Weekly Outlook on Index from 27th Feb-2nd March

Last week I had mentioned ‘expect some resistance near 5640 and concentrate on long side above 5640’. During the entire week NIFTY acted exactly as expected it made a new weekly high of 5630 and then got arrested near the resistance of 5640 and profit booking got initiated.

On the weekly chart of the Sensex the 20 week EMA is rising below the 50 week EMA, also on the daily charts the 50 day SMA is just intercepting the 100 day SMA and a cross above may snatch away the game from the bears. On the downside, the Sensex is likely to get strong support in the range of 17000-17273 zones and the immediate supports are at 17800-17579. A convincing drop below 17000 may end the promising bull market, but as of now the probability seems low.

The technical indicators are still bullish. The MACD is rising above its signal line in positive territory. The ROC is positive and is rising well above its 10 week MA. The RSI has dropped below 70 and seems will drop below 50% mark soon. The slow stochastic is inside its overbought zone, but showing signs of turning down.

On the Nifty index chart, the technical indicators are looking bearish. The MACD is positive, but has crossed below its signal line. The ROC has dropped well below its 10 day MA and is about to enter the negative zone. Both the RSI and the slow stochastic have fallen sharply from their overbought zones.

It seems the correction may continue a bit longer and drop the index towards 5360. NIFTY index had given a major bullish breakout at 5200. Henceforth 5200 is a strong support zone where even the 200 EMA is also present. For the coming week 5400 is very important for NIFTY index if it manages to protect 5360-5400 then we can expect continuation of up-move. However, break below 5360 would drag the Index right down to 5200 which according to me can be considered as a good entry point for fresh buying for those who missed the rally. So keep your cool & calm and try to pick fundamentally strong stocks.

Two big triggers are in the line, the RBI monetary policy and the Union budget. Any positive surprise from the RBI can boost the market sentiments but RBI is facing tough time on rising inflation and the rising oil prices are weighing heavily on inflation. The industries are expecting a CRR cut which can ease the tight liquidity conditions. Now can we expect some positive news or should we think that the market has already rallied in anticipation of these events. Now let’s consider some technical points for this probability.

On looking at the Nifty chart there was a small gap on the chart between 5420-5460 which was closed on Friday 24^th Feb. Now probably this can be taken as another sharp U turn or up move for the time being. Second, the cross-over of the 50 day EMA above the 200 day EMA will confirm the return to a bull market.

Conclusion: The chart patterns of the index appear to correct after a strong rise of new bull market and it may consolidate for some time. Stay invested with stop-loss at 17000-17273 in the Sensex and 5200 in Nifty. Be patient and see how the markets behave and take positions accordingly, don’t try to be over bearish or over bullish.

Stocks to trade for 22nd Feb

Buy bharti with a stop of 351 target 370, Buy Reliance with a stop of 822 target 869, Buy Jswsteel with a stop of 853 target 889 Buy Ongc with a stop of 285 for a target of 301, Buy Ucobank with a stop of 86 for a target of 96.

Bullish & Bearish Stock Patterns

					Bullish Pattern Stocks PP S1 S2 S3 R1 R2 R3 Pattern Reliance 835 822 802 789 856 869 890 Bullish Engulfing Capital 459 448 431 420 476 487 504 Bullish Engulfing Tcs 1227 1214 1192 1179 1250 1263 1285 Bullish Engulfing Yes Bank 363 356 343 336 376 383 396 Bullish Piercing Havells Bullish Piercing Jp associates 84.9 83.5 82.1 80.7 86.3 87.7 89.1 Bullish Harami Polaris 163.7 161 159 157 166 168 170 Bullish Harami Dena 95.5 94.1 92.3 90.9 97.3 98.7 100.5 Bullish Harami Max India 180.9 178.8 175.9 173.8 183.8 185.9 188.8 3 Inside up Tata Communication 238 235 232 229 241 244 247 3 Inside up  Bearish Pattern Stocks Cesc 289 283 279 274 293 298 302 Bearish Engulfing Ster 130 124.8 121 115 133.7 139 142.5 Bearish Engulfing Grasim 2873 2818 2789 2734 2902 2957 2986 Bearish Engulfing Apollo tyre 82.5 80.9 79.5 77.9 83.9 85.5 87 Bearish Harami Tata power 117 112.9 110.4 106.3 119.6 123.7 126.2 Dark cloud cover Canbk 554 545 537 528 562 571 580 Dark cloud cover Abb 887.8 865 852 830 901 923 936 Dark cloud cover Tata Motors 272 268 265 262 275 279 281 3 dark crows Gspl 81.9 79 77.3 74.45 83.5 86.4 88.1 3 dark crows Alok industries 21.4 21.1 20.9 20.6 21.7 22 22.3 3 dark crows Ashokley 29.2 28.8 28.4 28 29.6 30 30.3 3 outside down Exide 137.5 133.8 131.3 127.6 140 144 146.2 3 outside down State trading corp 278 268 264 254 283 293 297 Bearish gap down

Bearish stocks for 22nd feb

Stcindia, Sunpharma, Pfc, Rec, Suntv, Auropharma, Wipro, Aloktext, Hindunilvr, Gspl, Hdfc, Nmdc, Tatamotors.

Bullish stocks for 22nd feb

Indiainfo, Hdfcbank, Idea, Bharti, Hdil, Ongc, Raymond, Relinfra, Tcs, Balramchin, Mcleod, Max, Suzlon, Yesbank, Bajajhind, Heromoto, Albk Gravita.

Weekly Outlook from 21st Feb- 24th Feb

In my previous post I had clearly suggested to keep an eye on 5320-5428 and move beyond this range should be considered as a breakout trade and on 14^th Feb Nifty spot’s precise high was 5428.05. The very next day we witnessed a gap up with nifty rising more than 100 points for the day and rest we all know.

On a closer assessment of both short-term and long-term charts, it was quite clear that indices formed symmetrical triangle reversal patterns for about 4 weeks and past 2 weeks I have been talking about the bullish break out towards 5702. Hope my followers are enjoying the fire work as the Bullish Reversal alert was given when it broke 15 months falling channel by crossing 5200 level.

Now the question is whether this still is a bear market rally or we have entered into a new bull market? Two patterns on the chart of the Sensex suggest that the trend has indeed changed. A rectangular ‘flag’ pattern has formed after the index convincingly crossed above its 200 day EMA indicating an upward target above 20,000 mark and also witnessed a break out above the ‘flag’ with a gap which indicates the strength. So, the rally is likely to continue in spite of the overbought condition. Nifty is following perfect technical levels and moving precisely as per the technical chart. Nevertheless the cross-over of the 50 day EMA above the 200 day EMA will confirm the bull market.

Conclusion: Index made another new high of 5606 and closed the week at 5564. The index chart patterns indicate we have entered into a new bull market. The options build-up in derivatives segment is already giving a strong signal for continuation of this rally in the coming week. Our market has gone up by nearly 20% in just 2 months due to FII inflows. Stock markets move on their own logic so no need for a second guess but remember to trail your stop-losses. If you are holding from lower levels, don’t exit in a hurry just trail your stop-losses and ride the trend. If you have missed the rally, don’t jump now, at some point there should be a decent correction, where one can enter. Expect some resistance near 5640 and cross-over can give an up move till 5907. So concentrate on long side above 5640.

Weekly outlook from 13th feb-17th feb

In my previous weekly report I had mentioned NIFTY has formed a bullish reversal pattern on a technical chart and also mentioned that Nifty will face a resistance at 5440 before it continues further up moves. During the week Nifty faced the resistance exactly around 5440 level. On all 5 days of the week it tried to cross this 5440 mark but could not decisively sustain above. It made a high of 5451 once and at the end of the week also the high was at 5443. The bulls tried their level best to take the indices higher but were held by the bear due to poor IIP numbers and finally it ended in a tie.

After giving bullish reversal pattern Nifty is trying to consolidate in a range of 5300-5400. I consider this as a positive sign as of now as consolidation will help the market to gather strength for further up move. Heavy writing on Put options compared to Call options for February series supports this view.

Nifty on weekly charts has formed a ‘Doji’, indicating a pause and indecision in the current ongoing rally. Nevertheless a 'Doji' by itself does not signify too much, and one should wait for a bearish confirmation in the coming week.

However this was a much required pause, after 5 weeks of uptrend. The entire week Nifty Spot 5320 has not been breached which has now become an important low and aggressive Shorts can be opened if Nifty breaches and closes below this level. On hourly chart Nifty Spot is consolidating in the range of 5320-5428. A move beyond this range can be considered as a breakout trade.

The technical indicators are showing some signs of weakness which can be expected during a period of consolidation. The MACD is positive and above the signal line. The ROC has dropped below its 10 day MA and moving down. The RSI is still inside its overbought zone. The slow stochastic is also inside its overbought zone.

Conclusion: The chart patterns signal signs of uncertainty after a strong rally. That doesn't mean that a correction is going to happen but if it does, the rally may continue for a longer period. Keep an eye on 5320 and 5428 on Nifty Spot. Only a break and close below 5320 we can witness a short term correction.

Outlook of Nifty for 10th feb

Nifty future instant resistance is seen at 5456 and decisive cross over with volumes can target 5473-5488 and then 5498. The support is placed at 5424-5414 , strong support is seen at 5403-5398 and break below can drag nifty to 5357-5340-5332.