NIFTY Outlook for near term

NIFTY was on a technically oversold category and we saw a volume climax around 5480 - 5500 odd levels. In past five trading has rallied almost 300 odd points. This looks like a classic bear market rally. 

The fundamentals are supportive looking good for the near term with the dip in crude oil prices and gold (precious metals) which India are one of the biggest importers. This would reduce the burden on CAD. Also the WPI inflation has reduced below below 6%. The RBI policy action on May 3rd 2013 can be a key trigger for the markets to go ahead further. On the expectation of repo rate cuts with positive fundamentals rate sensitives have rallied specifically bank nifty. Also banking results posted (Induind and Yes bank) are outstanding beating the street expectations. 

      

NIFTY Daily chart

Basically, the index move is supported by Bank NIFTY, which  is the leader in the rally along with some support from Infra, PHARMA, FMCG and Autos. The laggards were IT and metals both under performing relatively. Overall, NIFTY has a stiff resistance around 5800 - 5850. The trendline break above 5820 will reaffirm the further move upwards towards 5950 and further. Although there is no indication of any weakness as of now both technically and fundamentally traders are advised to be cautious after a sharp rally. The risk on rally is going on bu the charts are showing classic lower top and lower bottom formations. 

There can be a consolidation around these levels in the index before the next move. The FNO expiry on 25th April next week, result season going on and further on May 3rd 2013 RBI policy action can spike up the volatility. 

NIFTY Daily Fibonacci Chart

The 23.6% retracement of rally from 4800 - 6100 odd levels comes around 5800 and also a fall from 6111 - 5477 retraces 50% at 5800 range. So confirming the resistance zone with the trendline as shown in above daily chart. Technically 5800 - 5850 is a resistance zone as of now. Break above on can initiate long positions and short traders are advised to watch out for 5750 and 5690 are support zone. The break below can lead to further fall in Index to 5300 - 5400 range ahead If bears unfold.

So trade objectively and wisely with the consideration of own risk with amid volatility. The strategy would be to wait patiently for the right opportunity to unfold to probable profitable trade setups.

Raju V Angadi

 Equity Research Analyst

 Fortuna Financial Boutique (FFB)

 Bangalore, India.

 To know more about probable counts contact us back on rvangadi@googlemail.com 

Disclaimer: This is just an view based on the research of individual. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.

Trading Wisdom

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. 

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.

Jesse Livermore in Reminiscences of a Stock Operator.

IT sector outlook near term update

We recommended to exit long positions in IT stocks on 19th of March 2013. The major stocks HCL Tech, Infosys have performed as predicted by us. The amid volatility has risen in markets from past 2 - 3 weeks which has created a good opportunity for good trades.

                                                            CNXIT daily Chart

The bears are in control of the market at present. The CNXIT index has shown a descending triangle formation with lower tops formation can be seen. The volatility is expected to rise in the sector in coming week due to Infosys quarterly results on 12th April 2013 (coming Friday). So traders who would like to initiate fresh positions are advised to be cautious as volatility can be increased and whipsaws can occur.

Infosys failed to cross previous highs showing bearish signs and signs of distribution before results due to nervousness from investors is seen. Similar kind of double top formations seen on daily charts of HCL tech and Infosys. Infosys results holds the key fundamentally for the index turn around. The long traders are advised to trade on cross above 3020 levels and short traders should be careful and watch 2900 as key resistance zone for coming week technically.

                                                              Infosys Daily Chart

                                                         HCL Tech Daily Chart

                                                                                                                      

                                                                    
                                                           TCS Daily Chart

Key resistance and support zones to watch out for:

CNXIT

Support     - 6700/6400/6250
Resistance - 7130/7240/7400

Infosys

Support      - 2830/2750/2700 below free fall zone
Resistance  - 2900/3000

TCS


Support      - 1500/1448/1390
Resistance  - 1545/1570/1598



HCL Tech


Support      - 735/700
Resistance  - 770/784

These are updated charts along with the key support and resistance levels for Infosys, TCS and HCL Technologies along with CNX IT Index. For further information one can look at our previous blog section on 19/3/2013 and details individual analysis on TCS in our past blog.

Raju V Angadi

 Equity Research Analyst

 To know more about probable counts contact us back on rvangadi@googlemail.com

Disclaimer: This is just an view based on the research of individual. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.