Nifty Index Chart Analysis
Sanket Dewarkar / 07 Jul 2016
Cushion for the Bulls is at 8240, panic mode can be kept away for now
During the last week of June, Nifty almost brushed aside BREXIT fears. It was aided by solid global cues and positive news from the IMD on monsoon. Nifty recuperated the whole misfortune which was registered on the outcome of BREXIT and veered around to the perspective that India could actually benefit from low commodity prices and more prominent open doors in Europe. Additionally, BREXIT implies that the FED is unlikely to trek rate in this year and that gives more breathing space to RBI to cut rates at the appropriate time. The next trigger for Indian markets will be the corporate earnings numbers which will flag off in mid-July.
The Nifty Index managed to close above 8300 mark at 8328 on Friday, July 1 after a long time. Nifty gained about 3 per cent in the week ended July 1, 2016. Technically, Nifty formed a ‘Bullish Belt Hold’ candlestick pattern. This candlestick is formed after a bearish candlestick and this candlestick does not have a lower wick, but has a short upper wick. Now going forward Nifty will face resistance around levels of 8480 and close above the mentioned level which will help Nifty to reclaim levels of 8620. On the downside, immediate support is placed around levels of 8240 which is 61.8 per cent retracement level of down move from the high of 9119.20 to low of 6825.80. If Bulls failed to cling to this support level, next major support is placed around levels of 7970.
Here are key levels to watch out for the medium term
| Ideas | Nifty Levels | Action to be initiated | Probable Targets |
| Resistance for the medium term | 8480 | Close above 8480 on the weekly chart would give further momentum to the bulls. | 8620 |
| Support for the medium term | 8240 | Close below 8240 on the weekly chart would trigger sell-off. | 7970 |
Nifty Index Daily Chart Analysis
On the daily time frame, Nifty after taking support at around 50 per cent retracement from high of 9119.20 to low of 6825.80, started a scintillating rally and closed above 8300 mark. Nifty cleared its major hurdle of 8240 levels which is 61.8 per cent retracement level with an upside gap as on June 30, 2016. At present, Nifty has formed a “Shooting Star” pattern on July 1. The formation of this pattern occurs when the asset rises well above the opening price and then comes under selling pressure before closing around the opening mark. The daily 14-period RSI it has managed to hold on to its range on the lower end i.e. 45 levels even after the panic sell-off. Going forward some consolidation is expected and key level to watch out for is 8360-8365 a close above this level will open gates for up-move up to levels of 8480-8620. On the downside, the level of 8240 will provide cushion to the Bulls. In case Bulls fail to hold on this support than it is likely to scale down up to the level of 7970.
Here are key levels to watch out for the short term
| Ideas | Nifty Levels | Action to be initiated | Probable Targets |
| Resistance for the short term | 8360-8365 | Close above 8360-8365 on the daily chart would give further momentum to the bulls. | 8480-8620 |
| Support for the short term | 8240 | Close below 8240 on the daily chart would trigger panic sell-off. | 7970 |
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Deepak Fertilisers & Petrochemicals Corporation Ltd …….Buy ………..CMP @ 170
BSE Code : 500645 : TGT 1 188 : TGT 195 : Stop Loss 154
The stock is currently trading at Rs 170. Its 52 week high/low stands at Rs 174.70/Rs 169 and was made on July 01,2016 and September 01,2015. On the daily time frame after registering high at Rs 173.80, the stock entered in to corrective phase after May 13,2016. The stock has formed multiple support zones above Rs 150 mark. Taking into consideration 1 year daily chart the stock of Deepak Fertiliser forming ‘ Higher Bottom Higher Tops’. The daily 14 periods RSI is also trading at 61.22 which is positive for the stock. From last four consecutive months, the stock is sustaining above its 200 day EMA level, which is at Rs 149. This indicates long term strength for further trade. Considering the all above factors the stock may touch its technical level of Rs 200 in medium term prospective. Hence we are recommending buying this stock with a stop loss of Rs 154 for possible targets of Rs 188-Rs 195.
Vardhman Textiles ……Buy ……… CMP @ 970.
BSE Code: 502986 : TGT1 : 1020 : TGT2 : 1050 Stop Loss 908
The stock is currently trading at Rs 970. Its 52 week high/low stand at Rs 1028/651.50 made on May 9, 2016 and January 20, 2016. Post a massive rally in between 52 week low and high, the stock saw a sharp correction after second week of May 2016. In the recent sessions, the stock has seen a good recovery after took vital support at 840 levels which is its 100 day EMA level. The stock managed to crossover at 880 levels ( 20-day EMA and 50-day EMA) which confirms the bullish trend in the stock. Since then the stock is moving straight upwards as if to make a ‘V’ pattern breaking the 61.8 per cent retracement level too. If it continues with its current momentum the stock may approach its 52-week high level at 1028. By putting all the technical studies together, we suggest buying in the stock at current levels for a near term target of Rs 1020-1050.
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