LFS PMS > Research > History > Nifty (11407) – MODI 2.0…??.. 13500+??
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Nifty (11407) - MODI 2.0…??.. 13500+??

Since our last report published on 5th May 2019, Nifty is witnessing high volatility. During the fortnight, the index saw a sharp selloff from 11657 highs, during which, it broke the important support of 11550 and slipped to a low of 11108 (a fall of almost 500 points from its highs). Such sell off in Index was expected, once the important support of 11550 was broken, as the index spent the entire April month sideways between 11550 and 11850 range.

We had mentioned in our last report that once Nifty breaks 11550 , short term traders should exit their long positions on Nifty, as Nifty could then slide towards 11150‐11300 range sharply. The index touched a low of 11108 during the fortnight, but in the second half of the fortnight it recovered some of its lost ground and managed to climb up, ending the week at 14000+ levels.

Before entering into the crucial week of “Election Results” the Nifty is placed in the middle of the long term trading range between 11000 and 11900. The “Exit Poll” followed by “Final Results” on 23rd May will see the Nifty largely trading in this broad range in the “First week of the Fortnight”.

Weekly Analysis

Coming week is very crucial for the Nifty, as the outcome of the “General Election” will decide the future trend for Nifty, not only for the days ahead but also for the months ahead. A favourable outcome for the ruling alliance will give bulls a reason to breakaway Nifty from its all time highs (11857) and rally towards 12000‐12100 levels in the immediate short term while on the other hand, any surprises (like no clear mandate for any alliance) will be taken equally negatively and then Nifty could slip below 11150‐11000 support zone and could enter into a long corrective phase, with initial price targets around 10700‐10550.

On the downside, as shown in the previous chart, 11150 to 11000 has now become important support for bulls to hold. There are multiple supports that are coming in this range. It is the 38.2% FR level (11148) of Nifty’s rise from 10004 to 11856 , the 200 DMA is placed at 11040 and the 61.8% FR level (11070) of index’s rise from 10585 to 11857. On the upside, Immediate hurdle for Nifty is placed around 11550‐11700 range and a weekly close above this range will pave way for the medium term rally with immediate target 12000‐12100 range.

Chart 2 is the weekly chart since Nov’2008 lows. The charts captures the scenario of last two “General Elections” outcome and its medium term impact on the overall markets. In last two elections (2009 and 2014) we have seen similar behaviour in Nifty. We witness that Nifty forms some kind of a base at lower levels, then starts inching higher closer to the final poll dates and then with the final outcome of general elections it registers a decisive breakout and adds any where between 2800 to 2500 points on upside, before any major corrective decline takes place.

Interestingly , the Weekly MACD is also trading around resistance zone 0f 450‐475. A breakout from this zone on weekly closing price basis had unfolded a sharp surge in Nifty in the past (2004 and 2009 election result outcome).

Based on the previous behaviour of Nifty around election results, we can assume that a favourable outcome for the ruling alliance will be extremely positive “sentiment wise” and then we could expect a medium term surge Nifty beyond 13500+ (adding 2500+ points from recent lows).


11700‐11550 has now become an important resistance for short‐term. Only a decisive breach of this resistance zone will witness further rise in Nifty and then it could rally towards its immediate supply zone of 11900‐12100 .

We advise short‐term trades to buy Nifty now and on any decline towards 11200 levels with a stop loss of 11150 (on closing price). Our immediate upside target is 11600 while 11900+ will be a major hurdle for bulls to cross before the final “General Election” results.

MEDIUM TERM VIEW(3 – 6 Months):

We expect Nifty to rally higher in coming months. On Upside, 12100‐12200 is 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 13500+ levels by the end of this year.

We advise Positional Trades to buy Nifty now and on all declines towards 11300 – 11150 levels, for medium term price target of 13500+. Our stop loss for all positional longs is 11100 (on Monthly closing price).


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Author: lfspms

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