The week was completely dominated by the bears as we witnessed one of the biggest fall in the recent months. The sell-off has dragged benchmark index towards the psychological level of 17000. It was a broad based weakness however the banking spaced remained the major culprit for this fall. Nifty ended with cut of more than 4% during the week whereas the Bank Nifty slipped more than 5%.
The bulls have been enjoying the merry run without any meaning full correction for the last 20months and finally during the last week the bears got a chance to display their existence. Now even though we have already corrected around 1600 points from the all time high; the actual momentum of the fall has picked up during the week gone by.
On Friday, the way markets corrected, our Indian bourse as well as the global peers it seems this correction is likely to be more deeper this time. Traders should hence refrain themself from bottom hunting in the near term as long we don’t get a concretes signs of resumption of the bull run.
Going ahead, next support to watch out for the Nifty will be at 16,750 – 16,530 whereas for the under performing Bank Nifty will be closely watched around the 35,700 zone that is its 200 DMA considered as a key point in the world of Technical Analysis. On the flip side, dead cat bounce for Nifty may face resistance around 17200 – 17400 levels.
View – Bearish
Last Close – Rs.2292
This stock has been an out performer however after making a lower top at 2570 levels the stock has broken below its previous swing low confirming a ‘Lower Top Lower Bottom’ bearish price cycle. The formation on the daily chart resembles a ‘Rounding Top’ and also a ‘Flag’ pattern can be seen indicating a near term weakness in the counter. In addition, prices have slipped below its key moving average of 50DMA and oscillators have also slipped into negative territory . We sense a deep correction in this counter and hence recommend selling with a target of Rs. 2060 and the stop loss can be placed at Rs. 2400.
View – Bearish
Last Close – Rs. 2433.90
On the daily chart, stock prices have broken below its key support of 2470 that twice acted as strong support in the last three months. This has resulted in the formation of bearish pattern known as ‘Inverse Cup N Handle’ pattern. In addition, we are witnessing a bearish crossover between two key averages, 50 and 89 EMA. Momentum indicator RSI has slipped into negative territory in both daily and weekly chart indicating further weakness in the near term. We hence recommend a sell with a near term target of Rs. 2110. The stop loss can be placed at Rs. 2550.
Technical Analyst, Angel Broking