NIFTY at crucial juncture correction of 3% odd from life time highs and some large caps particularly are showing signs of crack such as HDFC Ltd, Kotak Bank, ICICI Bank etc.
As Bank NIFTY holds 30% weight , thus RBI policy can impact cyclical stocks along with it. So this policy RBI governor Raghuram Rajan can make or break the index. Although the long term trend is intact (i.e., Bullish) for Indian Equities. Can this be a start of corrective move on the downside or will that be delayed for a month or so would be the question (In the sense another life time high still left from current levels) ? As FIIs have been net sellers from last week in Indian Equities overall.
To carry on the interpretation lets carry along with weekly charts of NIFTY ... We use simple trendinlines, channels, support & resistances along with RSI to identify the trend.
As Bank NIFTY holds 30% weight , thus RBI policy can impact cyclical stocks along with it. So this policy RBI governor Raghuram Rajan can make or break the index. Although the long term trend is intact (i.e., Bullish) for Indian Equities. Can this be a start of corrective move on the downside or will that be delayed for a month or so would be the question (In the sense another life time high still left from current levels) ? As FIIs have been net sellers from last week in Indian Equities overall.
To carry on the interpretation lets carry along with weekly charts of NIFTY ... We use simple trendinlines, channels, support & resistances along with RSI to identify the trend.
NIFTY WEEKLY CHART
The NSE NIFTY has formed a hanging man pattern couple of weeks ago and has not been trading above the highs of the week. Last week was an FNO expiry happened to be on the lower side on monthly charts. After sustained higher highs and higher lows on monthly chart last expiry ( September) momentum didn't sustain still previous important high of 7840 was held intact.
Some times indicators give a early warning signal where as some times price charts. While RSI is showing a divergence and bearish pattern in forming for the indicator, still to confirm the direction ultimate price confirmation below 7840 is required as "Price is Supreme" and we invest/trade on price only.
Let's look at the daily Bank NIFTY charts to get more information on the near to medium term trend of the market.
BANK NIFTY DAILY CHART
BANK NIFTY has formed a harami pattern and the prior day has been a piercing pattern on daily charts and also index is below key averages.
The index has taken a key support near 15200 and resistance is near 15800 now. So on either side breakout can see minimum 500 - 800 points swift move. The key stocks in the index are showing signs of crack such as HDFC, Kotak, SBIN and ICICI Bank.
Safe traders can bet on Buying 15000 PE and 16000 CE around Rs. 140 - 150 for targets of Rs. 400 - 500 collectively. Because ultimately we need to search for low risk high probable trade setups, which is the course of the game.
The clear trend and path ahead which have been omitted as the report is just for educational purpose ....
Raju V Angadi
Equity Research Analyst
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