Downsizing channel on BankNifty

BankNifty had been the outperformer in the last rally since 2011 but now it seems it would be an equal partner for underperformer in the coming future. Overall sentiments in the markets have turned bearish after the sell of on Friday. Even the global markets had seen sell off on late Friday giving a sign of weak opening tomorrow. If we look at the long term chart of BankNifty, than we had seen a rally from 9940 to almost 21500 which hasnt corrected yet enough to move further and my analysis suggest correct has begun. But as we have more traders so i had to watch the chart closes from Daily period. As we could notice in the chart, index was trading in the downside channel and it has almost breached on Friday. As we expect a gap down tomorrow, this channel is also breached and we could see downsizing channels on BankNifty daily chart which support my weaknening markets. 18346 is the 100 day average which has crossed 200 day average at 18542 for bearish crossover giving a selling idea for the medium. The crossover has been confirmed as the index is trading below the crossover and both the moving averages. As the expiry week kicks off tomorrow, i am expecting a short covering this week but use this as a opportunity to square of your longs and short new trades for next expiry. Stop loss would come at 18850 which is the resistance line of the channel. GST bill and Rate cut are the only trigger which could give some chance of reversal but it has very nuch thin chance to cross 18800 in near future. So overall the index seems to be weak in medium term. Sell rise is what i recommend 

Nifty levels for 21/10/2014

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#213 Nifty Update: Dark Cloud cover at the wrong place

Its already a late July and still no sign of heavy rains anywhere in India. Dark cloud cover has arrived but on Nifty and not on the cities. Nifty has dragged almost 400 points from the high last week. Railway Budget and General Budget were the two big events last week. Both were delivered in the faith of long term growth but still common man takes it hard to digest a expensive growth. IIP which was announced after the market hours on Friday which came at almost 18 months high at 4.7%. All the major events now have been declared and now markets will work on sentiments and Quarterly results. Technically market is gonna be crucial for this 15 days now. Daily chart has already weakened and we expect a 50-80 points pull back while weekly chart has also gone in the court of bears. But Monthly charts been still positive we have some hopes. 7300 is strong support on the monthly chart but if thats broken you could see some deep correction of 10%. Nifty could take support at 50 Day SMA at 7386. On our last Post we mentioned to Hold long and our 1st tgt 7688 had been achieved after which trailing SL of 7538 had hit down.

Our strategy: Wait and Watch. Short below 7300 and Go long above 7625

#212 Nifty update: Sky is the Limit

Heat Wave and Modi Wave are the 2 unstoppable waves currently prevailing in the climate. No one would have dreamt that Nifty could reach this high in such a short period. Such a vigorous rally has two implications 1) Still more upside is left or 2) this is a false rally and we may see sharp correction. I am support the first view and SKY IS THE LIMIT for this bull run. Looking at the economy data yet it hasnt recovered so well that it get digest such a move in markets but its just the expectation of the world that New govt will make India a better place and the work has already begun. Many infra and mining bills are cleared on the fast track and also Power sector is seeing some huge reforms. Two laggards in the markets since last few years were Power sector and Mining which has recently outperformed other sectors of the markets. We have Trade Balance number at 12 today during the market hours and that could be important for the markets. In my last post we did mention a range bound movement but we recommended to go long if Nifty closes above 7488 which happened last week. Our First target than 7688 almost has been achieved  which now makes us hold nifty with the tgt of 8031 on the upside. Technically indicators have turned positive for now on daily charts while weekly and monthly continue to be suggesting a strong bull run. As we all can notice in the chart, nifty is resisting near to the line which is 7715 level. Once we break the resistance line on the upside than we could see a sharp move ahead to 8031. 5 day EMA has been acting as strong closing support which is at 7568 as of now.

Our recommendation: Hold the longs which has triggered at 7488 with the next tgt of 8031. Keep a trailing closing Stop loss at 7568.

*Disclaimer: all the view are based on technical analysis and are personal. Please rely on our recommendation after thorough study and at your on risk.

#200 Nifty Update: Counter attack at the Border

A tough war at the Border Line of Nifty between Bulls and Bears!!! Last two session has brought some important pattern of Candlestick out which is known as "Bullish Counter Attack" as circled which is that a bears Close and Second Bull candle Close are the same level which has happened on Nifty and Sensex Today. And interesting all this action is taking place at 200 DMA which is at 6000 so we can say that War is at Borderline and Bulls have came back with a force at the right tym. But will they able to enter back the borderline and overcome bears??? Fingerscrossed!!!! This spill on Index was largerly due to global factors such bond defaulter or you can say weak earnings at the DowJones Index. But for us what matters is 6000 mark which is a Psychology level and also a strong level of 200DMA. We did mention to go long on our last post But sl which was at 5998 has been broken on intraday level and not on closing basis. We have been mentioning to keep SL on Closing basis but anyways still you havnt missed the bus as its standing jst near to where you left.

Our recommendation: We recommend to Hold longs or stay on long side with revised tgts of  6060/6131/62114/6263 revised sl:5960 

#199 Nifty Update: Hanging on the verge of Peak

On our #195 Nifty update we recommended tgt of 6070 on Nifty Short which has been achieved today and i guess you guys would have atleast booked some profit. Now future path on nifty looks lil bit dicey after carefully studying banknifty chart. Ofcourse Weekly charts and Monthly charts are looking still bearish but we are smelling some internal pull back from the daily charts of nifty. Firstly, As you all could notice on the chart Nifty is travelling in downside channel and today it has just managed to cling on the peak of support line in Channel. Technically tomorrow is important day for Nifty analyst as closed would be important for weekly candle as well as monthly candle. Secondly, Considering only todays candle it is a hammer or you can say a Dragon fly which is a sign of a reversal for a short term. And Finally, if tomorrows opening is little positive above 6082 than we could see a Morning star reversal after tomorrows close. Yesterday, FED tappered more $10 Billion  from its bond buying programme which helped markets to crash today morning but fundamentally you think its good news for Economy as tappering is sign that FED is smelling a recovery in its Economy. Our results have on other side been hawkish and unable to decide the state of economy. Our markets are majorily for National Election rather than Economic recovery. So coming back to Index for near term we are expecting a short recovery of 150-200 Points.

Our recommendation: Book 100% profit on our short Call near our 1st tgt 6070 and we recommend to go long near to same level with tgts of 6125/6170/6230 SL:5998

#5 BankNifty Update: Bank's Tank's

On 15th Dec we recommended to Short BankNifty on our blog at 11366 with tgts of 10720 and 10260 of which we have achieved 1st tgt easily last week. BankNifty made low at 10333 which was just 70 points away from our 2cd tgt. Anyways No worries we will still get that tgt but might take some time. Today we had third monetary policy by Mr.Rajan and street expected no change but truely speaking i did expect a hike in rate. I am not lieing but who all are in my touch personally could recollect that i myt have conveyed this gut feeling. Inflation has did cool off in last number but that major change was becoz have decreasing in Onion price. On other sign IIP are getting worst which made me pretty sure that RBI will rake hike. Though i didnt expect hike in reverse repo. Now coming to technicals BankNifty is still showing weakness sign on Weekly chart but a short covering is expected on Daily chart. As you could notice weekly chart in above graph, it clear shows off strong support at 200 Weekly average last week. Secondly now elliot wave suggests that we might see a pull back to 10988 but thats just a big MIGHT. 10988 is also a trendline resistance and 100 weekly Moving average which makes that point more stronger resistance on weekly chart. I hope you guys have booked atleast 50% profit on our 1st tgt 10720, if not do it right away.


Our Recommendation: HOLD rest 50% short on bankNifty with trailing at Cost price 11366 and risk taker can again short near 10988 with the same SL. and near tgt is intact at 10260 

*all levels mentioned are of bankNifty index and Not future and rely on recommendation at your risk.

#195 Nifty update: "Double Toppings on Nifty"

We all get excited when we get double toppings on Icecream or Pizza but i guess after todays close bulls wont be happy with the ''Double topping of Bearish Engulfing pattern on Nifty's Weekly chart". On other side Bears would be happy of the toppings. Now time will say who can digest this double topping..Bears or Bulls...Volumes on Nifty had dried up as Americans where on Christmas and New year celebration holiday. Yesterday we saw a basket selling and people had two reasons in mind 1) Rumors that Manmohan Singh would resign today (but he didnt) 2) People in Europe and America were booking profit after High NAV recorded on Financial Book Closure on 31st dec. Whichever reason you choose technical had indicated on 13th Dec Weekly closing and we did post on Blog to be short. Bond Purchase has decreased by $10 Billion/month which could also squeeze out  some liquidity gradually from market over some time. High Inflation is persisting in India which could trigger a rate hike in next RBI policy. On other hand Auto Sales have decreased for major companies in Dec which may be due to Inauspicious days as per Hindu belief. IIP are still pitched at lower levels which is not cheering for our economy. Earning season is about to commence and we expect intact growth and not much of flourished profits as our rupee had been stable around 62 which wouldnt have bought much profits for IT and Pharma sector which are dependent on foreign income. So we expect some profit bookings by short term traders on Nifty but we cant measure the extent of profit booking on downside i.e., it could be deep or even consolidation. Only good thing going around in Indian economy is FDI reforms. FDI in railway could be a surprise for markets and good for Indian railways. Parliament even approved some of the investment such as TESCO and vodafone 100% hike in Indian unit. Linking some inter market analysis, Gold chart is showing some bullishness which is a sign of downside in equity though not directly correlated in short term but it could trigger some bearishness on stocks. Coming to technicals, if we consider a bull wave to end at 6415, than we can see some extreme downside as we mentioned on last nifty update post. But for short term we have again got a chance to Sell nifty with some stop loss. Nifty is taking strong support at 50 SMA at 6193 on daily chart. RSI has turned negative. So now it seems Daily chart is also supporting negative biasness seen at weekly chart since 13th dec.

Long Term Traders Strategy: We are intact with Short call initiated on last post with tgt of 5970/5750 and SL 6415

Short term Traders straegy: We recommend to go Short (CMP 6211) tgts 6072/5970/5895 SL: 6360


*Note all levels on nifty are Cash levels and trade at ur risk with careful study. We might have recommended this strategy to our clients and we dont have any personal position. My analysis is biased to technical analysis.

#4 BankNifty Update: Dont Bank on Bank for near term

After nifty, Banknifty index is the most followed index. On 19th of October we had recommended to go long on Banknifty with tgts of 10948/11200 which were easily achieved in November/December. Now time has came to book all longs for short time and Sell Banknifty. Ofcourse for long term investors its time to arrange for some liquidity as they will get a chance to buy some banks for time horizon 2-3 years. Fundamentally, as we mentioned in our last post on Nifty, we are expecting some rate hike in upcoming Monetary policy and also expecting FED to start tapering soon. Now coming to BankNifty Weekly chart technical's, it has resisted at strong resistance line which was a support line last quarter. Secondly, A dark cloud cover pattern is visible on charts but not much valid as its not the clear top. Thirdly, the most strong theory which i follow Elliot Wave is showing some correction on the charts. Weekly, indicators have turned negative for the short term. Counting Waves, it has completed Sub-Wave 1 with as visible 5 wave Pattern. Now a correction Wave 2 with a-b-c is possible. We expected atleast correction upto 10720. At the most it could drop down to 10250 in near term.

Our Strategy: We recommend to go Short on BANKNIFTY (CMP:11366 cash level) with tgts of 10720/10260 SL:11750 ...

*all level mentioned are of Index and not the future contract of Index

#194 Nifty Update: "Dark Cloud" covers Market and 430/688 points rain expected

Rain in winter is unusual but for the markets this COULD happen, so now carry a RAINCOAT i.e., put option to protect you portfolio for new 2-3 months. Last five session has been continuous downside and that was like a slow poison to traders as slide was a bit everyday. Looking at 'Weekly chart" after today's close i was shocked to see a strong negative candlestick pattern "Dark Cloud" cover. This pattern suggest a reversal to bullish trend and this time its more relevant as its at a "Clear top". Indian Economy hasnt improved as expected or as market has discounted. Yesterday IIP were worst than expected at -1.8% while inflation was at the peak at 11.42% (approx). RBI is expected to hike rate in upcoming monetary policy while FED is expected to start tapering of Bond buying which will squeeze some liquidity from the markets. One more reason to see some profit booking around the world and India is the financial year end for US which makes FII liquidate their investment to adjust Balance Sheet. But one good thing for me is that a new high was in December than rather November because History says if a new high is in november than we see a downside for a long term but this was not case for us this year. Earning results would be announced next month and i am expected a little hazzy profits as auto industry hasnt seen sales as expected in diwali festive. Now coming back to technicals, Weekly chart has surely given a negative candlestick pattern while indicators are also bending negative. Nifty took strong support at 5 Week EMA which is also a strong support was next week. On daily chart we may see some short covering as we have seen 5 straight down side. On monthly chart nifty is trading below the resistance line. For bulls in power this expiry should close above 6288. From the elliot wave point, this was end of Wave 1 from 4624-6415. Now we expect correction of 430 points minimum to maximum 688 points if nifty trade nxt week below 6145-6152.

Our Strategy: SHORT Blindly below 6152-6145 and Sale on Raise with SL of 6450.. Downside targets for next few months 5950/5750/5470

#193 Nifty Update: A pause on the way

As we mentioned in our article update, Long was our call on nifty after Fridays move. Safe traders were recommended to go long above 6212 and i hope all are long. but todays move shows a pause on upside move. I am sure it is a short term pause!!! Nifty might hangover around these levels before moving forward. As circled  a perfect Doji has been formed today which also can be somewhat a dragon fly which is a sign of weakness but as its not the clear top but within yesterdays range, it could be jst a short term weakness rather than long term. 6123 is a strong support on daily charts while 6055 is the support for the week. As we have been saying Midcap are still a gud buy for portfolio holders. Indicators on daily charts are surely giving buy sign while weakly chart indicators are still flat.

Our Strategy: HOLD our Long nifty call initiated at 6176 (6212 for safe traders). tgt 6450 

#189 Nifty Update: Haathi vs Chiti

We all have forwarded funny sms Jokes of Haathi vs Chiti  but now traders are experiencing such fight on Nifty Chart. As all technical analyst could make out from my markings on chart that two "head and Shoulders" pattern are visible i.e., One being a confirmed breakout (Haathi) and Second being in formation (Chiti). That the size differs so its easy for some people to say that a small one is not much of importance but as hindi dialogue says "Chiti chahe toh Haathi se bhi Tandav karva sakti hai" and same is true here. Techinally size does matter on the charts but we cant ignore the possibility of smaller formation. Fundamentally we dont have much to cheer domestically but US economy is showing signs of improvement from employement data and ECB also reduce interest rates to 0.25%. Results have all outperformed street estimates. If we talk above correction than Bank Nifty has already given correction. As You all could notice that even nifty has closed at support line of Channel. So everything including a Chiti H&S suggest a pull back early next week but who wins the war depends on breakout. Green patch defines High Volatile range on the charts.

Our strategy:Wait for some confirmation on either side. 6080-6253 is the range. So Wait and Watch as of Now.

#183 Nifty Update: Madness around the Chart

Since last few updates we had mentioned a channel which was broken a day before yesterday but yesterday we moved back into channel initially in the day and closed back exactly on the verge of new support line. Nifty closed with a Dragon fly Doji but its not supported with perfect rules. Indicators have turned flats to slightly bearish with intact of my tgt of 6035. ONE PECULIAR CHARACTERISTIC OF NIFTY THIS WEEK IS THAT IT HAS CLOSED NEGATIVE EACH DAY. Yesterday we saw a higher high and higher low but we have to wait and watch what should we do the next. On thing supporting bulls is bank nifty which is signaling a buy on each dip and it has under performed nifty. Our trailing SL has been hit on both side yesterday and currently we dont recommend anything for safe traders

Our Strategy: Risk takers go long at 6034 or above 6220 today for holding it positional. Safe traders wait and watch for a safe call.  

#180 Nifty Update: Index in perfect channel

On our last update on #Nifty we mentioned to Hold long for risk traders and we are seeing a perfect upside angle on index. We had mentioned to that safe traders could keep a trailing SL at 6050 and it was hit but if you are lucky enough than its good for you. Anyways coming back to nifty, it is in a strong bull momentum. Our tgt 6220 as mentioned in #179 update is yet to be achieved and it would be comfortably achieved. Fundamentally US shut down is over and markets have positively discounted it. Indian markets are also positive on good Q2 earnings. Indiacators are yet positive and signalling some good road head for the index near  term. Weekly and Monthly charts are still handsomely supporting bulls .But WE DONT RECOMMEND TO Initiate new long though.

Our strategy: HOLD existing long with the tgts 6220/6280/6310 trailing SL 6125 (Closing)

#3 Currency Update: Time to Sell USD

Rupee depreciation has been the talk of the town for last few months which has been beneficial for companies and individual having reach in foreign countries. Sectors like IT and Pharma are expected to show earnings above street estimation this quarter. On last 30th October it was our #1 Currency target and we gave minimum target of 62.80 against closing of around 52 that month and it was achieved with in a year. Now looking at charts of other markets we are of a view that Rupee should get stronger and fortunately we have seen perfect confirmation technically on USD/INR monthly chart. For the basic technical analyst as you all could notice a Dark Cloud cover pattern though not the perfect one but its valid. Indicators have turned out from overbought zone. Combining it with other technical theory we are expecting our Rupee to appreciate against dollar in next 1-2 years.

Our strategy: We recommend to Short USD/INR near to CMP of 61 tgts 60.40/57.60/54.70/53 and MAX it go down to 50 in next 1-2 years with SL of 65 (Monthly Close)

#179 Nifty Update: Mixed bag fundamentals but strong technicals

Around 2 weeks ago we gave of tgts 6150 on Nifty in the update #175. We have achieved all the tgts on intraday basis but we still of the idea that we will get a strong close above 6150 soon. Inflation of our country has been rising but on other hand this result earning season has been good so far. With Infosys,Reliance, HDFCBANK, TCS and HCL Tech delivering above estimation result we can expect others to perform as well. US Senate has just passed budget before few minutes to avoid debt default which is of a great benefit for us indirectly. Tapering in US will be delayed and liquidity would stay with us.  CAD has seen some improvement which is also to cheer for us. Technically we are close to over bought position on daily chart but still we can see a long upside on Weekly and monthly chart suggesting a every dip as a buying opportunity. Our strategy is to HOLD long on Nifty  with tgts of 6220  6050 is important support for next 2-3 sessions which could be trailing SL. Currently downside is capped at 5900 which could be consider as buying opportunity if we see that levels first. 

#174 Nifty Update: head scratching for Traders

Nifty has been in the profit booking mode as we expected in our post #172 Update. Our 1st tgt on downside was 5810 and it has been almost achieved with a low of 5811 on Nifty index. Markets had been pretty range bound which has head scratching for traders. Now the tgt is 5677 but looking at the hourly chart we may see some short covering next week and that may be the end of downside correction. We expect a positive close on Monday which is a important close as its Monthly closing on the chart. We recommend to close shorts on Monday and wait for some confirmation to go long. 

#172 Nifty Update: Time for some profit booking

RBI governor did surprise markets as traders were expecting a status quo but he did raise repo rate. May be it is the right step has increasing inflation is a concern for our country and even technically it was time for some profit booking on the charts on Nifty. We have got a good thousand points move non-stop and it was the bliss for those atleast got 50% move correct. Next week being expiry it ought to be profit booking as this expiry was only a up move. Next month is going to be earning season and we might continue see disappointing earnings since currency had de-valuated a lot this quarter. Markets are overbought technically on the daily chart and we are expecting some downside in coming weeks. Our strategy is to SHORT Nifty below 5988 with SL of 6090 (Closing basis) tgts 5810/5677/5586  

#171 Nifty Update: Nifty was Drunk

Nifty had a great party and was drunk completely today. My tgt was 6150 on Nifty and it was almost achieved with high of 6142. A day before yesterday i did mention to go long on Nifty and now we are dicey from here. Technically we are expecting a small correction but other side it has chances to move up. RBI policy tomorrow and expecting no rate cut is adding more biasness to profit booking. We may Nifty to take support arround 5840.  Today around 3pm we did post to hedge longs with 6000 PE and we guess you did it and if u missed, we recommend to do it at the first tomorrow. Weekly and Monthly chart are suggesting a close above 6100 this month but Hourly and Daily chart are expecting a profit booking soon. Indicators are near to overbought zone and Index is comfortably above short term averages. A profit booking could take index back to averages around 5840

Strategy: HOLD our initiated long on Index and Also Hold 6000 PUT. Square of Nifty at 6000 on Downside and book profit on PUT at 5840. On upisde its party for us!!

Disclaimer: I may have personal position in index and above mentioned stocks. Views and News mentioned above may have Errors and omissions. My views are biased more towards technical analysis. Please read and study the market carefully before investing on my idea. For any suggestion contact me on my email. Some words mentioned in article don’t mean their actual meaning. They are correlated for market.

#166 Nifty Update: "Booster on Nifty"

As gamers would be aware of a Booster button in NFS, same is the case on Nifty currently. After a whooping volatile session in the month of August when nifty managed to closed at 5285, it has since gave a non-stop trading close at 5913 today. RBI says reserve money has increased YoY against the same period last year. Technically we are in a strong bull mood over 100 EMA and 200EMA. Indicators still have strength to drive nifty to some upside. Looking at chart from the point of view of Elliot Wave theory and some other patterns coordinately, i expect Nifty to resist near to 6003 (closing basis). But a range of resistance is 5971-6034 for next week and than market could retrace upto 5725

Strategy: Book Partial Profit on Long Nifty initiated by us on 4th Sept at 5971 and Full profits around 6003. Keep a Trailing SL at 5871(Closing basis)