are already few contra shorts seating in the market, earlier their stop loss was 8700 and now may be they must have shifted base to 9100 or 9200 (they believe that market will not go above that). And lastly few turned analyst will argue that market is in overbought territory. This are just psychological aspects which I discussed, there is no concrete aspects to support the idea, just biased notions, herd mentality or something else.

Now let’s check what charts are saying.nifty daily chart

Above is daily chart of Nifty, you can see that Nifty have given breakout from a consolidation almost after a month with rising volume.

nifty weekly chart

One may see on weekly chart, that trend is clearly defined and indicating further surge in weeks to come. So why to doubt at these juncture.

Similarly Bank Nifty weekly chart is poised with bullish bias, however on daily charts it is showing an early signs of exhaustion, but unless we get any confirmation, it is better to stay afloat.

NIFTY & VIX

Above is Nifty and India VIX chart, now one may see that VIX may continue to trade in lower territory and Nifty continue to rise, yes we might see some knee jerk reaction in between, but that is part and parcel of the game. It’s like this when market is in jubilant mode it can stay afloat in overbought territory for a long.

If we see FII’s data they are heavily long in Index futures and at the same time they are taking bullish bets through options, otherwise generally they keep some hedge with options. In the last week we observed that even DII’s are turning buyers in the market, in most of the cases they remain mean reverting player, whenever FII’s are buying they are selling, but this time it is not the case.

Okay, so with above all arguments one may derive few points.

1 – There is strong left out feeling in the market, and this crowd may take wrong position in hesitations.

2- Charts and data is clearly suggesting bullish bias.

3- If market go against this contra crowd then they will take markets further higher, who knows where market goes in short covering.

bears trap1

bear trap2

And like this strory continues…

So, to answer my friends query I would say that don’t try to preempt the markets, stay afloat with existing trend which is bullish. Don’t try to fall in trap with forecasting of tops, at max what you may miss is 100-200 points if at all top is placed or in offing. Can you create fresh long at this juncture, then answer is yes, but very subjective; if you are trader trading with just one lot then please trade with financial stop loss, and if you are positional trader with capacity of more lots than take just 25% of qty what you trade, average on dips with tight stop loss of 8500. As of now charts are suggesting to go short only below 8450-8500 levels…period.

Nifty Weekly Technical Outlook for 28 Dec’15

Merry Christmas..Welcome 2016….

Last two weeks remained action pegged and I was not in position to update due to some personal commitments and also one of the reason that after looking at screen for long-long hours your body starts giving you a red signals, so I took some mandatory leave from watching screen. Rather making it long, lets keep it simple and see how to position ourselves in the coming week.

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NIFTY CHART 24 DEC

Nifty Weekly Technical Outlook for 30 Nov’15

Don’t be Intolerant in stock market…

Over the time people build preferences and they never realizes that when their preferences turned prejudices, rigidity or stubbornness. Similarly in the stock market people would like to call them as Hardcore Bull or Bear, in hindi we call them as Tejiwale & Mandiwale, like my friends call me hardcore bull. How these prejudices build over a time is the topic to discuss at a length, but over the time I understood that, as a trader or even as a research analyst you should not be biased by any particular view, at all the time you need to remain objective, that does not mean that you should not have a view, but acceptance of change is very much essential, and if we put it in today’s perspective then you should not be Intolerant with changing dynamics of stock market.

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weekly technical view of Nifty 30 Nov'15

Nifty Weekly Technical Outlook for 23 Nov’15

nifty view 23 nov'15

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Nifty Weekly Technical Outlook for 02 Nov’15

Tough challenge for small time traders…

From last Friday NSE has increased the lot size of most of the contracts, resultant we need to pay higher margin then what we use to pay. Still I don’t understand what is the logic behind increasing the lot size of Nifty from 25 to 75 (not 50 which was earlier when Nifty was trading near 6000-7000 levels). I feel it’s one of Freebie marketing strategy of NSE, wherein once trader get used to with trading in Nifty, now by force they are asked to pay higher margin or stay away. I was talking with couple of my trader friends and they are really feeling the pain of such move, and at the same time if we see condition of brokers (which is deteriorating day by day), they are further tensed about the business. There are some pros as well, where overleveraged positions by default will remain in control. Anyway, we need to stay in market and will be dictated not only by market movement but by this regulators as well. Lets analyze how to approach market in this week.

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weekly range of nifty

The week passed by…

It was disappointing week for longs and shorts must have enjoyed the ride, as in all five days markets closed in red. At the same time it was really tough time for intraday traders as market corrected but if we see Intraday opportunity remained almost nil, one need to carry the position then and then only one would have made money. Week on week basis Nifty was down by almost 230 points.

  • Technically once again Nifty drift below its 200-DEMA, which is not so healthy sign, and expected Golden crossover of its 50-DEMA also came to halt for now.
  • Nifty retraced almost 38% of rally started from 7540 level to 8336 level, if fails to hold here then 62% retracement support comes near 7850 levels.
  • NF has filled the gap of 8060-8225 and closed above it, and on moving above weekly high, it will target for another unfilled gap near 8322-8360 levels.
  • As depicted in attached chart 14-period RSI has trendline support above 40-level, lets see whether falling momentum got arrested or not.
  • In the last week biggest surprise or disappointment came in from AXISBANK, so as BANKNIFTY which dragged the market lower. However chart structure of BNF and NF remains moreover same.
  • Barring CNXPHARMA most of the Indices gave up their gains, while CNX PHARMA managed to hold little bit, so one may expect some positive momentum in the coming week, which may be used for Index rebalancing.

Derivative Insights

  • In the month of October FII’s have infused almost 3000 crore of capital, whereas DII’s remained net seller to the same tune if we just exclude last Friday’s buying which 1560 crore, so DII’s sold 1509 crore. The game changed in last week of the month were FII’s taken out 1289 crores from the market otherwise their net figure would have been much larger.
  • Week on week basis FII’s have not only reduced long & short position in Index  future but also in options as well.
  • I think FII’s data in respect to Index & Options needs to be reviewed in the coming week, because change in lot size needs to be adjusted. So we’ll be keeping watch over next week.

Last week’s reviewIn the last week I had not released the report but let me put previous week’s commentary here- allow NF to hold and sustain above 8250, if it does then stay put with long position and target for 8325-8350 levels.. area of confluence between 8350-8400, and my anticipation is that, this area will not be taken out so easily, so in the first go I would prefer to take the profit on table, and then evaluate for next move.

Current chart structure indicates underlying weakness, and again Bihar Election result will remain in focus. Nonetheless, immediate support for Nifty is placed at 8025-8050 levels which happens to be 38% retracement of last up move and where again NF will get some psychological support as well. What if it’s taken out, then I will be watching for 7850 to 7720 area. Look for long position if NF sustains above 8120 levels and again game changes on close above 8250 levels. As supports are placed near to current level, I don’t find lucrative to go short in the market, look for short on closing or sustenance below 8000 mark, keeping stop loss near 8050. At the same time long only above 8120.

Nifty Weekly Technical Outlook for 19 Oct’15

Nifty above its major average…

After almost fourty days of dilemma once again market is pouring hope in to the minds of trader. You must be thinking why I am writing this-yesterday one of my friend called me to confirm my view, first question was are we ready to for new highs?  And I was little shocked, and he gave one another shock is it possible by January or max by February? I understood that he is not asking, but he is conveying his own view, and I answered him what is your gut feeling, he said it is very much possible. In the hindsight I was thinking that just few days back traders were searching reasons of collapse, then what can come to rescue the fall, after stoppage again hope of revival and reasons to push the market higher. Its not the objective way, I think right way to approach the market, should always be focus on next possible area of confluence or area of least resistance. In this weekly report we’ll analyze and see how to approach the market, and stay on the right side.

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19 oct weekly outlook

The week passed by…

  • In the first three trading session momentum was appearing slightly bleak, however by Thursday & Friday wings turn on other side, and scenario start appearing optimistic. Week on week basis Nifty closed with gains of 48 points and formed candle Hanging man, essentially it tells us buying interest at lower levels, but at the same time we should take little caution as well.
  • Finally, NF closed above its major 200-DEMA after 36 trading sessions, which gives me little hope of recovery, and also 50 & 21-DEMA (8060-8080) is placed at lower levels to support the price on any minor correction.
  • NF has filled the gap of 8060-8225 and closed above it, and on moving above weekly high, it will target for another unfilled gap near 8322-8360 levels.
  • Amongst the oscillators 14-period RSI is exhibiting strength, however I need furthermore confirmation from it, but as of now flow suggest bullish bias.
  • As depicted in attached, while drawing trendline from swing highs, we get two lines which and that is the area where NF is going to face utmost resistance, because this is the area above which underlying negativity may cooled-off and NF targets for higher levels.
  • Among other Indices, Bank Nifty appears to be prepared for next leg of rally, and chart structure of NF & BNF looks similar.
  • On Friday CNXAUTO has formed Star candle and now we need to see whether it turns out to be a Evening star, so keep watch of Monday’s closing, otherwise setup appears to be decent enough.
  • CNXIT disappointed the participants, or lets put it in right sense, major IT companies had disappointed market participants or Research Analyst community. Here once again I remember Ace Fund managers tweet

  • CNXMETAL after a flurry move in earlier week, turned quite in last week. So once again, better to take profits on the table, and wait for next move.
  • Keep watch on CNXMIDCAP, as such in last week was not much happening here, but it seems that next week can be action pegged here.
  • Structurally CNXPHARMA is forming Ascending Triangle kind of a formation, but mind you it is not always necessary that breakout comes on the upside only, it can come either side. To turn bullish wait for 13400 to cross.

Derivative Insights

  • Till date FII’s have infused more than 3100 crore of capital, whereas in just single day (Thusday) DII’s bought to the tune of 2744.55 and now for the month they stand at 2300 crore (sheer jump from negative to positive)
  • Week on week basis FII’s have cut there long position to the tune of 59386 contracts and to similar extent shorts are build 50932 contracts. It seems that institutions have done some profit booking or reduced their position to tune of 1452 crores.
  • Interestingly if we observe Options build-up of FII’s only, then they are long call options 91213 contracts and Put longs are reduced by 61934 contracts. At the same time they have unwound call shorts are build by 89469, while 46021 Put contracts are short build. Above points indicates little cautiousness, like last week FII’s are not very bullish on the market.

Last week’s review – I expect in this week markets are likely to remain highly volatile, as nobody will turn out to be clear winner. Level specific, NF on sustaining above 8225 will target of 8325 levels and may be it can target for 8390-8400, but sustenance near this level is a big challenge. On the downside supports are placed near 8100, and till NF holds above this level, I prefer to stay long if at all it corrects below 8000 then one think to create shorts, between 8100-8000 is neutral zone..  Weekly low for the NF was 8088.60.

As on Friday NF stands at 8238 and weekly high is 8246.40. On the top I had clearly mentioned that weekly candle suggest little cautiousness, so it is better to turn little skeptical, and allow NF to hold and sustain above 8250, if it does then stay put with long position and target for 8325-8350 levels, and if fails to do so then allow for some retracement upto  8150-8130, where one may take some risk and go long keeping stop loss below 8080.

In the attached chart I market big circle which is area of confluence between 8350-8400, and my anticipation is that, this area will not be taken out so easily, so in the first go I would prefer to take the profit on table, and then evaluate for next move.

Nifty Weekly Technical Outlook for 21 Sept’15

In what state of mind market is??

Finally Fed decided to keep rates unchanged, so quandary does not end here, it keeps on going, now again after few days market will start speculating on it, but I think nonetheless this factor is already discounted. Coming on to our markets now we are speculating on RBI’s stance, whether they reduce the rate or not, and looking at price action it seems that traders are already betting heavily on interest rate sensitive stocks, and now waiting for things to actually take place. Our markets are on the path of maturing, but still it lacks liquidity & confidence. In the coming week expiry is lined up and speculation regarding rate cut, so how to position ourself in such a situation, lets analyze the facts and come to a conclusion. To read full report you need to Register here (it’s free) and if you are already registered then there no need to register again, you’ll shortly receive newsletter.

outlook on nifty for 21 sept onwards