WHAT LIES AHEAD : NEAR-TERM PIC­TURE

Flash News Investment - - TECHNICALS -

The jump in coun­try’s ease of do­ing busi­ness by 23 places to the 77th rank cheered the do­mes­tic in­vestors, who are now hop­ing con­tin­u­a­tion of the BJP’s reign for the next 5 years. In­dian bench­mark in­dex Nifty wit­nessed some bounce-back from its cru­cial sup­port level of 10,000 amid en­cour­ag­ing cor­po­rate earn­ings re­ports dur­ing the last five trad­ing ses­sions.

Fur­ther, cor­rec­tion in crude oil prices and, thereby, the bounce-back in ru­pee too buoyed the mar­ket sen­ti­ments, re­sult­ing in bot­tom­fish­ing in few stocks. The broader mar­ket in­dices out­per­formed the bench­mark in­dices, with the

Mid-cap and Small-cap in­dices surg­ing 6.4% and 5.5%, re­spec­tively, as against 2%-plus in both Nifty and Sen­sex. On the sec­toral front, the realty sec­tor led from the front with 6.7% gains, while FMCG and metal sec­tors re­mained flat.

Tech­ni­cally, Nifty af­ter reg­is­ter­ing a low of 10,004.55 as on Oc­to­ber 26, 2018, has wit­nessed a smart pull-back rally, where it has wit­nessed about 61.8 per cent re­trace­ment of the re­cent fall which started on Oc­to­ber 17, 2018, from the high of 10,710 to the low of 10,004.55. Go­ing ahead, to con­tinue this pull-back rally, Nifty will have to move past and stay above the 10,400-10,450 zones. The re­gion of 10,400-10,450 is a cru­cial re­sis­tance for the bulls as it is con­flu­ence of 61.8 per cent re­trace­ment of the last leg of fall from the high of 10,710 to the low of 10,004.55, and the open­ing down­side gap which was formed on Oc­to­ber 19 is placed in this re­gion and the down­ward slop­ing trend­line ad­join­ing the lev­ela of 11,145.55-10,710 is placed in this area. Un­til the zones of 10,400-10,450 are breached and the Nifty sus­tains above that, the vul­ner­a­bil­ity of the in­dex from volatile bouts of sell-offs will re­main. How­ever, a close above the 10,400-10,450 re­gion would set the stage for the next leg of the up­move, where the Nifty may at­tempt to touch the level of 10,540, fol­lowed by the ma­jor hur­dle which is placed in the re­gion of 10,675-10,765 as it is the con­flu­ence of Oc­to­ber 17 swing high of 10,710 and 38.2 per cent re­trace­ment of the ma­jor cor­rec­tion which be­gin in the last week of Au­gust from the high of 11,760 and the 200-DMA is placed in this re­gion. On the down­side, im­me­di­ate sup­port is seen around the level of 10,270, fol­lowed by 10,180. The 14-pe­riod RSI on the daily chart is quot­ing around the 45 mark and it has re­cently marked a fresh 14-pe­riod high, which is bullish. The daily MACD is trad­ing above its sig­nal line. Over­all, the bulls, dur­ing this high volatil­ity and cor­rec­tive de­cline, have man­aged to de­fend their ma­jor sup­port zone of 9950-10,020 and hav­ing done this now, they need to move past 10,400-10,450 zone and stay above this zone to con­firm a tem­po­rary bot­tom for­ma­tion. LE­GEND : EMA – Ex­po­nen­tial Mov­ing Av­er­age. MACD – Mov­ing Av­er­age Con­ver­gence Di­ver­gence RSI – Rel­a­tive Strength In­dex

NIFTY 50

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