Nifty (11752)- Stay Invested, Buy All Declines

18th April 2019
lfspms
Business, Plans
No Comments

Nifty (11752)- Stay Invested, Buy All Declines

After three‐months of sideways move in the month of March Nifty witnessed a massive move of 850 points (7.8%) and closed near the all time highs (11760) at 11623. The rally was supported by heavyweights like Reliance, ICICI bank , SBI, HDFC twins and other Financial and Banking stocks. Since the beginning of April month, Nifty has found some resistance around previous highs and moved sideways in small range of 200 points between 11750 and 11550. This week finally it made a new all time high of 11856 and gave a highest ever weekly close of 11752.

The short‐term trend for Nifty is still bullish, however its is currently placed near the supply line of the ,“Up Sloping Trend Channels” (Red and Blue), which is in force since Nifty touched a low of 10004 in Oct’18, as shown in the above chart. There are multiple resistances working in the range of 10800 and 10950 (shown in charts as extension levels of current move from the lows of 10585). The daily RSI is also showing negative divergence on charts. This suggest that in coming days, Nifty might trade with positive bias amid high volatility. Until, Nifty breaks 1950 level, It will remain largely range bound between 11700 and 11950.

A decisive break of 11950 will see the bulls once again taking control and then Nifty could rally towards 12100+ levels in current series itself. On the downside, Important support for Nifty is 11700 while 11550 is crucial support for current uptrend to remain intact.

Weekly Analysis

The following chart is weekly chart of Nifty since 2009 lows. In this chart we can see that once the Nifty witnesses a massive bull rally, it corrects for a period of almost a year or so and then once again starts climbing up. We can see in the above chart, that once the Nifty successfully negotiates the previous peak and trades above the previous high of weekly “Bollinger Band”, it starts a fresh Upmove. In the past we have seen two such instances 1) 2600 points rally after crossing 6500 resistance zone in March 2014 (from 6500 to 9100) and then 2) again 2100‐2600 points Upmove after moving beyond 9100 levels in March 2017 (from 9100 to 11200 and then 11700).

Based on this past behaviour of Nifty, we can assume that once the Nifty crosses 11900‐12000 zone decisively, we will enter into another massive rally in Nifty. On the upside, we find two major target 13600 and then 14600 by adding 2600 points in previous to peaks of BB @ 11000 (Feb’18) and 12000 (Oct’ 18). However for this bullish argument it is important for Nifty, not only to move beyond 12000 levels but also to sustain above 11700 levels in case of any corrective decline after 12000+ levels are achieved on weekly charts.

Monthly Analysis

The following chart is Monthly charts of Nifty since 200 lows. As we can see, Nifty is trading in “Up sloping trend channel” since Oct 2008, connecting the lows of 2552 and 4888. The monthly chart shows that Nifty is currently facing resistance from the purple supply line of the channel. For current month this supply line is placed around 12200 levels.

In the above monthly chart, Nifty is making a similar pattern as it did between May‐06 and Aug‐07. During that period, we can see that Nifty consolidated with upwards bias for 15‐months and then finally gave a bullish breakout and rallied massively from 4400 to 6300 in next 5‐months. This time again Nifty is making similar pattern and currently 15th month is in progress. In coming months, if we register a breakout from purple supply line, we could then observe a similar massive rally in Nifty in coming few months. Once this supply line is decisively broken, Nifty will then rally towards the blue supply line (Currently placed round 13700 levels). On the downside, 11500‐11200 is major Support zone on Nifty and till these supports are not broken decisively medium‐term trend will remain bullish.

SHORT TERM VIEW (2‐4 weeks):

In the short term, we expect Nifty to rally towards 12100‐12200 zone, once 11900‐11950 levels are taken decisively. 11600‐11550 has now become an important support for short‐term only a breach of this support will witness further sell-off in Nifty & then it could slide towards its medium term support of 11300‐11150 zone.

We advise short‐term trades to buy Nifty and maintain a stop loss of 11550, (on weekly closing price) with short term price target of 12100‐12200.

MEDIUM TERM VIEWS (3‐6 Months):

We expect Nifty to rally higher in coming months. On Upside, 12100 – 12200 is a major supply zone for Nifty and once this supply is absorbed we will witness a sharp rally in markets and Nifty could then rally towards 13700 levels by end of this year.

We advise Positional Trades to buy Nifty now on all declines towards 11550 levels for medium term price target of 13700 , with a stop loss of 11100(On Monthly closing Price).

DISCLAIMER:

This document is not for public distribution and has been furnished solely for your information and may not be reproduced or redistributed to any other person. The manner of circulation and distribution of this document may be restricted by law or regulation in certain countries, including the United States. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions. This material is for the personal information of the authorised recipient, and we are not soliciting any action based upon it. Neither LFS Broking Pvt. Ltd, nor any person connected with it, accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Please read the Statement of Additional Information and Scheme Information document before investing.

Tags: Awards, Marketing plan

Author: lfspms