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Nifty Analysis, July 03, 2015 - "The action in near term has to be stock specific, not the right time to go all in !"


Nifty at the moment is little shy of a major resistance zone of 8500 - 8550 levels . Nifty closed at 8485 levels this week with a strong positive momentum which reflected in the later half of Friday's trade. Today's closing levels mark third successive week of a higher closing. However the important factor which shall never be ignored about the week's rally is volumes. The volumes this week in Nifty has been relatively the lowest in recent times. You may attribute such low volumes to the fears concerning the recent global crisis situation. As stated in my previous post, such situations acts as a perfect triggers for technical entries as they do not effect the fundamentals much.  If at all I am looking to buy in such a market, is because of the momentum which of course is not so backed by the volumes. So the action in near term future has to be stock specific rather than being more generic about the over all market conditions. I am expecting stocks like TCS, SunPharma, Grasim, ITC, BhartiAirtel would over perform Nifty this week. 

Technical Analysis

Weekly Chart:
Nifty on weekly chart completed its 5th sub wave of 3rd major wave in uptrend in first week of March. Going further it started its correctional wave (assumed to be 4th wave of the uptrend in consideration). It is also expected that it shall form a complex wave pattern. Probability is a 3.3.5 correction. The first A wave (5) is in progress. Nifty this week closed further higher at 8500 levels which continues to break the previously acclaimed 8210 level to the downside thereby confirming the 5th minor wave of a bigger corrective A wave. The major resistance for Nifty has shifted to 8600 if the option data is to be believed.The Open Interest of 8600 Call has risen by a net of 43% on Friday suggesting the braking points for the momentum. Momentum oscillators are providing positive signs. If the trend has to be legitimate, it has to surpass its previous highest closing levels at 8965, till then expect Nifty to play range bound with the floor seen at 7800.  

Daily Chart:
5th sub wave of 3 wave in major uptrend ended on 19.02.15. Then started a complex correction which is expected to have completed "A wave" and is a 3.3.5 pattern. It is assumed that current wave for Nifty daily is a correctional "B wave" and may further carry on to make 3.3.5 pattern. Nifty  has breached all major retrenchment levels and currently stands at 8485 levels. MACD is poised at a positive zone. The major concern for the Nifty has been its low volumes. Hence it is again expected that Nifty shall taste a bit of a selling pressure in next few days. It is expected Nifty shall experience robust support at 5-10 Mas. The bollinger bands is suggesting an increase in volatility. Nifty has been able to close above its 200 EMA on daily charts for third consecutive day. The current rally which has been initiated in the later half of this week's Monday shall take Nifty breach 8550 levels. However caution is the day's game. Never forget to expect the unexpected !! 

 Happy Weekend !! 

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