26.01.2020
AAKASHAYA PATRA WEEKLY MARKET OVERVIEW
Last two
and half years has seen the Frontline Indices outperform the Mid-Cap Indices by
a huge margin. The divergence between both the indices became too glaring and
every attempt to rally by the Mid-Cap indices was thwarted by the Bears. This time,
finally the breakout in Mid-Cap Index has sustained and the out-performance is
clearly visible. Last four weeks has seen the Nifty stay at the same level
whereas the Mid-Cap100 Index has gone up by more than 7%. This out-performance
is also seen in this week's performance as Nifty was down by around 1% this
week whereas the Mid-Cap 100 index was up around 1.5%. The convergence between
both the indices has set in and it is likely to continue in the near future. Hence
the focus should be on selection of good Mid-Cap and Small-Cap stocks for
strong outperformance.
TECHNICALLY
SPEAKING :-
Sensex
opened the week at 42263, made a high of 42273, low of 41059 and closed the
week at 41613. Thus it closed the week with a loss of 332 points. At the same
time the Nifty opened the week at 12430, made a high of 12430, low of 12087 and
closed the week at 12248. Thus the Nifty closed the week with a loss of 104
points. On the daily charts, both the indices have formed a Real White body
candle which comes on the back of Bullish Harami and hence acts as a
confirmation for Bullish Reversal. It can also be called Three Inside Up. On
the weekly charts, both the indices have formed an Opening Black body Marubuzo
with a long lower shadow. The pattern has bearish connotations, but the long
lower shadow indicates buying at lower levels. Thus daily candlestick pattern
suggests Bullish bias in the near term. Last two weeks has seen the Nifty
getting blocked by a Rising Trendline (12393) obtained by joining two previous
tops over last two years. For Nifty it is acting as an immediate Resistance whereas
Sensex is above the concerned Trendline.
Once the
Nifty closes above the Rising Trendline, both the indices will head towards
their Bullish Cup & Handle target which is at Sensex 42895 and Nifty 12751.
Failure point will be a close below Sensex 38718 and Nifty 11490. Higher term
Sensex target remains at 44700 and Nifty at 13500.
On the
down side, strong Support is seen at Bullish Gap between Sensex 41175-40866 and
Nifty 12132-12044, which acted as strong Support this week. A break of this Gap
support will lead
the
indices towards a more critical Bullish Gap Support between Sensex 40490-40466
and Nifty
11934-11923.
It has been tested successfully and it has provided strong Support. A break of
this
more
critical Support will put the higher bottom (Sensex 40476 and Nifty 11929) in
jeopardy and
can result
in a Trend Reversal.
This week,
both the indices tested and closed above both the short term average of 20dma (Sensex
- 41457 and Nifty - 12216) as well as the medium term average of 50dma (Sensex –
41116 and Nifty - 12119). Both the indices continue to remain above the long
term average of 200dma (Sensex - 39191 and Nifty - 11644). Thus the Trend in
the short term, medium term as well as long term Timeframe continues to be
Bullish. MACD is positive but in Sell mode whereas Price ROC is positive and
hence in Buy mode. RSI (53) suggests Bullish momentum. Stochastic Oscillator %K
(49) is above %D and hence is in Buy mode. ADX (15) suggests consolidation in
an Uptrend. Directional Indicators are in Sell mode as +DI is below -DI. MFI
(54) suggests Positive Money Flow. OBV continues in Buy mode. Thus majority of
Oscillators are suggesting a Bullish bias.
Options
data for January series indicate highest Call Open Interest at 12500 and
highest Put
build-up
is at the strike of 12000. Thus Options data suggests a trading range with
Resistance at
12500
and Support at 12000.
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