Nifty Index Chart Analysis

During the third week of May, stock markets in India continued to consolidate in a range with a weak bias. Nifty closed at around 7750 with a loss of 0.83 per cent on a weekly closing basis. On the domestic front, BJP’s victory in Assam failed to cheer the market.

Technically, after facing resistance at the upper band of the Falling Channel, Nifty has been consolidating in a range. Nifty did breach its previous week’s high but failed to sustain at that level and turned lower to trade below last week’s low. The zone of 7975-8000 is acting as a major hurdle for Nifty as it is 50 per cent retracement of down move from high of 9119.20 to low of 6825.80. Now going forward, zone of 7670-7700 is a key support area for Nifty. If Nifty fails to hold this support zone, its likely to test levels of 7500-7530 on the lower end. On the upside, it’s important to cross and sustain above 7850 and then holding on to levels of 8000 for momentum to continue on the upside. 

Nifty Index Daily Chart Analysis

On the daily time frame, Nifty after forming ‘Shooting Star’ pattern on May 17, 2016 entered into a corrective phase. At present, Nifty has filled the upside gap which was formed on May 9, 2016. In the last couple of months 50-day EMA has played a very crucial support for Nifty and has been rising, hence, in the short term it’s important that Nifty holds its crucial support level of 7720 as defined by its 50-day EMA. Breach of this support will open up gates for correction up to levels of 7660-7670. If any case, this support is breached that it’s likely to test levels of 7500. On the upside levels of 7880 will act as a stiff resistance level.  If Nifty sustains above zone of 7880, it’s likely to test 8000 levels. The daily momentum oscillator RSI is quoting around levels of 45 and as per the bullish range theory 40 is an important support

Here are key levels to watch out for the short term 

-         The short term trend is currently in sideways trend, move below 7670 would confirm bearish trend.

-         The intermediate trend is in the favour of the bulls and only a breach below 7500 would change the course of trend.

-         The long term trend is in favour of bears as Nifty failed to cross resistance level of 8000 and maintained its sequence of lower top lower bottom. 
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The stock is currently trading at 128 levels. Gati has been trading in consolidation pattern since the end of January 2016 after hitting its two year low at 94.5 levels. Recently, Gati gave a breakout of a consolidation pattern which is similar to an inverse Head & Shoulder pattern breakout with huge volumes at 125-127 levels that suggests some more upside up to 145 levels. Moreover, the momentum oscillator RSI is quoting at 62 levels, which indicates strength.

The stock if given a pullback and in that case if it manages to take a support at Rs 127.50 to 125, we suggest averaging at these levels. The stock has a major hurdle around levels of Rs 138 which is defined by its 200 days EMA, which is still 7 per cent higher from our current range.