Tech­ni­cals

Some more con­sol­i­da­tion likely be­fore ma­jor break­out or break­down

Dalal Street Investment Journal - - CONTENTS -

The reper­cus­sions of geopo­lit­i­cal ten­sions seemed to have been blurred for the In­dian stock mar­kets. This is ev­i­dent from Nifty's con­sol­i­da­tion break­out and its inch­ing higher since last cou­ple of days. More than any ex­treme pos­i­tive move­ment in the spe­cific front­lin­ers, this time around it was be­cause of stronger pos­i­tive mar­ket bias which has been push­ing in­dices higher. The DIIS are seen off­set­ting the sell-offs from the FIIS, which had turned to safe havens amid ten­sions pre­vail­ing be­tween North Korea and the US. How­ever, SEBI has been con­stantly amend­ing norms so as to make In­dian mar­kets a bet­ter place to in­vest and thereby at­tract higher cap­i­tal. The break­out driven by ex­u­ber­ant auto sales data is seen con­tin­u­ing ahead of in­fla­tion and IIP re­lease.

Tech­ni­cally, con­sid­er­ing the daily time frame, after a sym­met­ric tri­an­gle break­out at the 9925 level on the first day of Sept 2017, Nifty wit­nessed a pull­back on the very next trad­ing ses­sion, wherein prices en­tered the tri­an­gle yet again. There­after, Nifty con­sol­i­dated for a while and has yet again wit­nessed con­sol­i­da­tion break­out head­ing to­wards the 10100 mark, which is the cru­cial re­sis­tance level. The con­sol­i­da­tion break­out is sup­ported by jus­ti­fi­able vol­umes and the 14-pe­riod RSI en­ter­ing the mo­men­tum level of 61. Go­ing for­ward, above the level of 10100, we hold 10135-10150 as the im­me­di­ate re­sis­tances for the Nifty. Nifty is show­ing lesser signs of a downside. How­ever, in case of any turn­around in the wake of any new de­vel­op­ment in the geopo­lit­i­cal sit­u­a­tion, we hold 10000-9970 as the im­me­di­ate sup­ports, fol­lowed by 9925 as re­sis­tance-turned-sup­port.

On a weekly ba­sis, Nifty fi­nally gave a break­out of four weeks con­sol­i­da­tion and is on the verge of giv­ing 14-pe­riod RSI pos­i­tive cross­over at the 68 level. Nifty may hit the peak lev­els and then con­sol­i­date in the over­bought zone for a while. Thereby, on the up­side above 10100-10150, we hold 10300 as our next re­sis­tance level for the Nifty. If Nifty re­treats from the cur­rent lev­els, which is not very likely, we hold 9940 as the ma­jor sup­port, which is the up­ward slop­ing trend­line level.

Nifty's trend re­mains pos­i­tive, un­less 9685 is bro­ken on the downside. For im­me­di­ate trig­gers, we have macro num­bers which may di­rect the mar­kets, fol­lowed by RBI pol­icy re­view at the start of next month.

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