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22.09.2019

AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:

It was a historic day for the market as the Government swap into action bringing in much needed relief. Both Sensex and Nifty posted their biggest single day gain in 10 years after the FM announced a cut in Corporate Tax from 30% to 25.17%, which will directly improve the profitability and show in the bottom line of the company. Bank Nifty gave a rocket like move and surged over 2600 points which is the highest single day upward move ever, thereby saluting the path-breaking reforms process undertaken by the Government. Now gate is open for 11800.

FM first started the reform process by PSU Bank consolidation, followed by their Recapitalization and now directly reducing the Corporate Tax to 25.17% and 15% Tax for new entrants setting up manufacturing units. This Reformatory step has put a cap on the downside and broken the Trading Range (10700-11200) on the upside. This has opened the doors to Nifty 11771-11797 in the near term. In the process, the Trend has now turned up and hence it is 'Buy on dips' again. A Rally for the mid-cap and small-cap stocks is long overdue as many stocks are into Oversold Territory not only in weekly but even in monthly timeframe. Thus as a trader one can look for opportunities to go long in selected mid-cap and small-cap stocks as the momentum begins to pick up.

Technically Speaking :-

Sensex opened the week at 37204, made a high of 38378, low of 35987 and closed the week at 38014. Thus it closed the week with a gain of 630 points. At the same time the Nifty opened the week at 10994, made a high of 11381, low of 10670 and closed the week at 11274. Thus the Nifty closed the week with a gain of 199 points.

On the daily charts, both Sensex and Nifty have formed a BIG White body candle which is big enough to Engulf last 40 days candles. On the weekly charts too, both the indices have formed a BIG White body candle which again Engulfs previous six weeks candle bodies.

Thus daily as well as weekly candle stick study suggest strong Bullish bias in the near to intermediate term. The Confluence Zone (37138-36124) of strong Weekly Trend line Support (37138) and 100 Weeks MA (36124) gave Support for seven consecutive weeks where it was tested numerous times successfully before giving a bounce back. The bounce back this time looks decisive as it has broken the trading range of last seven weeks.

Trading Range was defined by the 200dma which was the upper boundary i.e. Nifty 11229.Current Rally will now gather steam as the Trading Range has experienced a Bullish breakout after seven weeks. Above this, Nifty will run into a strong Weekly Bearish Gap Resistances at 11398-11399, followed by another stronger Weekly Bearish Gap 11771-11797. Only a close above the upper Weekly Bearish Gap 11771-11797 will signal a Reversal in long Term Trend; till then any pull-back will be treated as Selling opportunity by the Market. Interestingly Sensex does not have the above mentioned Gaps.

This week, both the indices closed above the short term average of 20dma (Sensex - 37012 and Nifty - 10946), medium term average of 50dma (Sensex - 37490 and Nifty - 11114) and even the long term average of 200dma (Sensex - 37535 and Nifty - 11229). Thus the Trend in the short term,medium term as well as long term Timeframe has turned Bullish.

MACD and Price ROC both positive and continue in Buy mode. RSI (58) suggests momentum is bullish. Stochastic Oscillator %K (48) has gone above %D and hence is in Buy mode. ADX (26) suggests Uptrend getting strong. Directional Indicators are in Buy mode as +DI has gone above -DI. MFI (54) suggests Positive Money Flow. OBV is in Buy mode making higher top higher bottom formation. Thus Oscillators are suggesting a strong Bullish bias.

Options data for October series indicate highest Call Open Interest at 11500 and the highest Put build-up at the strike of 11000. Thus Options data suggests a trading range with resistance at 11500 and support at 11000.

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