Nifty Outlook for Next Week: (11.08.2014 to 14.08.2014) Sell on Rise
Nifty continued its fall for the Second week, and the fall was possible because of the fall due to gap down opening on Friday due to geopolitical tensions. Initial gains of the week were eroded by the end of the week.Further fall is possible for the Third week (a truncated week as Friday is holiday due to Independence Day. Falling Rupee is also putting pressure on macro fundamentals and markets.
Nifty appears to be in a complex correction mode, which could logically conclude between 7200 and 7300 but not without a reasonable pullback in between. Correction is on account of geo political factors, below expected Q1 results (particularly midcap stocks). Mid cap stocks were quite weak and most stocks are already experiencing deeper correction and medium term buying can be done in quality stocks. Investors need to follow stock specific approach as initial euphoria of new Government etc., is over.
Technically, Nifty chart suggests that it is in complex correction mode and high degree of caution / sitting on sidelines is suggested. 20 DMA, 50 DMA and 100 DMA are placed at 7670, 7600, 7240 and they would act as supports / resistance for Nifty. Nifty is already below 20 DMA and 50 DMA and could act as resistances. It closed below 50 DMA of 7600 and below 20 DMA of 7670 and further correction is possible only as long as it holds below these moving averages. It could be considered bullish for Medium term as long as it holds above 100 DMA and bullish for long term as long as it holds above 200DMA.
Quarterly results, Funds Flow and Global cues would be the triggers for market movement. FIIs appear cautious at these levels and have been selling recently. Unless they turn buyers, it might not get into uptrend. However, as long term and Medium term outlook is quite bullish any reasonable short term corrections should be utilized to build long term positions.
Based on the present Government’s agenda, Infra and Power sectors could come out of their problems soon. Stocks of promotes with proven record may be preferred in these sectors. Investors need to accumulate quality stocks while traders need to be ever vigilant.
Nifty continues to be above 200 DMA and 50 DMA too is above 200 DMA suggesting that the long term bullish trend is intact. Nifty is quoting at a PE of just under 20, which is about 10% above the long term PE multiple. Hence, further upside (8000+ or 8500+ is possible during the year / before next Budget) in view of the stable and performing Government at the centre as earnings would go up because of favourable atmosphere. Hence, it could pullback nearer to long term average when it completes correction.
Market is usually ahead of fundamentals and fundamentals need to catch up with the present valuations which could take some time, hence correction is in progress.
Further, Nifty had been trading in a range of 4600 to 6300 (till 2013) for more than 4 years and a powerful breakout had taken place for an initial target of about 8000 / 8500. Hence strong long term support would be around 6750 level and Medium term support is 7250.
Technical Levels:
For the coming week, Nifty spot is expected to face resistance at 7660, 7750, 7835 and find support at 7485, 7400, 7310. Nifty is in short term bearishness due to last week’s fall. It would get out of the bearishness only if it closes above 7750 in first half of the week and above 7700 in Second half of the week.
Advice for Traders:
Nifty is in short term bearishness amid complex correction. Further fall is possible, particularly next week unless global cues improve dramatically. Correction up to about 7250 is possible (initial support at 7450) with a pullback and then followed by a fall. Present policy would be to “Sell on Rise” as long as it does not go above 7725. Further, weekly open level is very important for the entire week. Short positions may be avoided as long as it maintains / closes above weekly open and vice versa.
Nifty continued its fall for the Second week, and the fall was possible because of the fall due to gap down opening on Friday due to geopolitical tensions. Initial gains of the week were eroded by the end of the week.Further fall is possible for the Third week (a truncated week as Friday is holiday due to Independence Day. Falling Rupee is also putting pressure on macro fundamentals and markets.
Nifty appears to be in a complex correction mode, which could logically conclude between 7200 and 7300 but not without a reasonable pullback in between. Correction is on account of geo political factors, below expected Q1 results (particularly midcap stocks). Mid cap stocks were quite weak and most stocks are already experiencing deeper correction and medium term buying can be done in quality stocks. Investors need to follow stock specific approach as initial euphoria of new Government etc., is over.
Technically, Nifty chart suggests that it is in complex correction mode and high degree of caution / sitting on sidelines is suggested. 20 DMA, 50 DMA and 100 DMA are placed at 7670, 7600, 7240 and they would act as supports / resistance for Nifty. Nifty is already below 20 DMA and 50 DMA and could act as resistances. It closed below 50 DMA of 7600 and below 20 DMA of 7670 and further correction is possible only as long as it holds below these moving averages. It could be considered bullish for Medium term as long as it holds above 100 DMA and bullish for long term as long as it holds above 200DMA.
Quarterly results, Funds Flow and Global cues would be the triggers for market movement. FIIs appear cautious at these levels and have been selling recently. Unless they turn buyers, it might not get into uptrend. However, as long term and Medium term outlook is quite bullish any reasonable short term corrections should be utilized to build long term positions.
Based on the present Government’s agenda, Infra and Power sectors could come out of their problems soon. Stocks of promotes with proven record may be preferred in these sectors. Investors need to accumulate quality stocks while traders need to be ever vigilant.
Nifty continues to be above 200 DMA and 50 DMA too is above 200 DMA suggesting that the long term bullish trend is intact. Nifty is quoting at a PE of just under 20, which is about 10% above the long term PE multiple. Hence, further upside (8000+ or 8500+ is possible during the year / before next Budget) in view of the stable and performing Government at the centre as earnings would go up because of favourable atmosphere. Hence, it could pullback nearer to long term average when it completes correction.
Market is usually ahead of fundamentals and fundamentals need to catch up with the present valuations which could take some time, hence correction is in progress.
Further, Nifty had been trading in a range of 4600 to 6300 (till 2013) for more than 4 years and a powerful breakout had taken place for an initial target of about 8000 / 8500. Hence strong long term support would be around 6750 level and Medium term support is 7250.
Technical Levels:
For the coming week, Nifty spot is expected to face resistance at 7660, 7750, 7835 and find support at 7485, 7400, 7310. Nifty is in short term bearishness due to last week’s fall. It would get out of the bearishness only if it closes above 7750 in first half of the week and above 7700 in Second half of the week.
Advice for Traders:
Nifty is in short term bearishness amid complex correction. Further fall is possible, particularly next week unless global cues improve dramatically. Correction up to about 7250 is possible (initial support at 7450) with a pullback and then followed by a fall. Present policy would be to “Sell on Rise” as long as it does not go above 7725. Further, weekly open level is very important for the entire week. Short positions may be avoided as long as it maintains / closes above weekly open and vice versa.
