text:
NIFTY Range for March 2015: 8500 – 9000
Technical & Derivatives Analysis: 02 Mar 2015
I had boldly written in my
previous article that NIFTY won't cross 9000 levels till budget day and results
are now in front of you… There was no rocket science behind this prediction. It
was simply based on Derivatives insights.
Now budget fever is over and
sharp decline in Volatility Index suggest not to expect too much from the
market for March series. The upper side remains capped around 9000 and the
lower levels are 8700-8500.
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NIFTY can't cross 9000 till budget day event…
Technical & Derivatives Analysis: 22 Feb 2015
Majority of market participants
are anxiously waiting for pre-budget rally. Options buyers are blindly betting
on 9000 call options and at the same time Option Writers are coolly writing
9000 strike call! So, who do you think smarter? Needless to say that NIFTY is
unlikely to cross 9000 level till last day of February derivatives contract
expiry on Thursday, 26th.
Technically also the long red
bearish Marubozu candle, which was formed on 30th
January, is not so easy to cross. Hence, 9000 remains a strong resistance till
budget day event.
Keep watching this column for budget day clues
immediately after expiry day on Thursday 26….
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NIFTY Target Achieved… What's next?
Technical & Derivatives Analysis: 08 Feb 2015
Last week I had given a target of
8630 based on the Options buildup and Fibonacci Retracement. During the week
NIFTY Index reached exactly near this level and closed the week at 8660.
next? Monday opening is very crucial for the market. As you can see in
the chart, if it break the technical level of 8630 decisively then the Index
can fall up to 8540-8420 which are 50% & 61.8% Fibonacci Retracement
levels. Derivatives data is signally break below 8630 as Put Writers were
unwinding their positions at 8700-8600 strike on Friday and the highest OI
buildup shifted to 8300 and 8500 strike prices. OI PCR is still at 0.87 which
means there is some more room for NIFTY to slide down.
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NIFTY fails to break channel resistance… What's next?
Technical & Derivatives Analysis: 02 Feb 2015
In my last week's article I had
shown how NIFTY index was approaching the channel line resistance. I had also
written that the key derivatives indicators were signaling a fall but only
after F&O expiry and exactly same thing happened on Friday.
What's Next: As per the current Derivative
Options buildup level 9000 looks difficult to However, market is in strong
bullish trend and therefore one can expect immediate support at 8630 which is
roughly 38.2% Fibonacci Retracement level and also previous breakout
point. Interestingly the PCR for Feb
series is reset at 0.94 which also suggest possibly limited downside before
pre-budget rally begins.
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NIFTY: Approaching Channel line Resistance @ 8930
Technical & Derivatives Analysis: 27th January 2015
Market is on fire on the back of
one after another sentiments boosting news. The NIFTY movement looks
unstoppable, however Index is now approaching channel resistance which is
around 8930 level.
Key derivatives indicator – OI
PCR is in extremely overbought zone. The sudden drop in Call option IVs is
signaling early warning. With only three trading sessions remaining for expiry,
I don't expect any sudden major price correction but keep close eye on NIFTY
Rollover for the next cue for February month. At the moment 8930 seems to be technical
resistance for the current up move.
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NIFTY: Heading towards upper channel line @8550-8650
Technical & Derivatives Analysis: 05 January 2015
December 2014 F&O series
ended with flushing out weak hearted NIFTY traders from their long positions.
However, healthy rollover at 66% was signaling positive bias on expiry day for
January 2015. In fact most of the Technical as well as Derivatives indicators
are now signaling continuation of positive bias for the coming weeks.
chart clearly shows how NIFTY index has taken channel line support around
7950-8000 and now heading towards the upper band of 8550-8650. Key Technical
Indicators such has Money Flow and Stochastic are just crossing 50% mark
signaling further strength. Unwinding of call options on Friday's session
further confirms continuation positive moment for Nifty index until it reaches
8550-8650 range.
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NIFTY Options unwinding on Friday signaling range breakout?
Technical & Derivatives Analysis: 07 Dec 2014
I had earlier written in this
column that 8500-8600 level is going to be acid test for NIFTY. Considering
exceptionally high NIFTY rollover, I had also forecasted the outcome of RBI
policy and results are in front of you. NIFTY traded in a narrow range of
8500-8600 for the entire week and gave tough time for intraday as well as
positional NIFTY traders.
However, those who are monitoring
Call/Put Options build up must have noticed a dramatic change in the writing
pattern on Friday.
There was
simultaneous unwinding of Call and Put options signaling NIFTY is ready to
break the 8500-8600 range. Decline in Future OI indicates that smart traders
are covering their long positions. As per Options data, the trading range for
December is now condensed to 8300-8400 on lower side and 8700 on upper side.
GOLD | Watch out 38.2% Fibonacci
Retracement Support @ 24800
Record high 76% NIFTY Rollover, RBI Policy on 2nd Dec...
What to expect next?
Technical & Derivatives Analysis: 01 Dec 2014
NIFTY Index witnessed record high
rollover at 76% for December 2014 Series. After expiry, NIFTY index kissed 8600
level immediately on next day and closed for the week on Friday just near the
top. Market is propelling higher on rate cut hopes when RBI reviews the
monetary policy on Tuesday, 2nd December. Record high rollover
number indicates extreme bullishness among market participants.
However, stock market history
says one need to be cautious when it enters into extremely bullish sentiments.
Price has almost discounted RBI policy hopes by now. Hence, I expect limited
positive reaction on any positive news. However, no change in the current rate would
be considered good reason for massive profit bookings. Hence, 2nd
December is the day for next cue. It's too early to comment on Options cues but
it is hinting that NIFTY range for December 2014 series is most likely to be
between 8400 and 8800. Possibly on Monday we will have more confirmation on
Level 8500-8600, an Acid Test for NIFTY Index
Technical & Derivatives Analysis: 24th Nov 2014
I was expecting a bit of
correction in NIFTY from 8400 level but Index did not give up on the gains and
kept marching towards 8500 till Friday. Everyone seems to be bullish in
anticipation of RBI monetary policy but Technical and Derivatives data is
giving a signal of exhaustion for the Index. NIFTY needs to undergo an acid
test before crossing 8500-8600 levels.
derivative indicator PCR (Put/Call
Ratio) has entered into overbought zone. You can see in the above chart that
Index is crawling upwards but OI (Open
Interest) is constantly declining. Money Flow index is
also showing –Ve divergence. As per Options build up,
it is unlikely that Index will correct before expiry but fingers crossed for
the December 2014 series! Keep close eye on NIFTY Rollover on expiry day for
the next cue for Dec 2014…
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Expecting minor correction for NIFTY up to 8180
Technical & Derivatives Analysis: 13th Nov 2014
NIFTY is forming Doji Candles for last six days
after giving powerful breakout above 8180. Most likely it is going to test this
level (8180) again before further upward movement continues. The options
buildup at the moment (13/11 10:30am) is showing slight unwinding by Put
Writers, which suggest NIFTY may correct and retest the breakout level of 8180
in next couple of days.
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Expecting NIFTY & Bank NIFTY to Fire in November Series!
Technical & Derivatives Analysis: Week Starting 31rd
Oct 2014
As expected,
NIFTY is continuing with its positive momentum. Today morning, It has opened
very strongly with a gap above previous high of 8180. You can also see the
Bollinger Band has opened after consolidation a long consolidation period.
October series ended with 63 % rollover, which is again a good sign for
the new series. Its little early to comment on Derivatives but the expected
NIFTY target as per the Options buildup seems to be around 8400.
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NIFTY: Critical Support @7800
Technical & Derivatives Analysis: Week Starting 29rd
Sept 2014
As expected,
Sept' 2014 F&O Series for NIFTY ended within a consolidation range of
7900-8200. It did try to deceive the NIFTY traders with some intraday breaks
but ultimately closed and sustained above 7900. We are now into October 2014
series and need to take fresh look at the Options insights. On Technical Chart
the things are looking very straightforward. There is a Trend line support at
7800 which is 'make or break' level for the NIFTY Index for the new series.
If you are observing Options Buildup
carefully then you would have noticed that Index recovered and went up on
Friday, but the Put options writer actually covered their position instead of
adding more. This is not a positive side from Derivatives perspective. However,
Derivatives data still hinting 7800 as a good support level. There could be
some intraday drop below this level but be careful about the trap. PCR just tested its oversold level for
Sept'2014 series and currently at 1.30 level, which is again not very far from
its oversold level. So, to summarize, 7800 seems to be a support at this
moment, but keep watching action of Options Writer at 7800 Put option
for further confirmation.
NIFTY: Expecting consolidation between 7900-8200
Technical & Derivatives Analysis: Week Starting 22rd
Sept 2014
The power of Derivatives is, it provides insights beyond
what Technical Chart shows. On Tuesday, 16th when NIFTY index was witnessing a free fall,
we flagged the Options buildup at 8000 strike price Put option and hinted about
possible support.
As usual market
deceived bears by breaking some technical support levels. It then recovered its
entire loss on Thursday and closed the week at just above 8100. Now, the
bullish candle on Technical Chart shows lot of strength and trying attracting
the bulls once again. However, Derivatives data shows that the NIFTY movement
is restricted up to 8200 for the series. The Index is likely go into
consolidation mode on Fed scare and results of assembly and Lok
Sabha bypoll results which shows NaMo/BJP wave is
fading out. The expected consolidation range for NIFTY is 7900-8200 and till
the time it break on either side, it's going to be mostly very short term
trading opportunity.
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NIFTY: Opportunistic trading at 7700
Technical & Derivatives Analysis: Week Starting 28rd
July 2014
Last week we
saw how Derivatives Indicators were giving positive signal and we were
expecting cross over above 7720 would take NIFTY Index to its first resistance
level of 7800. During the week, NIFTY moved exactly as expected. It made a high
of 7840 and closed at 7790.
What's next?
Coming week is the expiry week for July F&O series with only 3 trading
sessions. Though Index has crossed critical mark of 7720, Call Option built up
suggests that 7800 resistance likely to continue till expiry day. Technically
7700 level is now supposed to act as a support but we saw heavy unwinding of
Put Options on Friday, which signals to stay cautious around this level.
Considering an F&O expiry week, I would prefer to be opportunistic rather
than having one sided view. I would keep close eye on 7700 strike price Put
option Open Interest and would go short if unwinding continues. On other hand
if I see accumulation of OI for this Put option then obviously make sense to go
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Level 7720 – Make or Break for NIFTY Index
Technical Analysis: Week Starting 21rd July 2014
NIFTY Index
is very near to its Make or Break Level. On Technical Chart shows formation of Head & Shoulder pattern in progress. The
target for the Right Shoulder of this pattern is at 7700. Also, if you see the
Fibonacci Retracement level of fall from 7809 to 7422, the 76.4% reversal point
is at around 7720. Hence this level is very crucial for the coming week.
However, the next immediate Technical resistance would be around 7800 which is
its previous top. If Index is able to cross these barriers then the next target
is straight around 8000 level. However, failing to sustain above 7720 would
confirm the Head & Shoulder reversal patter and expect NIFTY to fall again
to the Neck Line of this pattern at 7400.
However, though it's all if &
but decision on technical chart, the Derivatives data is providing some
positive cues. PCR (Put/Call Ratio) has
recovered from its oversold area and now ready to cross critical bullish signal
mark. The Call Options writers were seen
unwinding their positions on Friday. Future OI
was also seen to be rising when Index went up in last three days. Hence, I
would prefer to wait watch Index at this make or break level and then ride on
the wave of 300 odd point price movement on either side.
NIFTY target for Union Budget: 8000 or beyond?
Technical Analysis: Week Starting 07rd July 2014
After 3 weeks
of consolidation, NIFTY Index gave strong positive signal as we enter into most
awaited union budget week. On Technical chart Index kept for forming Doji candles for previous 3 weeks and then closed
the week with Bullish Morubozu
candle. However, the question is how far NIFTY can continue to go up in
anticipation of Budget event.
Though Technical chart is signaling strength, the Derivatives data
clearly shows that crossing 8000 level seems to be a big challenge. For the
coming week, it's recommended to closely watch Options buildup for 8000 strike
price Call options. At present it carries highest OI (Open Interest). During
the coming week, if you see OI for this Call option continues to go up then be
sure that NIFTY won't be able to sustain above 8000 level. However, any panic
exit by Options Writers for this Call Option would mean NIFTY will cross 8000
level for sure.
NIFTY – Expecting sharp fall if 7480 is broken
Technical Analysis: Week Starting 23rd June 2014
Last week,
with the help of Technical Chart and Derivatives insights, we saw how NIFTY was
showing a sign of exhaustion. During the week Index remained volatile and just
survived above 7500. The close was below previous week's low. Now, though index
is showing weakness, one can't ignore Jun 2014 F&O Series expiry on
Thursday, 26th. Highest Put Option
buildup at 7500 strike price indicates that Index may try to hold this level
till expiry and any make or break move can be expected on or after expiry day!
Just look at
the above technical chart carefully. It's an hourly intraday chart, which clearly
shows that level 7480 is extremely critical and break below this on closing
basis can trigger a sharp fall with a target of 7250 and possibility of
correcting till 7050.
NIFTY – Dark Cloud Cover!
Technical Analysis: Week Starting 16th June 2014
NIFTY Index is first time showing a sign of exhaustion. Index did try to cross
the election day high of 7625 on
Technical Chart but the Derivatives data clearly shows that there is not enough
strength to sustain above this high at least for June 2014 series. If you
carefully look at NIFTY Future OI in the
below chart, you will notice that though NIFTY future is trying to make new
high, the OI is significantly low. This is an indication of NIFTY has reached
near the top and it can either get into consolidation mode or start declining.
The key
Technical Indicators are also confirming the overbought situation. Stochastic
Oscillator is at the verge of confirming Sell signal. MFI (Money Flow Index) is
showing divergence. NIFTY Future made new high during the week but MFI could
not cross the previous high which indicates that Smart money has started
flowing out of the market. Further, FII's net long positions in Index future
are sharply declining, which is an early warning for the market! The
expected correction levels are 7200-7050
of Election special Options Strategy which was recommended on 13th
May is as below-
NIFTY Call 7400 made high of 400 on election result day today morning.
Hence the max profit opportunity offered by our recommended strategy was as
– 175) x 50 = 11250/- per lot
NIFTY – Options Strategy for Election Results
I would prefer to rely on Derivatives, as it is the best instrument to
trade on this once in 5 years election event.
Taking position on both sides; Call + Put would allow to take advantage
of one sided price movement in NIFTY index on either side.
Strategy (approx rate
as on 13th May at around 11.00am)
Long Call
May 7400 @ 125
Long Put Jun
6400 @ 50
Breakeven: Index should cross 7575 on upper side post-results. However,
any surprise on negative side would provide time up to June 26th for Index to
fall below 6225.
The maximum loss per lot: 175 x 50
Maximum Profit : Could be anything depending upon the price movement on
either direction.
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NIFTY – Cautious stand ahead of Election results!
Technical Analysis: Week Starting 28th April 2014
data is clearing showing that market participants are going extra cautious ahead
of Election results. NIFTY Rollover for May 2014 series was just 59%, which is
quite below the average range. NIFTY Future Open Interest is again below
average and in fact it declined by 4.84% with fall in price on Friday. This can
be interpreted as - participants are not willing to take new positions and they
are trying to play safe with the current open position.
The Technical
Chart is also not giving any encouraging signals for INFTY Index. Money Flow
Index is actually giving negative divergence indicating that smart money is
flowing out of the market. Now the immediate support is at 6650 and I expect
market to trade in narrow range during the week.
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NIFTY – FII's Net Positions Signaling some dips!
Technical Analysis: Week Starting 15th April 2014
Last week we
talked about 6800 level for NIFTY index, which was supposed to be the target
for the breakout when Index crossed 6350 level. During the week Index made an
unsuccessful attempt to cross this level. Prima facie it looks like NIFTY index
is unstoppable but the technical chart and derivatives data is indicating
something else.
Index is making new high but the volumes are just average. Money Flow
Index (MFI) is showing divergence. Though the index is at top, the MFI is below
previous top. The key Derivatives indicator Open Interest is just near its
average and in fact it's going down. If you carefully look at the FII data, you
can see that they have slowly started covering their long positions in Index
Futures from the start of the April month. At the same time their net long
position in Put options has gone up significantly. Hence, I feel that Market is
likely to show some down side movement and the targets remains the same as
given in the previous week's article.
NIFTY - Just 57% Rollover for April Series! What's next?
Technical Analysis: Week Starting 7th April 2014
consolidating in a range of 6400-6600 for almost 13 trading session, NIFTY
Index broke this range one day prior to F&O expiry date i.e. on 26th
of March. However, April 2014 F&O series witnessed just 57% rollover which
is way below previous month's average. NIFTY Future Open Interest buildup is
also just average. These are clear indications of market participants are now
trying to play safe by not adding new positions ahead of General Elections
The Technical Chart shows that NIFTY Index has achieved its breakout
target near 6800 and now entering into correction mode. The first target for
this correction is 6575. It will be interesting to see if Index can hold this
level in the April series. Break below 6575 can drag the Index near 6350 to
re-test the previous breakout line. Needless to mention that 6350, it will be
great opportunity to re-enter.
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NIFTY – Correction expected before pre-election rally continues
Technical Analysis: Week Starting 24th March 2014
As expected,
the current pre-election rally has taken a halt near 6600. NIFTY Index made a
high of 6575 and that seems to be an ultimate top for March 2014 series. Index
is now trying to consolidate within a narrow range of 6400-6600. As Index is
consolidating in the narrow range, the NIFTY Future
total OI is constantly going up. This means Index is gearing up for
another big move once it breaks out of this consolidation range of 6400-6600
What's Next? Most of the Technical Indicators and Oscillators are hinting for some
bit of correction. You can see in the given chart that Stochastic
Oscillator is in the overbought zone and ready for the decline. MFI (Money
Flow Index) is showing negative divergence.
The OI PCR indicator is gradually declining and has
come near the threshold level of 1.2 ratio level. Drop below 1.2 will
definitely confirm more downside for NIFTY Index from this point onwards. The
only hope for Bulls is the options buildup at 6400 strike price Put options.
Keep an eye on the OI for this Put option and any
unwinding in this would confirm the downside break with the target of
6200. However, next week is March 2014 F&O series expiry and Index may try
to hold 6400 level till expiry day on Thursday, 27th March 2014.
Market Gearing up for Elections
Technical Analysis: Week 10/03/2014-14/03/2014
I was
expecting some bit of correction from 6250 before NIFTY Index starts gearing up
pre-election rally. However, on Monday you would have noticed huge addition of
OI for the 6200 strike price Put option along with panic unwinding in Calls.
This was the first signal of Index forming a strong base around 6200 and ready
to propel higher with a target of 6400. By Thursday it achieved the target of
6400 and change in derivatives Option's Open Interest continued to give bullish
signal. It was evident that Index will cross 6400 & 6500 levels considering
further panic unwinding in Call options on Thursday and Friday.
On Friday
Index has closed above 6500 level and still looks unstoppable. Most of the
technical indicators and oscillators are in overbought zone but key derivatives
indicator - OI PCR is at 1.46 which
is still away from overbought zone. I expect NIFTY Index to keep moving upward
with first target of 6600. Keep close eye on OI-PCR and call buildup at 6600
& 6700 strike price call options. We saw Call writing happening for these
Call options on this Friday. If writing continues on Monday/Tuesday then only
think of shorting NIFTY. Until then it's advisable to stay on long side.
Another important thing is Volatility Index
has taken a "U" turn after finding support at around 12.50 level. Currently it
is at 16.72. If it crosses 20 odd level then expect huge volatility in the
market. And last but not least, Its Options Buyer's market now
therefore Options Writers be careful.
NIFTY – Opportunity to short NIFTY @ 6200-6250
Technical Analysis: Week 24/02/2014–28/02/2014
It may sound
monotonous as am repeating the NIFTY levels for last few weeks but that's how
NIFTY is behaving. Index is now heading towards the upper band. You can easily
see a Gap zone between 6188 & 6263. Obviously this is going to act as
strong technical resistance. Tech Indicators & Oscillators are almost near
Over Bought zone.
The Options
buildup around 6200 and 6300 clearly show that Index can't cross this band in
February F&O series. The OI-PCR is almost in overbought zone. Therefore the
conclusion is 6200-62500 is a level to short.
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NIFTY – Upper boundary 6250-6300
Technical Analysis: Week 10/02/2014–14/02/2014
NIFTY index is
trading exactly as per our predictions given in the first week for February
series. Index made a low of 5933 which was just around our lower target of
5960. After touching the lower support zone, Index is now trying to move up
towards the upper resistance. If you refer to my previous week's chart, I have
already highlighted how Stochastic Oscillator is giving positive crossover.
However, I would like to reiterate that crossing 6250-6300 is extremely
difficult considering the technical resistance as well as Options
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NIFTY – Sell on Rise Market
Technical Analysis: Week 03/02/2014–07/02/2014
In previous
article I had written that NIFTY Index would break the critical support levels.
I was expecting lower level target of 5960 and index made a low of 6027.
January 2014 F&O series expired with 72%
Rollover which is significantly above average. What does rollover
number signals for February series?
What's next? You can clearly see on Technical chart that NIFTY Index is confined
within a range of 5960 and 6350. Index has broken critical level of 6130 with
Gap which is definitely a sign of weakness, technically. However, Derivatives
insights are giving slightly different cues. Change in OI for 6000 strike price
Put option indicates support in the zone of 5960-6000. The PCR is at healthy
1.33. Hence, I expect Index to go up during early part of February 2014 series.
However crossing 6250-6300 is very difficult task and should provide good
opportunity for NIFTY traders to go short!
NIFTY – Retest of Support at 6130
Technical Analysis: Week 20/01/2014–24/01/2014
During the
week Index moved as expected. Considering Technical Indicators I had written in
the last week that Index would go up but the upper side target would be only up
to 6350. During the week it made a high of 6347 and started losing momentum.
What's Next? For the coming week, expect NIFTY Index to once again retest the critical
support at 6130. This would be the 3rd occasion since last month and
I am little doubtful about holding the support this week. The reason why I am
doubtful is because we saw huge unwinding of positions by Put Options writers
on Friday. Hence, if Index breaks below 6130 (on closing basis) then expect a
drop till 5960.
NIFTY – Critical Support at 6130 | (13/01/2014–17/01/2014)
At present
Market is looking directionless. I was expecting NIFTY to take some cues from INFY's
result on this Friday but Index closed with Spinning
Doji Candlesticks indicating indecision.
Technically it has broken important Trend Line support but as you can see in
the chart, it tried to consolidate near 6130 support line for last 4 days. Next
week we have Index heavy weights ITC, RIL etc
results. Hence, we need to keep close eye on 6130 on closing basis.
Next? Index is very near to Bollinger Band support.
Stochastic Oscillator is in oversold zone and about to give 'buy' signal.
However, Money Flow Index is flat and
not showing any indication of either smart money flowing in or out. Hence,
chances are index can find support at the current level but the upside is also
very limited. If Index is able to hold technical support at 6130 then expect a
bounce only up to 6350. On lower side, break below 6130 (on closing basis) can
drag the Index up to 5960.
The Options buildup in
Derivatives segment confirms that the trading range for NIFTY index is between
5900-6300. PCR (Put/Call Ratio) is
exactly around 1.0. Hence, it's better to wait till it stabilizes above 1
before taking any long position. However, the constant decline in Future OI is
indicating that smart ones are winding up their long positions. Hence to
conclude, Index is expected to continue consolidating within this range for
January 2014 series.
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NIFTY – Ready for warm welcome to 2014
Technical Analysis: Week
23/12/2013 – 27/12/2013
Last week our
market showed resilience to US FED QE tapering news. RBI kept interest rate
unchanged in its policy review and market took this move positively. During the
week NIFTY index confirmed the trend line support near 6100. It made a low of
6130 and closed the week at 6274, which was very near to week's high. Index is
looking forward to welcome the year 2014.
Next? As shown in the technical chart, Index has taken
channel line support and has started progressing towards the upper resistance
line. The channel target comes to around 6550. Derivatives data is also confirming the positive signal. PCR is at healthy 1.2 points. On Friday,
Option Writers were confidently writing Puts and quietly unwinding their Call
positions. So, Index looks bullish at the moment but we may see the rise only
after December 2013 F&O expiry on 26th. Keep watch on Rollover % numbers to confirm the trend for
January 2014!
NIFTY – Is smart money flowing out?
Technical Analysis: Week
16/12/2013 – 20/12/2013
Last week on
the back of assembly election results, our prediction was NIFTY index would hit
new high between 6400-6500 and that could be the time to book profits on long
position. The prediction was based on the Options build-up seen in the
Derivatives segment. Once again our prediction turns out to be right as Index
opened at 6415 on Monday morning and came under heavy profit booking pressure.
It lost nearly 250 points from the peak and closed the week at 6168.
Its sustainability
was anyway doubtful as market is expects US Fed to start QE tapering. The next
big major event which will drive the market sentiments in the coming weeks is
RBI monetary policy.
Next? Last Monday Index formed bearish 'Marubozu' on technical chart and confirmed the weakness.
MFI (Money Flow Index) is giving clear –ve divergence
indicating smart money is flowing out of the market on every rise. For the
coming week 6000 is a crucial support. Though the technical chart is showing
weakness, I expect that Index will hold this support at least for the December
NIFTY – Set for All Time High but Sustainability?
Technical Analysis: Week
09/12/2013 – 13/12/2013
Once again
Derivatives Analysis proved an edge over Technical Analysis. Two weeks back
i.e. just before expiry time we saw in this column, how technical chart was laying
a trap for bear and derivatives indicators were giving clearly bullish signal.
NIFTY is on run since December series has begun and this Monday morning NIFTY
is obviously expected to open up with a gap. However, the question is how far
market can go up on back of assembly elections and its sustainability is
doubtful as market expects US Fed to start QE tapering.
What's Next? Technically speaking, NIFTY index has made 2 unsuccessful attempts to
cross and make new all-time high till now and if on Monday it crosses this high
and sustains above then it would be considered as a strong bullish breakout on
a technical chart. For December 2013 series, the PCR is just around 0.96 which
means enough room for market to scale up but the Put/Call build-up
suggest that NIFTY index would hit new high between 6400-6500 and that
could be the time to book profits on long position for December 2013 series
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NIFTY – Time to go long?
Technical Analysis: Week
25/11/2013 – 29/11/2013
Wonder why I
always give more weightage to Derivatives compared to Technical? As we saw last
week, Technically NIFTY chart was showing strength till 6340 above 6100 level
but Derivatives data was not confirming the same. During the week Index first
deceived by crossing 6100 level on Technical chart, barely reached 6200 and floored back to 6000
level. Now though the technical chart is showing weakness, derivatives data is
actually giving an indication of oversold situation and one can expect sharp
bounce back once again.
What's Next? The channel line support is at 5900 and most critical 200 EMA is at 5850.
The OI PCR (one of the most reliable derivative indicator) has achieved its
oversold target this week. Hence, I would not be looking for any new shorts and
instead would prefer to go long in INFTY in the region of 5850-5900.
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NIFTY- Support at 5850-5900!
Technical Analysis: Week
18/11/2013 – 22/11/2013
In my
previous article I had cautioned bulls as Index was reaching towards the
technical resistance at 6340. In fact Index kissed exactly this resistance zone
by making high of 6342 on Muhurt trading day and
thereafter corrected by 370 points without any pause and hit 5972 level.
However, on Friday Index bounced backed sharply and closed the week at 6056.
Does that mean correction is over?
What's Next? On Technical Chart Index will have to close above 6100 for up move to
continue. Above 6100 the index will try another attempt to touch and cross 6340
resistance. However, Derivatives data is still not confirming the end of
correction. The November 2013 series started with record high Rollover but
NIFTY Further OI is declining since the day one and no fresh long buildup till date. The OI PCR is at 0.97 which means
there is some more room for NIFTY to slide down further. On downside the
channel line support is at 5900 and most critical 200 EMA is at 5850. Hence, I
feel that 5850-5900 level should be considered as an opportunity to go long.
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NIFTY under Dark Cloud Cover!
Technical Analysis: Week
28/10/2013 – 01/11/2013
Last week I had
cautioned Bulls as 6230-6340 was expected to be strong resistance zone. During
the week NIFTY Index could barely reach 6252 and started confirming the
What's Next? Index is definitely ready for the correction now Decline in NIFTY Future
OI near resistance zone confirms that smart traders are booking profits on
their long positions. OI PCR seconds this assumption because it has already
reversed after touching the overbought level and currently it is at 1.46
levels. Last we saw how MFI (Money Flow Index) was showing negative divergence
and during the week it has started confirming the outflow of the smart money.
To conclude, NIFTY is under dark cloud cover and correction is due.
However Options buildup is hinting that Index is unlikely to fall below 6000
until October 2013 F&O series expiry on Thursday 31st.
NIFTY – Bulls be Cautious!
Technical Analysis: Week
21/10/2013 – 25/10/2013
In previous
article we had given an upper target of 6100 for NIFTY index but, to be very
honest, were expecting Index to reverse from this level. During the week Index
did reach to the 6100 levels but unwinding at Call options followed with huge
Put writing gave an indication of further up move on Friday morning and Index
closed near 6200. For the coming week,
Index still looks bullish but it is already into cautious territory.
What's Next? NIFTY Price Chart is showing the next resistance levels at
6230-6340.The unwinding of Call options on Friday suggest that Index may
continue to move up further and hence can break the 1st resistance
at 6230 but crossing 6340 is going to be an acid test! The OI PCR as on Friday
closing is at 1.55, which means some more upside is possible but very soon it
will enter into overbought territory. However, MFI is clearly giving a
divergence signal which is an early warning for the Bulls. Another important
thing is, on Friday Index went up by nearly 150 points but NIFTY Futures IO
actually declined by -2.17% which is not a healthy sign for the market. Hence to conclude, we are very close to the
strong resistance zone at 6230-6340 and be cautious if adding any long
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NIFTY – Trading Range for October series 5700-6100
Technical Analysis: Week
07/10/2013 – 11/10/2013
Last week I
had explained why and how range 5680-5750 was going to act as support and NIFTY
Index actually took support at 5700 which was exactly within this band.. The
majority was bearish because of the US government shutdown news but as usual
stock market proved that the majority is seldom right.
What's Next? Candlesticks formation on Friday closing basis shows indecision on
Technical chart. Index bounced back by
250 points from 5700 but the volumes were just average. The current
Options buildup is confirming the NIFTY trading range between 5700-6100 and
NIFTY index has closed exactly at the midpoint of the trading range. 'Doji' candlestick formation with marginal change in OI
suggest wait and watch situation before taking any new positions.
From swing
trading perspective 6050-6100 level will be good opportunity to go short and
5700 is an opportunity to go long for October F&O series. Level 5950 is
very important as the next week begin. If Index is able to cross 5950 on Monday
then it can easily propel right up to 6100, which is upper limit for NIFTY
index for this series.
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NIFTY – Intermediate Support @ 5750
Technical Analysis: Week
30/09/2013 – 04/10/2013
Last week it
was clearly written that the correction was inevitable and index was unlikely
to give any further bullish breakouts. In fact Candle Stick formation had
already given the bearish signal and decline in OI was confirming the
correction without any doubts. As expected, NIFTY index corrected from the
previous week's closing of 6012 to 5811 and closed at 5833 for the week.
Now index is
very near to the support zone and expect some bounce during the coming week.
What's Next? As you can see on the technical chart, 200
EMA for NIFTY is at 5750. The 38.2%
Fibonacci Retracement of the rally from 5118 to 6142 also coincides with
200EMA. Further, there is a Gap zone between 5688 and 5738.
5680-5750 is temporary support zone for NIFTY Index. However, any bounce back
from this support zone would be yet another opportunity to go short. Below
5680, the next target is 5550-5450.
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NIFTY – Correction looks inevitable
Technical Analysis: Week
23/09/2013 – 27/09/2013
Last week I
had written that on higher side 6050-6100 seems to be the max limit for October
series and should provide good opportunity to go short. As expected the week
was full of excitements. First, NIFTY Index jumped by 200+ points on Thursday
and hit 6142 level on the back of global cues as FED surprised the markets by
announcing that it will continue with its $85 billion per month bond buying
program. However, very next day Index dropped to 5932 on account of
disappointing RBI Monetary policy. Though Index has managed to hold 6000 level
on weekly closing basis, the correction for the current rally looks inevitable,
What's Next? Candle Sticks formation on technical chart is hinting the weakness as we enter in to
September 2013 F&O expiry week. Sharp decline in Future
OI at resistance level confirms that NIFTY is unlikely to give any
further breakout till the expiry. PCR is in
highly overbought zone. The MFI (Money Flow Index)
indicates that the smart money is flowing out at the higher levels. Hence, to
conclude, the correction for the current rally looks inevitable and the
correction levels at which Index may find some intermediate support is 5750
which is 200 Day EMA and Gap zone on the
technical chart.
NIFTY – Cautious mode ahead of FOMC and RBI monetary policy
Technical Analysis: Week
16/09/2013 – 20/09/2013
Last week, we
saw that there were multiple resistances on Technical Chart around 5750 but
Derivatives buildup was not confirming the upper range as OI was way below the
average and no distinctly high accumulation was seen at any strike for Call
options. On Tuesday, NIFTY index opened just above 200 EMA @ 5738 with gap up
opening and confirmed the breakout above 5750 resistance level, It then made a
high of 5932 and closed the week at 5850.
Poor Options
buildup indicates that market is in cautious mode ahead of US Federal reserve
FOMC rate decision on Wednesday 18th September 2013 and then RBIs monetary
policy on Friday 20th September 2013.
What's Next? NIFTY Index is now very close to its next major resistance at 5960-6000,
and it's not going to be an easy task for the market to move up for this point
onward. The Trend line resistance coming from previous two top is at 5980. If
NIFTY Index is able to break this line then there is immediate Gap at 6050 and then
6100, which was previous high.
On higher
side 6050-6100 seems to the max limit for October series and should provide
good opportunity to go short. Index is already showing a sign of tiredness as Future's OI has begun to decline. PCR already tested its overbought zone once and
may make another attempt to hit this level during this week before it confirms
sell signal. On lower side the support is at 5600 and if this level is broken
then Index may slide back to 5300 by the end of the series
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NIFTY – Multiple Resistances @5750
Technical Analysis: Week
10/09/2013 – 13/09/2013
Last week I had
predicted that the bullish momentum will continue and the targets given were
5600-5720, which were 50% and 61.5% Fibonacci Retracement levels respectively.
During the week Index first tried to achieve its 1st target at 5600
and tanked by 200 points on Syria rumor. However, it recovered from very next
day and by Friday it reached very close to our 2nd target of 5720.
Index made a high of 5689 and closed the week at 5680.
Index is now
very near to the area where it is likely to face multiple resistances and
coming week is going to be Trend decider for NIFTY Traders.
What's Next? On Technical Chart, the 200 day EMA is
at 5730. The 61.8% Fibonacci Retracement level
is at 5720. The previous top made was at 5755. Hence, there are multiple
resistances for NIFTY index around 5750.
The OI PCR is at 1.53 which means there is limited
room on upper side. However, Call Options build is not yet confirming the upper
range and OI is buildup way below average and no distinctly high accumulation
was seen till Friday close.
Hence to
conclude, at present the resistance zone is around 5750 but I would suggest to
watch change OI for OTM Call/Puts for the confirmation..
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NIFTY – Bullishness to continue, but limited upside!
Technical Analysis: Week
02/09/2013 – 06/09/2013
Last week I had
recommended that the expiry week is going to be most favorable for Option
Buyers. I am sure that both Put as well as Call buyers must have minted money
during the week. The Options buying was recommended mainly considering VIX
(Volatility Index) being on its peak to make new high around 35. It was shown
on the technical chart that Index had broken the rising channel and downfall
was expected but the pullback from the low of 5119 to around 5500 surprised
everyone. However, there are important
Derivatives Indicators we need to review before we set the expectations right
for September 2013 series.
What's Next? August F&O series ended with a way below average Rollover which was
just at 51%. What it means is smart traders covered their short positions which
they had built in the range of 5900-5700. There is no carry forward of short
positions for September 2013 series. This is a sign of relief for the bulls.
However the further journey for NIFTY index is not so easy until we see any
fresh buying interest. There was 18% increase in Future OI (Open Interest) with
1.3% gain on price, but this trend has to continue in the coming week. The PCR which tested its oversold zone around 0.8 just
before expiry is now at 1.45 as September series begins, which means
very limited space for NIFTY to move up.
On Technical
Chart the Index is still bellow rising channel. For the coming week the target
for Index above 5500 is 5600-5720 which are 50% and 61.2% Fibonacci Retracement
levels for the current fall from 6093.
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NIFTY – Rising Channel Broken!
Technical Analysis: Week
26/08/2013 – 30/08/2013
the OI-PCR ratio we were anyway expecting more downside during the week. On
Wednesday 21st, this most proven derivatives indicator touched 0.80
level on EOD basis and we alerted everyone on our website about potential
bounce back on Thursday morning itself. Index took technical support at the Gap
around 5260 (which was left on 7th September 2012) and bounced up to
5478. On Thursday & Friday, NIFTY index recovered by 200+ points from the
low of 5254. However, FIIs were net seller by 1400+ crore in cash and Index
futures each on these days. Index bounced back on Thursday & Friday but
that is due to short covering only.
What's Next? On technical chart, Index has broken the rising channel. Weekly chart is
showing "Bullish Hammer" type candle but
Index must close and sustain back inside the Channel to confirm the
bullishness, if any. The 38.2% Fibonacci
Retracement level for the current pullback is at 5570.
The highest OI at
5600 strike price Call option confirms that it is hard for NIFTY index to cross
5570-5600 level in this series. At
the same time there was heavy Put writing at 5400 strike. Therefore at this
moment the trading range till expiry seems to be locked between 5400 and 5600.
However opportunistic NIFTY traders should keep close eye on Put/Call buildup
at these strike prices and take full advantage for Options trading. Remember
that the Risk/Reward ratio is always most
favorable for Options Buyers during expiry week!
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NIFTY – Critical support at 5400-5450
Technical Analysis: Week
19/08/2013 – 23/08/2013
Last week I
had given 5450-5720 as a trading range for NIFTY Index and as you know,
during the week NIFTY Index could barely reach up to 5754 and crashed to 5496 on
in a single trading session on Friday. You are seeing multiple reasons to
justify the fall; RBI imposing capital controls, US tapering down of QE, Rupee
making new all-time low etc. However, technical chart and derivatives insights
had given weakening signal well in advance!
NIFTY is now
very near to our lower target of 5450 and we need to take a fresh look at the
data to figure out where market will move from this point onward.
What's Next? As you can see in the chart, NIFTY is approaching most critical support
level at 5450, which is being provided by trend line and Gap zone between
5447-5477. Technically this is the last hope for NIFTY before we see more
An option
buildup at 5400 Puts still continues to be the highest accumulation point with
more than 20L addition on Friday. But the worrying factor is OI-PCR at 0.97, which suggests that there is still
enough room for downside. The FII Indictor
is also looking scary. FIIs have net short positions in Index Futures &
Call Options and long in Put options. On Friday
Index collapsed >4% with >18% additions in Future OI for August
series, which indicates huge short position buildup in NIFTY Futures.
Hence to conclude, NIFTY Index may bounce back from the range around
5400-5450 but any pullback will be new shorting opportunity for the traders
NIFTY Trading Range 5450 – 5720
Technical Analysis: Week
12/08/2013 – 16/08/2013
As expected, NIFTY broke 5600 level during the week. It made a low of
5486 and then tried to recover by closing the week at 5565. On Daily chart it
clearly shows further downside breakout but one can not
ignore the gap zone between 5477- 5447 which can act as an intermediate support
for this series.
What's Next? As you can see in the chart, NIFTY has broken next trend line support @5620
on Tuesday. However, it managed to survive above the previous low of 5477,
which was made on 10th April 2013. You can also clearly see a big
gap which was left by NIFTY index at 5447 in September 2012. Hence a narrow
range of 30 odd points between 5447-5477 is extremely important. According to
me this range will provide a strong support for NIFTY index in near future. The
Options data build-up also hints that 5400 is a good support for August 2013
F&O series. The OI PCR is at 0.93 which is very near to its oversold zone.
Hence, I
think there is a limited downside for NIFTY at least for August 2013 series.
For the coming week, the immediate resistance is at 5620 and above this NIFTY
index will try to reach 5720
NIFTY Support levels 5800-5700
Technical Analysis: Week
29/07/2013 – 02/08/2013
Based on the
Derivatives Indicators, last week we had said that NIFTY in oversold zone and
correction would begin as soon as it kisses 6070-6130 zone. We had also said
that though it will enter into correction mode, it is unlikely to break 5900
till F&O expiry. During the week NIFTY acted exactly as predicted. First it
made a high of 6093 which was almost as midpoint of 6070-6130 range and then
collapsed to 5900 on expiry day. The technical chart is showing weakness but
the immediate support levels are not too far
What's Next? In my previous articles I have already said that the target for
correction is around 5800 levels. On technical chart you can see that 200EMA line is at around same 5800. Also, there is
Gap Zone at 5700.
Though it's too
early to comment on Derivative buildup, the options writers were busy writing
6000 & 5800/5700 strike price Call and Put options respectively. Hence
5800-5700 looks like a support at the moment and the upper side is being capped
at 6000 level.
NIFTY unlikely to give correction before July F&O Expiry…
Technical Analysis: Week
22/07/2013 – 26/07/2013
Last week we discussed about OI-PCR ratio in extremely overbought zone
and were expecting NIFTY to enter into correction mode as soon as it approaches
6070-6130 range or breaks the crucial support of 5950. On Tuesday it did break critical support at
5950 but managed to survive by closing just around 5955. Then on Friday it
tried to kiss the upper resistance band but could reach only up to 6067 and closed
the week at 6029. The key derivatives indicator OI-PCR (Open Interest –
Put/Call Ratio) continues to be in overbought zone and Index is due for
correction. However, the coming week being Expiry week for July 2013 F&O
series, market may test the patience before any correction begins.
What's Next? The Technical levels remain same as what we discussed last time. However,
the question is when NIFTY can enter into correction mode. If you carefully
look at the options buildup then you will observe that it is very unlikely for
NIFTY Index to break 5900 level before July F&O expiry on this
Thursday. Hence, Option buyer should be careful if they are buying Puts for
July series. The better strategy will be to buy August series ATM or near ATM
Puts and at the same time selling OTM Puts to reduce the risk.
NIFTY 5970-6000 targets achieved! What's Next?
Technical Analysis: Week
15/07/2013 – 19/07/2013
Since last few
weeks I was talking about continuation of bullishness with a target of around
5970-6000 level for NIFTY Index. During the week NIFTY achieved this target by
making a high of 6019 and closed at 6009. The bullish momentum looks like
unstoppable but market is now in extremely overbought zone and can give
unexpected correction before the rally continues towards next milestone.
What's Next? As you can see on the technical chart, Index has crossed the hurdle at
61.8% Fibonacci retracement level and now the last hurdle i.e. 76.4%
retracement level is at 6070 level. Till last week the Derivatives buildup was
suggesting 6000 as a boundary for this series but there has been a significant
change in Option Writers positions during the week. Reduction in 6000 Call
Options Open Interest due to unwinding of their positions suggests that the
upper limit for NIFTY index has moved to 6100. Hence the next target for NIFTY
Index above 6020 is at 6070-6130 which is 76.4% Fibonacci Retracement and
previous tops respectively.
However PCR OI ratio is at 1.71
which is highly overbought zone. Therefore NIFTY is expected to enter into a
correction mode as soon as it approaches 6070-6130 range or breaks the crucial
support of 5950 on lower side. The target for this correction would be around
NIFTY – Upper side capped @ 5970-6000
Technical Analysis: Week
08/07/2013 – 12/07/2013
Last week I
had written that at overall level both Technical & Derivatives indicators
were suggesting continuation of bullish momentum and this rally would be
approaching 61.8% Fibonacci Retracement
level at 5970. As expected, during the week NIFTY index went up and took a halt
at 5900 which is 50% Fibonacci Retracement milestone. The momentum is still
positive but the upper side is now very limited for the July 2013 series.
Next? On Technical Chart you can clearly see that there
are multiple resistances at 5970 level. 61.8%
retracement level will act as first resistance. Then there is another
resistance line which is highlighted in red
color. This resistance is coming from series of previous highs made by NIFTY
index. Therefore NIFTY Index must cross this crucial hurdle around 5970-6000 if
bullish trend has to continue. However, derivatives
data clearly shows that it is far difficult for NIFTY to cross this hurdle in
July 2013 F&O series. The highest OI is at 6000 Call options and option writers
are fearlessly writing more and more Calls at this strike price. The OI-PCR is
at 1.38 which means it will enter into overbought zone soon possibly by the
time NIFTY hits 5970-6000 target. Therefore to conclude, 5970-6000 is the limit
for July F&O series and it is better for NIFTY traders to start booking
profits on long position and start building short positions as Index enters
into this crucial resistance zone
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Bullish momentum to continue…
Technical Analysis: Week
01/07/2013 – 05/07/2013
During the week we saw a spectacular bounce from 5600 level to 5840. The good news for Bulls is that the NIFTY Rollover for June'13 series is
just 47% which is well below the average. What it means is major NIFTY short
positions have been covered in June series and the bullish momentum which we
saw on Thursday/Friday is likely to continue further.
What's Next? On Technical Chart NIFTY index has closed above 200 EMA & SMA. A big
gap up opening along with long green Marubuzu
Candlestick on Friday indicates strong bullishness. It has also closed
above 38.2% Fibonacci Retracement level. The technical Indicators are also
confirming the bullishness. On Derivatives side after touching 0.8 ratios in
June series, the PCR is at healthy 1.4
level. I was expressing worries about FII indicator
till last week but this indicator has also given some sign of relief this week.
So at overall level both Technical & Derivatives indicators are suggesting
that the bullish momentum will continue in the coming week. The immediate
target for this rally could be around 5970 which is 61.8% Fibonacci Retracement level of the current fall.
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Can NIFTY Index hold 5600 till
Technical Analysis: Week 24/06/2013 – 28/06/2013
I have been continuously stressing on how FII indicator is turning more
and more negative and any pullback s a shorting opportunity. During the week a
Dead Cat Bounce could lift the NIFTY index hardly up to 5863 and collapsed.
Thursday was 100+ point Gap down opening and by Friday it made a low of 5600.
Now the situation is trickier. The technical indicators as well as
Derivatives indicators are in oversold zone but FII indicator is not showing
any sign of recovery and on the contrary it is turning worse. The question in
every NIFTY trader's mind is can NIFTY index hold or break 5600 till expiry on
this Thursday.
What's Next? As per the technical charts major technical indicators are in oversold
zone. The OI PCR is at 0.8 which is again an oversold territory. The highest
open interest is for Put option is at 5600 strike price Put option and there
was further addition on Friday. Which means at this moment it is very unlikely
that NIFTY index can break 5600 level before this expiry. However, there is
equal addition in Call option open interest too. Considering the current market
scenario one need to be very alert and need to monitor options buildup very
closely. I suggest to short NIFTY only and only if it breaks 5600 along with
decline in open interest for Put options in the coming week. Otherwise Index is
ready for another sharp bounce possibly up to 5780 before expiry on this
Dead Cat Bounce!
Technical Analysis: Week 17/06/2013 – 21/06/2013
I hope during the week all NIFTY traders pocketed full 150 points fall in
NIFTY. Last week I had written about hammering NIFTY below 5850 as it was
expected to break this critical support and fall right up to 5700. As predicted
NIFTY broke critical support on Tuesday and reached to the target of 5700 by
Thursday morning on opening bell! It made a low of 5683 and closed exactly at
5699 on Thursday. However, after achieving this target NIFTY Index has given
strong bullish signal for the coming week.
What's Next? If you look at Candle Stick pattern on the technical chart, you will
notice bullish reversal pattern call "Morning Star". [Morning Star: a short middle candle that
gapped down on the open, and a long-bodied white candle that gapped up on the
open and closed above the midpoint of the body of the first day.]
Market is in oversold zone and key Technical Indicators such as Stochastic
Oscillator, Money Flow Index are giving bullish signals. PCR (Put/Call Ratio)
almost hit 0.8 level on Thursday and now at 0.92 levels. On Friday majority of
the stocks went up due to short covering. Hence, expect market to go up further
in the coming week till around 5950. However, one can't forget that FII
indicator has turned extremely negative. Therefore unless and until this
indicator shows any positive sign, I would consider this up move as Dead Cat
Bounce and wait for an opportunity to hammer NIFTY at around 5950.
NIFTY Traders, be ready if
Index breaks 5850?
Technical Analysis: Week 10/06/2013 – 14/06/2013
Apology for not being able to update Market Rahasya website for last two
week as most of our team members were away on summer vacations.
After facing a resistance near 6200, NIFTY Index is now in correction
phase. This week Index opened at around 6000 and closed near 5880. It did make
some efforts to recover from day's lows but faced tremendous selling pressure
on every rise. This is a clear sign of further weakness. During the week FII's
have given alarming signals and one need to be careful if NIFTY index breaks
5850 level in the coming week.
Why 5850 is critical? On Technical Chart you can see that 5850 is 50% Fibonacci Retracement of
the recent rally from 5477 to 6229. You will also notice that that there is an
open Gap between 5844-5853. Hence, this range becomes a support zone for NIFTY
Index. One can expect some technical bounce around this level.
However, FIIs are giving strong negative signals. They have reduced their
long positions in Index Futures significantly. Also, they are increasing the
long positions in Put options and shorting Call options. Hence, I doubt whether
NIFTY can hold the support level of 5850. The break below 5850 would trigger a
fall up to 5700 within no time. So, NIFTY Traders be ready to hammer NIFTY
gain if it breaks 5850!
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@ 6180
| Target Achieved, what's Next?
Technical Analysis: Week
20/05/2013 – 24/05/2013
During the week NIFTY Index rallied exactly as I had predicted. It was
predicted that Index will struggle a bit to cross first resistance at 6111 but
ultimately it will break this resistance and reach 6180-6200 levels. During the
week this is what exactly happened. Index first mad a high of 6114 and tumbled
by 140 point on Monday. However it showed a smart recovery on Wednesday and gained
by 150+ points and covered the entire loss.
Finally the Index made high of 6198 and closed the week at 6187, which
was exactly within our given range of 6180-6200. I hope all our readers enjoyed
the rally and have taken the money home from the table. Index is now at Make or
Break stage and I would suggest to wait and watch before taking any new
What's next? Technically speaking, level 6180 is a "make or
breaks" level because during January 2011 Index had made a high of 6180 and
thereafter there was a fall of almost 1000 point without any pause. Obviously
one can expect huge profit booking at this level 6180 because of the past
If you look at the Call option buildup then 6200 is still a resistance as
I did not see any panic among Option Writers to exit from this level. Therefore
the best strategy is to wait and watch the Open Interest (OI) at 6200 strike
price call option. If you don't see any decline on Monday/Tuesday then
resistance at 6200 will get confirmed. However, if you see decline in OI in the
early part the week then be sure that NIFTY Index will break 6180-6200
resistance line and don't be surprise to see index reaching previous high at
6338 with the speed of rocket.
The PCR (Put/Call Ratio) is at 1.43 which means it
has still not reached overbought zone though Index has already reached very
near 6200 level. The FII indictor continues to be bullish and still no sign of
any divergence yet. Hence overall view still remains bullish. Therefore to
conclude, if NIFTY Index is able to cross 6200 level in the coming week then
NIFTY traders can once again take long positions with a target of around 6340.
Time to book profits near 6180-6200
Technical Analysis: Week
13/05/2013 – 17/05/2013
In my
previous article i.e. week before RBI monetary policy day, I had written about
continuation of bullish momentum and had given a target of 6000 level before
3rd of May, which was RBI monetary policy announcement day. During last two
weeks index continued to rally as expected and achieved the target of 6000 on
2nd May itself. In fact on Friday of this week it almost kissed 6100 level. So
far NIFTY index has gained nearly 600 points without any pause and it seems to
be unstoppable at this moment. However, Index is very near to the critical
resistance at 6180 and therefore I would suggest being cautious from this point
What's next? On Technical chart the
immediate resistance is at 6111, which is previous high made on 29th January
2013. Index may struggle a bit to cross this level but most likely this will be
broken in the coming week. However, the next resistance at 6180 seems to be a
tough challenge to cross. This level has a lot of history behind. This high was
made during January 2011 and thereafter there was a fall of almost 1000 point
without any pause. Hence, there is going to be a huge profit booking as soon as
Index reached near 6180 level.
Derivatives data too confirms that 6200 as a strong resistance for the
May 2013 F&O series. The highest OI for Call option is at 6200 strike price
Calls. Therefore the possibility of crossing 6200 level in this series is very
low. The PCR (Put/Call Ratio) is at 1.37 which means there is still some more
room for index to move up. But I expect that the PCR will hit its upper limit
by the time Index hits 6200 odd level. The FII indictor continues to be bullish
and FII's net positions in derivatives segment supports continuation of the
current rally for some more time. But this indicator too is approaching its
apex point where divergence is likely to begin. Therefore
to conclude, 6180-6200 seems to be the ultimate target for the current
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Next cue: RBI's monetary policy review on 3rd May
NIFTY - Technical Analysis:
Week 29/04/2013 – 03/05/2013
April 2013
series ended on a very promising note. A spectacular recovery of nearly 400
points from the low of the series around 5500 to 5900. The reversal was seen
during mid of the series i.e. on Tuesday, 16th when it confirmed the support at
the gap zone between 5447- 5526 and closed above previous red candlestick.
Simultaneously Options buildup showed huge reversal in Option Writer's
positions and confirmed the supports. On the same day it crossed 200 day EMA
and closed above it signally powerful bounce back.
Interestingly on
Thursday FIIs (Foreign Institutional Investors) have bought record high Index
Futures worth Rs. 3,700 crore and Rs
1,450 crore in the cash market. In fact FIIs had net short positions in Index
Futures at the beginning of the April series but since mid of April they have
been covering their short positions in Index Futures and today they have turned
net long position holders as May 2013 series begins. So, what are they
expecting in the months of May?
Next? I expect the current bullish momentum to continue in
the coming week. The Technical chart shows that NIFTY Index has given a bullish
breakout by crossing the multiple resistance lines around 5800. Hence going
forward, expect this level to provide support. However, the next immediate
technical resistance is at 5970. The NIFTY rollover for the new series is at
67% which his significantly high compared to last two month's average which was
just about 54%. This is a positive cue for the market because it implies carry
forward of long position for May series. Most likely NIFTY index will try to
kiss 5970-6000 range by 3rd May 2013 which is RBI's monetary policy
announcement day. Thereafter it is advisable to wait and watch whether NIFTY
index sustains above this level and decide the next move!
NIFTY: Watch channel line resistance @5800
NIFTY - Technical Analysis:
Week 22/04/2013 – 26/04/2013
Last week the
situation was little uncertain and I was doubtful about NIFTY index holding
5440 level. Though the PCR was in oversold territory the Option writers were
still confidently writing the Call option till Friday, 12th April. However, a
confirmed bullish reversal signal for the week came on Tuesday, 16th when
Options buildup showed huge reversal in Option Writer's positions. During the
week NIFTY index opened near 5500 and reached almost 5800. A spectacular rally
of nearly 300 points in just 4 trading sessions!
The India
market is rallying on hope for rate cuts from RBI's monetary policy review on
3rd May. The exciting factor for the week was fall in Gold, Silver and Crude
prices. The fall in prices of these commodities is obviously going to ease the
pressure on external trade deficits. Also, the inflation data has surprised
positively raising hopes for interest rate cuts
The other factor is
earning season. The earning season actually started with disappointment by
Infosys but TCS and HCL Tech posted decent results which helped to improve
sentiments for IT sector. Banks have started posting decent results too.
What's Next? If you look at the Technical chart, you will notice that NIFTY Index is
trading in a falling channel shown in the dotted parallel lines. Above 5800
Index will break this falling channel but there is one more trend line
resistance coming from the top which is at 5850. Therefore one can expect
5800-5850 as next resistance level. If Market is able to break this barrier
then the next target comes at around 6000 which may be achieved if RBI
announces any rate cuts during the monetary policy review on 3rd of
May 2013.
Derivatives data is
of course showing resistance at 5800 level. I suggest watching Call option
buildup at 5800 strike. If you see addition in Open Interest at this level on
Monday then it will confirm the resistance at this level. However, if you
notice unwinding in Call options by Call writers and Open Interest start
declining then be sure that the resistance will be broken very easily and don't
be surprised to see 6000 level by 3rd May 2013 which is RBI's
monetary policy announcement day.
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NIFTY: Next Target below 5440 is @5280
NIFTY - Technical Analysis:
Week 15/04/2013 – 19/04/2013
Last week I had explained about gap zone between 5447-5526 and how Index was
expected to bounce back sharply as it reaches near 5440. During the week NIFTY
Index behaved almost as expected. It made a low of 5477 and bounced back
sharply. However, the pullback was short lived.
It hardly reached 5600 and Infosys ruined the market sentiments. NIFTY
Index opened with a gap down of nearly 100 points on Friday morning and closed
the week at 5528. According to me the pullback for NIFTY Index stands
terminated at 5600 and I see more dark cloud cover as we enter into 2nd
half of the April 2013 series.
Next? Technically, the gap zone is still open between
5447-5477. Going forward 5440 level is extremely important. I would like to
repeat that this is only 50% retracement level of the entire rally from 4700 to
6111. Hence break below 5440 would mean a slide up to 61.8% Fibonacci
Retracement which is at 5280.
From Derivatives angle the only favorable indicator at the moment is
Put/Call Ratio (PCR), which touched the oversold zone at around 0.80 and now
hovering around 0.90 point. But it needs cross 1.0 level to indicate any
strength. Invariably NIFTY index bounces back from 0.80 ratio level which did
happen during the week but the Options buildup data does not support any
further +ve momentum. As on Friday, Options writers
were fearlessly writing call options and winding up their positions from Put
options. This is more or less confirmed signal that Index may breach 5440 level
in the coming week and continue towards the next target of 5280.
Pullback Terminated, Next Target 5440…
NIFTY - Technical Analysis:
Week 08/04/2013 – 12/04/2013
I was expecting a
pullback from 5600 to at least around 5850. However NIFTY Index could barely
manage to reach up to 5750 and pullback got terminated. Generally 200 day
moving average acts as strong support/resistance and index or stock tussle
around these averages before it makes or breaks. However, on Thursday morning
Index broke 200 day EMA as well as SMA effortlessly with big gap down opening.
By Friday it made a low of 5535 and closed just below all major support lines.
This is definitively a sign of weakness indicating further fall.
What's next? NFTY
index is now ready to fall and achieve our 2nd target of 5440. Technically speaking there is a gap zone between 5447 and 5526, which
was formed in September 2012. Gap means not trading happened in this price
range. Going forward this Gap zone is considered to be a strong support zone.
Therefore NIFTY index can find a support anywhere in the range of this 80 odd
points. Generally it is observed that eventually these open gaps are filled.
Hence there is a high possibility that index will fall around 5440 level to
fill this gap. Also as on Friday, Options writer were switching their positions
in Put Options directly from 5600 to 5400 strike price. This indicates that
options writers are not sure whether Index will hold 5500 level in the coming
week. And as you know Option Writer are proved to be right majority of the
time. So, expect NIFTY index to break 5500 level in the coming week and to fill
a gap at 5447.
Just to remind you once again, I have already talked about Fibonacci
retracements level for NIFTY index in my previous articles. At 5600, index
achieved its first target of 38.2% retracement level of the entire rally from
4700 to 6111. Now the next target is at 50% retracement level which is 5440.
Once again expect some sharp bounce back in NIFTY as soon as this level is
reached. NIFTY traders can take full advantage by covering short positions at
around 5450 and going long for some quick and handsome gains.
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NIFTY finds support @5600, What's Next??
NIFTY - Technical Analysis:
Week 01/04/2013 – 05/04/2013
Last week I had
predicted a limited downside for NIFTY and pullback rally from 5600 level and
that's what exactly happened during the week. On F&O expiry day NIFTY Index
made a low of 5605 and pullback started on account of short covering. It then
recovered by almost 90 points and finally closed the week at 5682. That's the power of Derivatives Analysis. Technical
Analysis only indicates support and resistance, but the actions seen in
Derivatives confirms whether it will hold or break the support/resistance.
Market is once again back on the dividing line between Bulls & Bears. Index
closed at 5682 which is just near its 200EMA (5670). Hence expect the battle
between bulls and bears to continue in the coming week.
What's Next? During the week NIFTY index has taken support at 38.2% Fibonacci
retracement level which was 5600. It is currently hovering around critical 200
day averages. Market is in highly oversold zone. Most of the technical
indicators and oscillators are below the threshold level of oversold line. As
you can see in the chart, the momentum indicator – Stochastic Oscillator is at
the verge of giving 'Buy' signal from the oversold zone. However the only
hurdle is broken support trend line at 5700. Index must cross this hurdle if it
has to continue with the pullback which got triggered on the back of short
covering on Friday. It would be bit early to find some confirmed cues from
Derivatives but it hints that 5600 is a good support. Technical and derivatives
both are hinting for relief rally in April 2013. My personal view is it should cross 5700 and
rally towards 5850 minimum!
NIFTY @5650… 1st Target Achieved, What's next??
NIFTY - Technical Analysis:
Week 25/03/2013 – 29/03/2013
Last week I had written about how Derivatives buildup
was showing clear weakness and NIFTY Index heading towards its 200 day EMA at
5670 on technical chart. As expected, during the week NIFTY Index achieved its
lower target of 5670. It made a low of 5632 and closed the week @5650, which is
below 200 EMA.
On the monetary policy review
day the Reserve Bank of India lowered the benchmark repo rate –by 25 basis
points but kept CRR. This was widely expected and, therefore, could have had
hardly any impact on Market. However immediately after this, the next news
stroked about DMK's withdrawal from the ruling coalition and market started
collapsing because it made the political situation uncertain. On global front
European markets are eyeing towards Cyprus. ECB
has given deadline to allow the Central Bank of Cyprus to keep providing
with emergency funding until next Monday. Needless to say that there will be
ripple effect on Asian markets including India.
What's Next? On Technical chart NIFTY index has achieved its first target towards its
200 day EMA at 5670. The immediate support below EMA is its 200 day SMA (Simple
Moving Average) which is at 5620. I have already talked about Fibonacci
Retracement level in special article on Budget 2013. NIFTY index will achieve 1st
target of 38.2% retracement at 5600. But before it proceeds toward to 2nd
target of 50% at 5440 I expect some pullback from 5600 levels. The coming week
is an expiry week for F&O March 2013 series. Options buildup shows that it
is very unlikely that Index can break 5600 level in this series. The Open
Interest Put/Call Ratio (OI PCR) has almost reached to an oversold territory.
Hence I expect very limited downside for NIFTY index in the coming week and get
ready for a pullback rally from 5600 level.
RBI's Monetary Policy Review - Next cue?
NIFTY - Technical Analysis:
Week 18/03/2013 – 22/03/2013
During the week
NIFTY Index just kissed yet another resistance around 5970 and gave up on any
efforts to cross the hurdle. Monday itself it formed a "Doji"
candle indicating indecision on the technical chart and started declining from
subsequent days. Then came Thursday morning when the whole market was shook up
by online magazine CobraPost when their sting
operation on money laundering claimed that the staff of India's top three
private banks (ICICI Bank, Axis Bank and HDFC Bank) was helping customers do
deals that violate income-tax, enforcement and banking laws. However the banks
immediately clarified that they fully compliant with the regulations and
assured that they will probe the matter. This helped the stocks recover most of
the intra-day losses. In a process NIFTY Index tumbled to 5791 and closed the
week at 5875.
Now market prepares
to face the next hurdle as Reserve Bank of India (RBI) sits to review its
monetary policy. Market participant are very hopeful of another 25 bps cut in
the midst of conflicting signals coming from the economy making RBI's task as
usual difficult. Though the market participants are hopeful about the rate
cuts, the Technical & Derivatives data is giving altogether different
signals on the final outcome post this event
What's Next? Technical chart shows that NIFTY index is confirming resistance at 5970
and heading towards its 200 day EMA at 5670. On Derivatives front, Open
Interest Put/Call Ratio (OI PCR) has started declining from overbought zone.
Currently it is at 1.4 and it will be a warning signal if it drops below 1.2
No matter what
surprise RBI comes up with on Tuesday, 19th of March but Options buildup shows
a clear weakness, The highest Put buildup is at 5700 strike and Option Writers
were skeptical about writing more Put option at 5700/5800 levels on this
Friday. Therefore by any chance if Index jumps up to 5970-6000 on account of
rate cut news from RBI then it will be a golden opportunity to go short in
Broken Trend Line Support to act as Resistance @6050-6100
Technical Analysis: Week
11/03/2013 – 15 /03/2013
Index gave an early
signal of confirming support at its 200 day EMA (5650) when it formed Doji type candle on Monday near 200EMA support line and
next day opened up with gap and closed the day with Bullish Marubozu
candle. It bounced back from the low of 5663 and gave a spectacular bounce back
of 4% and gain of 280 points in the week. However the pullback was mainly on
account of Short Covering rather that fresh buying.
One of the trigger
which boosted the sentiments during the week was Moody's expressing on Thursday
that the worst might be over for India in 2014 by the economic growth bouncing
back to 7 percent. They raised the India's 2013 GDP forecast to 6.2 percent
from 5.1 percent.
What's Next? On Technical chart there is further upside if Index crosses the next
resistance at 5970. The target above 5970 looks like near 6100 level where the
Trend Line shown in red color would put a full stop to this pullback. The Options data suggests that Index will
continue rising further as Option writers are unwinding their positions from
Call options and writing Put options heavily. However key Option Indicator – PCR (Put Call Ratio) is at 2.3 which is extremely
Overbought Zone. Therefore I wouldn't be surprised if market witness vertical
fall as soon as it touches Red Trend Line resistance line at 6050-6100. So, be
cautious going forward!
Hope for new high vanishes in thin air! (28/02/2013)
As expected market gave
thumbs down to flat Budget 2013. The Sensex went down by nearly 300 points
(1.6%) at 18854, and the Nifty collapsed by 100+ points (1.8%) at 5694.
Last week I had
clearly written that most of the positives of the Budget were already
discounted in the current price and therefore one can't expect very positive
surprises or big jump beyond 6000. In fact I had advised that if Index reaches
around this level then it will be a shorting opportunity for NIFTY traders. I
was expecting some bounce before NIFTY index could crash but it did not happen.
In the last week's article I had shown Head & Shoulder pattern formation
with neckline around 5820 levels. Index opened the week at 5870 and broke the
critical technical support line at 5800 on Tuesday itself. This was a
confirmation for what to expect from the budget event.
What's Next Post Budget Event?
Budget day event
has more or less set the direction for 2013. The hope for the new high in 2013
seems to be getting vanished in the thin air. If you recollect my views at the
beginning of the year, I had given a comparison of the scenarios between start
of 2012 vs. 2013. When we entered into 2013, majority of the experts were
extremely optimistic about new high in this year. I had warned about the fact
that history shows market always proves majority wrong! We all know how market
positively surprised everyone in 2012 and therefore I had said that 'fingers
crossed' as we enter into 2013…
Now NIFTY index is very near to its 200 EMA which is at 5650. On budget
day it just managed survive above this level by making a low of 5674 but going
forward this technical support level looks very vulnerable to me. Break below
5650 will drag the NIFTY down all the way to 5400 to fill the gap between
5420-5526. Hopes drive the market sentiments. Going forward expect market to
trade with a very cautious approach for the rest of the year 2013. I do not see
any trigger which is capable enough to take the market to new high in this
year. On the contrary expect a correction of the rally which begins in Jun 2012
from 4770 to 6111 in January 2013. The Fibonacci Retracement levels for this
correction are 38.2% at 5600, 50% at 5440 and ultimately 61.2% at 5280 for sure
before we hit the election year 2014.
Market in cautious mode ahead of Budget 2013
Technical Analysis: Week
25/02/2013 – 01 /03/2013
Last week we had
said that expect NIFTY index to fall near 5800 level where it can find a
support. During the week NIFTY Index went very close to this level. It made a
low of 5836 which was very near to our expected lower level target of 5800 and
closed the week at 5850. On Thursday global markets plunged on the worry of
Federal Reserve may end QE sooner than expected. The Indian market was also hit
by this panic and NIFTY index lost nearly 100 points on this day. However the
interesting thing to note is even on this day the FIIs were net buyers in cash
segment by 1200+ crores!
What's Next? As per the Technical chart you will notice some sort of famous "Head
& Shoulder" pattern formation with Neckline at around 5800 level. On Friday
Index has formed a small "Doji" type candlestick with
some upper shadow. This means there is some signal of pause at critical support
line. So, technically speaking one must stay alert if Index breaks this
critical support at 5800.
As per Derivatives
insights, the market seems to be caught in a narrow range of 5800-6000. The Put
options buildup still shows that Index will hold 5800 level. The OI PCR is at
0.84 which is nearly in oversold region and historical data shows that the
Nifty Index generally bounces back from this zone very sharply. However the
Open Interest buildup at 6000 strike price Call option suggests that most of
the positives of the Budget are already discounted in the current price and
therefore one can't expect very positive surprises or big jump beyond 6000. It
is very unlikely for NIFTY Index to cross 6000 mark on the budget event. In
fact if Index reaches around this level then it will be a shorting opportunity
for NIFTY traders.
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NIFTY - Trend Line Support Broken! But…
Technical Analysis: Week
18/02/2013 – 22 /02/2013
At the beginning of
the February month we had said that the break below 6000 would bring NIFTY
Index down up to 5850-5900 range. We had also said that though this is a good
support level to re-enter, we would wait for the confirmation because Money
Flow Indicator (MFI) was showing divergence on the technical chart indicating
smart money is actually flowing out of the market.
This Friday NIFTY
index made a low of 5855 and closed at 5876, which is exactly in the middle of
our expected support range for NIFTY index. Therefore it's important to take a
look at technical and derivatives insights to predict the next price movement
from this point onward.
What's Next? For the whole week NIFTY Index struggled to survive above psychological
level of 5900 but could not succeed. More importantly it kept on hitting the
broken support line and closed below that trend line support on weekly basis.
This is the first warning signal confirming weakness on the price chart. Options
writers who were confidently writing 5900 strike price Put options were seen
unwinding there position on Friday. However interesting thing to note is they
are still comfortable with 5800 strike Puts. The Open Interest Put/Call Ratio
(OI PCR) is still at 1:1. So derivatives data indicates that though technically
NIFTY index has broken technical support, it has a limited down side and may
hold 5800 level in the near term.
Even price chart
shows level 5800 is a good bounce back point. Most of the Technical Indicators
such as Money Flow Index, Stochastic Oscillator etc. are in oversold zone.
However they have not given any reversal signal till Friday. Therefore the best
strategy would be to wait and watch till Index reaches to 5800 in the coming
Next two weeks are
crucial for the India stock market as we approach the Budget 2013. Market will
not easily give up till the final announcement and expected to rise again on
budget hopes. Therefore to conclude, there is a high chance that NIFTY Index can
bounce back from 5800 level with a target of 6000.
NIFTY on the edge of the Trend Line Support
Technical Analysis: Week
11/02/2013 – 15 /02/2013
Considering the
decline in PCR ratio, I had said that NIFTY Index would drop in the region of
5850-5900 and during the week NIFTY dropped exactly in this region. It made a
low of 5883 and closed on the edge on the Trend Line support.
What's Next? Though NIFTY broke the trend line support marginally on Friday one need
not worry about it immediately. It would be worth to wait and watch how index
trades during this week. The reason is though index broke the technical level
marginally it still able to hold 5900 on closing basis. The other important
reason is Put/Call option buildup in Derivatives. As on Friday the highest Open
Interest (OI) buildup was at PE5900 and Option Writers were still confidently
writing 5900 strike price Put options. Therefore I feel that NIFTY is likely to
hold 5900 level in the coming week.
Along with Technical Support (which would deceive many times) I would
suggest keeping close eye on Open Interest of Put option. If option writers
continues writhing 5900 strike price Put option on Monday then expect our
market to bounce back from the current levels. However the target for this
bounce back would be very limited. Derivatives data confirms that the upper
limit of NIFTY index for February 2013 series is locked at max 6100.
Budget 2013 – Next important trigger for the Market
Weekly Technical Analysis : 04/02/2013 – 08/02/2013
During the week RBI
ended the excitement around monetary policy with a balanced act. Reserve Bank
of India lowered the benchmark repo rate and cut the cash reserve ratio (CRR)
by another 25 bps each. It's a positive cue for the market which signals the
central bank has now joined hands with the government to revive the growth
momentum of the economy. Now hype around monetary policy is over. Though market
analysts are expecting another 25 bps cut in March, RBI signaled that further
rate cuts are dependent of easing of inflation pressures and government's
commitment on continuing to deliver on other reform policy fronts.
On back of this
balanced act NIFTY Index responded very mildly and just managed to kiss the
upper side of the bullish rising channel at 6100 and was back to 6000 level
when market closed on Friday. Technically it survived above critical benchmark
level for yet another week. From this point onwards market will look forward to
union budget as next important cue.
What's Next?The February 2013 series will be interesting to watch how market starts
moving in anticipation of the budget. This is going to be a single big event
for India market because this is the last budget this government will be
presenting before elections. Therefore expect lot of hype and lot more
expectations ahead of the budget. Majority feels that market will rally further
in anticipation of this budget and NIFTY may touch new high post budget rally.
However as I have been always saying, one need to be cautious when everyone is
confidently bullish.
Let look at what
technical chart is saying…The NIFTY price chart looks extremely bullish
satisfying all the characteristics of bullish trend. It is consistently making
typical higher top / higher bottom formations. However it is struggling to
cross the January 2011 high of 6180. The only trigger for crossing this high in
this January was RBI monetary policy review. Markets would have crossed this
high if RBI had cut the repo rate by 50 bps instead of 25 bps. But that did not
happen and NIFTY index faced the resistance at 6100.
Chart shows that if Index breaks 6000 level in the coming week then it
can fall in the region of 5850-5900 levels. Technically this is a good support
zone but the only factor which worries me is Money Flow Index (MFI). If you
look at the chart carefully then you will notice that though Price is making
new highs MFI is actually declining. Which means Smart money is actually going
out of the market on every rise. Therefore it will be advisable to wait for the
confirmation from MFI when we try to re-enter in the market at lower levels. On
Derivatives side it is little early to get confirmed cues for February 2013
series but PCR has dropped all the way from 1.5 to 1.08 which indicates some
more downside in the coming week. 6100-6200 still going to remain as strong
resistance till the end of February F&O series.
NIFTY Options Traders don't miss the opportunity on 29th March
Weekly Technical Analysis : 28/01/2013 – 01/02/2013
Last couple of
weeks we have been talking about upper side for the NIFTY is being capped near
6200 and therefore one needs to be cautious from here onwards. During the early
part of the week NIFTY Index achieved the milestone of 6100 but collapsed back
to 6000 level on Thursday. I still maintain the target for the NIFTY index as
6200 but the targets are never achieved in a straight line. It always creates
confusion among traders with up and down movements on daily basis. However, coming week is going to be a golden opportunity
for NIFTY options traders. Let's understand how?
On Tuesday 29th
of January RBI will announce the monetary policy. There is lot of expectations
around rate cuts this time. You can't guess the outcome on 29th with
100% accuracy but one thing is sure…that is market is going react wildly on
either side based on interest rate cuts decision. NIFTY traders would be wondering
on which side to take the position. Should I go long or short? It will be a big
risk as you don't know which side market will move. However, if you know some
simple Call/Put Options trading tricks then you can make your day in just few
hours on this day.
How to
build Straddle? On 29th morning, before the policy announcement buy Call &
Put in 1:1 ratio. Select the strike prices which are close to the NIFTY spot.
The total Call + Put cost will be roughly around 55. So, the breakeven will be
around 50-60 points movement for NIFTY index. Anything beyond 50-60 points will
give handsome returns on the same day. The assumption is immediately after
policy being announced market will move in either direction beyond 50-60
points. And just in case it doesn't then you can still exit on the same day
without any significant loss. So, Option Traders don't miss this opportunity on
29th of March.
Correction to provide an opportunity to Buy
Weekly Technical Analysis : 21/01/2013 – 25/01/2013
Last week considering
the heavy options writing at 6100 strike price Call options and 5900 Put
options, we had assumed that NIFTY index would trade within 5900-6100 range for
the week. We were actually excepting another opportunity to go long in NIFTY if
it would have dropped in the region of 5900. But during the week Index opened
at 5968, made high of 6083 and closed at 6064, which was anyway within our
expected trading range.
Reliance and Oil-Gas sector on Friday spearheaded the rise of 100 odd points
for the week. Now for the coming week Banking and other related sectors will be
eying on RBI's monetary policy on 29th January 2013.
NIFTY Index closing
above psychological '6000' mark on weekly basis for second time is of course a
bullish sign on Technical Chart. For January 2013
F&O Series it has a potential to go up to 6200 level. The
Derivatives data also confirms that 6200 is the upper limit for this F&O
series. Expect heavy profit booking around this level because this is the same
high which was made in January 2011 from which Index started declining and the
downtrend continued till Index made a low of 4640 by the end of 2011. Going
forward one need to be choosy about those stocks that are approaching the
support levels rather than those who are already at their top.
Stock Watch: This week we are going to see two more stocks which are there on our
radar. Marico Industries and Hindustan Unilever from FMGC sector.
Marico: As chart shows, this stock is in strong uptrend and moving in a perfect
channel since last one year. It has come near to channel line support this
week. 220 is a good price to enter and hold this stock with minimum 3 to 6
months view.
Hindustan Unilever: This stock is approaching its support level. This week it has come to 490.
It is a good opportunity to accumulate this stock in a range of 485-465 and hold for minimum next 6 months.
Correction to provide an opportunity to Buy
NIFTY Technical Analysis 14/01/2013 – 18/01/2013
Last to last week
NIFTY index had closed above crucial 6000 level and had raised the hopes for
the target of 6180. However, during the week it was unable to sustain above
this important breakout level. The week opened near 6042 and immediately came
under some profit booking pressure and ultimately closed at 5952 with a loss of
just about 70 odd points. Possibly index would have lost much more but IT index
lead by heavyweight Infosys provided much needed support and saved the index
from panic on Friday. Almost all the indices were down on Friday by 1% to 2.5%
percent but IT sector was up by 3.7%. The biggest losers were capital goods, cement
and Infra who lost more than 2.5% on a single day.
The profit booking
is quite expected and I see this correction as an opportunity to enter into
many stocks. In the given chart you will notice that NIFTY index has a strong
trend line support near 5850. This week's derivatives data shows that Option
Writers are betting of 6100 strike price Call options and 5900 Put options.
What it means is Index is expected to trade within this range during the coming
week. Hence if index come near 5850-5900 level then it would be good
opportunity to go long for NIFTY traders for the target of 6100.
In fact you can also see that many of the index heavy weight stock are
also coming near their support zone and likely to provide an opportunity to
buy. I am just giving couple of examples below but you can find many such
stocks yourself using technical analysis tool.
L&T: This stock struggled in the past to cross 1480 level multiple times and
then gave a break out in Sept 2012. It then made a high of 1700 odd level and
its coming down to 1480-1500 again. Expect good support as stock touches this
level. It is definitely a buy call for L&T at this level. One can buy and
hold this stock again for the target of 1700.
Just look at the chart…Tata Steel has given a strong
breakout when it crossed the falling Trend Line resistance near 400. The stock
is coming down to retest the breakout line. Now the same resistance line will act
as support and therefore 400 is a good level to enter into this stock with a
target of nearly 20% gains in the near future.
NIFTY – Time to Book Profit @ 6180
NIFTY Technical Analysis 07/01/2013 – 11/01/2013
As expected
January 2013 series has begun with positive bias. US Fiscal Cliff avert and RBI
monetary policy hopes are driving the sentiments. Index closing above 6000
level for the week is an extremely bullish sign on Technical Chart. But the question is how far the rally can sustain?
If you look at the technical chart carefully then you will notice that
MFI (Money Flow Index) has started giving
-Ve divergence.
The NIFTY Index is pointing towards North but the MFI is heading towards South,
which means "Smart Money" is flowing out of the market on every rise. In near
term expect NIFTY index to face strong resistance at around 6180 level. This is
the same top which was made in January 2011 and then Index had crashed from
that level. Therefore expect huge profit booking as soon as Index touches this
6180 level. Derivatives data also confirms that 6200 is the limit for January
2013 F&O series as the highest open interest is at 6200 strike Call
options. To conclude, it's time to book profit
when Index hits 6180 level and quietly start taking short positions!
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2013 | Registration @ 9892230682
NIFTY - What to expect in Year 2013?
Just try to recall
the day when we entered into 2012. The atmosphere in stock market was
absolutely gloomy. Majority of the experts were skeptical about 2012 because
the year 2011 had ended almost near the lowest point of the year for Sensex
& NIFTY Index. It was then 2nd January 2012, the first trading day of the
year… NIFTY Index entered into year 2012 by opening at 4640. It immediately
broke sub 4600 level and sent sewer among the market participants. However by
3.30pm it had recovered from the day's low and formed long legged Doji
candlesticks on technical chart. On very next it formed a long green bullish "Morubozu" candlesticks signaling Bulls were back to
dominate the year 2012. During the year we saw a spectacular bull rally for
NIFTY index starting from 4640 in January till 5965 in December. A whopping
1300+ points with more than 25% rise! Though there were many ups & downs
during this journey, the second half of the year have been a smooth ride for
the Index with healthy correction and strong up trend.
With good memories
of 2012, everyone is very optimistic about the market as we enter into 2013.
The situation is exactly opposite to what was in the beginning of the 2012!
However instead of going by sentiments, I would prefer to take a practical
approach by considering the historical price movement on the technical charts.
No doubt that NIFTY Index is in strong bullish trend however level 5940-6000 is
a trend decider for the market going forward.
Let's understand how? Please observe the given chart very carefully. It shows that NIFTY Index
continued to trade in a perfect price channel for almost one year during
September 2009 and September 2010. During this period it formed parallel
support & resistance levels and then gave a bullish breakout by breaking
the resistance line in September 2010. You will notice that the earlier
resistance line provided support in November 2010 when index crashed after
making high of 6336. Later the extension of resistance line of the same price
channel acted as resistance in April 2011. Further you will notice that the
support line which provided strong support to NIFTY index during 2009-2010
later proved to be strong resistance during 2011-12, whenever Index tried to
bounce back. In early 2012 Index moved out of the falling channel when it broke
5200 level. However, the same support line of 2009-2010 price channels acted as
strong resistance in February 2012. What is more interesting is the resistance
line of falling channel provided strong support in June 2012 during correction
phase. Considering the similar hypothesis based on historical price movement,
we have already seen that NIFTY index is actually struggling at 5940-6000 range
in December 2012. Therefore level
5940-6000 is an extremely important for the continuation of current bullish
momentum. Index will have to trade above this point in order to confirm the
continuation of strong rally which has reached upto
the current levels on back of several reform measures announced by the
government in recent time. The current level also coincides with 76.4%
Fibonacci Retracement of the fall from 6336 to 4531 and history shows that
76.4% retracement level acts as a major turning point for the index. Therefore
failing to cross 5940-6000 band would mean Index will retrace back to the lower
support line of the current price channel which is in the region of sub 5450
level. I feel that level 5450 is a strong bounce back point for the next
journey toward the retest of previous high at 6300!
However, be aware
of the fact that as we enter into 2013 majority of the experts are extremely
optimistic about new high in this year. The history shows that market always
proves majority wrong! We all know how market positively surprised everyone in
2012 and therefore 'fingers crossed' as we enter into 2013…