Last week nifty on weekly chart made bearish engulfing pattern and as expected selling was seen throughout the week. NIFTY showed a 78.6% retracement of last rise from 16410 to 18350.
While nifty is trading in falling channel as shown in image, earlier resistance line now acting as support line , according to above study 16750 should act as a strong support, if 16750 is broken then next support lies at 15600-15500 levels.
On Friday after opening sharply higher at 17,208 the Nifty rallied to the day’s high of 17,373 but wiped out the gains in the afternoon sinking to 17,077. It closed with an 8.2 points loss at 17,102.
The Nifty50 registered a Shooting Star kind of formation on weekly charts with a long upper shadow hinting that pull-back attempt from the lows of 16,836 to a recent high of 17,794 levels is weakening. Moreover, despite the recent upsurge, most of the momentum indicators remained in the sell mode.
This seems to be the lowest close of the current leg of downswing despite the last three sessions of pull-back attempts from the recent lows of 16,836.
If the bulls manage to defend 17,100 and push the index above 17,373 then the consolidation zone can remain between 17,600 and 16,900. After a long time, the Nifty closed below the 50-day SMA and has also formed a bearish candle on weekly charts, which suggests negative move for the markets.
For the bulls, 17300 would be the important breakout level to watch and if the Nifty manages to close above the same, we could expect continuation of an uptrend wave up to 17450-17550 levels. On the flip side, trading below 17000 may trigger further weakness up to 16800-16700.
On Friday, Bank Nifty opened sharply higher at 38,246.60 and climbed to 38,421.70 but erased gains in the afternoon to test the day’s low of 37,581.50. It closed 292.70 points lower at 37,689.40 and formed a bearish candle on the daily chart. On daily chart the key pivot levels are 37360 acting as support and 39250 acting as resistance.
On the weekly scale, the index, which gained 0.3 percent during the week, formed a Doji candle, indicating indecisiveness among the bulls and the bears. Key pivot levels to watch are 38284 is resistance and 36000 is acting as support on weekly chart.
However, there was a bullish candle formation on the weekly frame, as it gained 2.9 percent during the “Now if it sustains below 38,850, weakness could be seen towards 38,500 and 38,250, whereas, hurdles exist at 39,250 and 39,500 levels.
Now the Bank Nifty has to hold above 37,500 levels for an up move towards 38,000 and 38,250 whereas support can be seen at 37,250 and 37,000 levels. On the stock front a bullish setup was seen in LIC Housing Finance, Can Fin Homes, Maruti, Canara Bank, Bata India, IRCTC, NTPC, United Breweries, Container Corporation, NALCO, ONGC, UPL, Sun Pharma and Cipla, etc.
Weakness was seen in TVS Motor, BHEL, Tech Mahindra, Voltas, Hero MotoCorp, Bajaj Finserv, HDFC Bank, Dr Reddy’s Labs, InterGlobe Aviation and Havells.
1. Technically, daily chart suggest that after a decent correction stock has shown a pullback rally suggesting potential up move.
2. Weekly chart suggest that stock is well place above 20 DMA.
3. Momentum indicator RSI is showing a positive cross over indicates strength.
4. On weekly chart the prices have given a breakout from the Symmetrical Triangle formed as shown in the chart image; which suggests a possible up-move of 240 points (Height of the Triangle) in coming months. So target for Biocon may be Rs. 600 (360+240).
The majority of the indices saw a negative week. The IT index was top loser while PSU Bank Index was the top gainer as far as indices are concerned. We see further gains in the PSU Bank sector in future.
Team Arthvidya Wealth Mantra
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