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06.10.2019

*AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:* 

Last five days have formed bearish black body candles which have seen the Nifty giving away almost 500 points from the recent intermittent top of 11694. In the wake of current economic distress, RBI cut Repo rate by 25bps which was not taken kindly by the Market. Market was not only expecting a higher rate cut but also some concrete measures to boost dwindling Growth. Call it a Correction or a sharp Retracement of the 1000 points rally of Nifty or 3500 points rally on the Sensex, we are currently placed at 50% Correction level. On the way,Market has managed to breach key Support levels especially the recent weekly Bullish Gap. Interestingly we are at strong Support Zone (Nifty 11178-11092) which will hopefully provide some Support and a reason to bounce.

Technically Speaking :-

Sensex opened the week at 38873, made a high of 38923, low of 37633 and closed the week at 37673. Thus it closed the week with a loss of 1149 points. At the same time the Nifty opened the week at 11491, made a high of 11554, low of 11158 and closed the week at 11174. Thus the Nifty closed the week with a loss of 338 points.

On the daily charts, both Sensex and Nifty have formed a big Opening Black body Marubuzo which has not only filled the weekly Bullish Gap between Sensex 38510-38378 and Nifty 11416-11381, but also managed a close below that. On the weekly charts, both Sensex and Nifty have formed a big Black body candle almost like Full Black body Marubuzo. Thus daily as well as weekly candlestick study suggest Bearish bias in the near to intermediate term.Weekly Bullish Gap created last week between Sensex 38510-38378 and Nifty 11416-11381,has been filled and the Support thus broken. Both the indices moved much lower to settle in the Support zone defined by moving averages i.e. Sensex 37663 (200dma) - 37451 (50dma) and Nifty 11178 (20dma) - 11092 (50dma). The coming week will be interesting as the Market will test and verify whether the above mentioned Support Zone is able to provide the requisite defence or not.

If the above mentioned Support Zone defined by the Moving Averages is broken, then the Market is likely to move lower and test the strong long term Support Zone which is defined by the Confluence Zone of strong Weekly Trendline Support and 100 WeeksMA, which has given Support for 7 consecutive weeks for Sensex, Nifty and even Bank Nifty.Both the indices are Correcting their massive 2 days rally i.e. Sensex 3500 points and Nifty 1000 points and are near the 50% mark. A close above Sensex 39441 and Nifty 11695 will mark the end of Correction. Also just above this level, Nifty will run into a strong Weekly Bearish Gap 11771-11797. Only a close above this Bearish Gap will signal a Reversal in long Term Trend.
This week, both the indices closed above the short term average of 20dma (Sensex - 37707 and Nifty - 11178), medium term average of 50dma (Sensex - 37451 and Nifty - 11092) and even the long term average of 200dma (Sensex - 37663 and Nifty - 11262). Thus the Trend in the short term,medium term as well as long term Timeframe is Upwards.

MACD and Price ROC both positive and continue in Buy mode. RSI (48) suggests momentum has turned bearish. Stochastic Oscillator %K (59) has gone below %D and hence is in Sell mode.ADX (20) suggests Uptrend has lost all its strength. Directional Indicators are in Sell mode as +DI has gone below -DI. MFI (34) suggests Negative Money Flow. Buy signal in Bollinger Band has been negated. Thus Oscillators are suggesting a mixed bias.

Options data for October series indicate highest Call Open Interest at 12000 and the highest Put build-up at the strike of 11000. Thus Options data suggests a trading range with resistance at 12000 and support at 11000.

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