A Quick Update - NIFTY Weekly View
After a resolution was reached on European Debt Crisis, the European Markets all rallied by close to 4 to 5% yesterday. Dow, S&P Nasdaq closed up by 3% too. As Indian markets were closed yesterday. SGX NIFTY Closed at 5330 levels & today morning SGX NIFTY is pointing to an opening at 5420. So it'll be a gap up opening on NIFTY by roughly 175-200 Points :-).
The look at Weekly charts of NIFTY shows that it'll approach a key resistance zone of 5420-5440 (Falling Top-Top Trendline).
Also 200 EMA is near 5337. So the thing to watch out would be how NIFTY would move around this level & would it be able to close above it. Keep a close watch.
Be careful in initiating any fresh longs as a gap of 150-200 Points looks very unlikely to sustain.
200 D SMA is currently at 5408. So It can reach this levels Sustaining above 200D SMA would be the real strength of the Bulls as one would know 200 Day Simple Moving Average is a psychological level above which bulls will be more powerful.
For anyone who is still long in NIFTY one can keep a Stop Loss of 5320 as below this the Gap Filling process would start. Also if you observe the Daily Charts (Will Post Chart Later) We have made an Island Reversal Kind of Chart Pattern (This pattern would have been more valid if it was around 4700 levels than at these levels).
For anyone who is still long in NIFTY one can keep a Stop Loss of 5320 as below this the Gap Filling process would start. Also if you observe the Daily Charts (Will Post Chart Later) We have made an Island Reversal Kind of Chart Pattern (This pattern would have been more valid if it was around 4700 levels than at these levels).
- Leave alone global macro scenario even the domestic situation is not that favourable.
- Interest Rates at high & USD almost at 2 year high against the Rupee (The Stronger Dollar would hurt our Imports & would put a stress on our Fiscal Deficit).
- In the recently concluded Monetary policy review, the RBI has already lowered the growth projection for the year.
- Inflation is still a concern with Food Inflation ruling above 10%. The base effect can kick in & bring the Inflation to around 8% by Feb-Mar. But till the Interest rates starts coming down the Capital Intensive space would be suffering by margin reduction & less order inflow.
- This is indeed a powerful rally but the rally was all the way sold by the Domestic Institutions(Mutual Funds). Its more of a Short Covering rally than actually a rally that was fuelled by delivery based buying. But this doesn't mean we can revisit 4700 levels & move much lower. For Interim term at least the bottom of 4700 seems to be in place & we wont be going to that level unless we have another Greece like bailout situation.
- This is not to paint a bearish picture. As they say "Markets are always Forward Looking & they discount the future at least 6 months in earlier" - Meaning if Markets gets to know Interest rates would be coming down in 6 months from now they would start discounting that news & the favorable Interest rate sensitive sectors would start slowly to outperform the index.
NIFTY - 2 Years Weekly Chart - 1
NIFTY - 2 Years Weekly Chart - 2
NIFTY - 2 Years Daily Chart
Bottomline: Looking at the Weekly chart it looks unlikely to cross the Top-Top Trendline. So we might now enter into a sideways market again for few weeks before getting any trending moves like we got in this October.
May The Trades Be On Your Side
Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.
Keep a Stop Loss in each trade you Initiate.
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