09.02.2020
AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:
Market shrugged off the disappointment of the Budget and the Bulls were back in business.Support Zone - I, which was a confluence of 200DMA, 50 WMA, Golden Ratio and 61.8% Retracement, held strong and the Market saw a sharp recovery. As a result, the Nifty is now near 12100 and is now trying to conquer the 20dma and 50dma. Bullish Piercing line with very long lower shadow, formed for this week, is proof of strong Buying support at lower levels. A close above 12160 can propel the Nifty towards its life-high levels. Interestingly Mid-Cap and Small-Cap Indices are outperforming Nifty consistently in every fall and every rise, which indicates their strength.Mid-Cap100 and Mid-Cap50 Indices are now within striking distance from their recent highs. One should use every decline to buy good quality Mid-Cap and Small-Cap stocks.
Technically Speaking :-
Sensex opened the week at 39701, made a high of 41405, low of 39563 and closed the week at 41141. Thus it closed the week with a gain of 1406 points. At the same time the Nifty opened the week at 11627, made a high of 12160, low of 11614 and closed the week at 12098. Thus the Nifty closed the week with a gain of 437 points.
On the daily charts, both the indices have formed a Black body candle forming a Bearish Engulfing pattern. But that pattern cannot be given very high significance as the previous day's candle had a small body. On the weekly chart, Nifty has formed a Bullish Piercing Line formation with a very long lower shadow. The long lower shadow is indication of strong Buying at lower levels. Thus more than daily, weekly candlestick pattern suggests a Bullish bias in the near term. This week saw another Bullish Gap formed between Sensex 40117-40014 and Nifty 11783-11749. This Bullish Gap will act as strong Support going forward. Stronger Support will be seen further down at the Support Zone of Nifty 11602-11663 which is due to the confluence of 200DMA,50WMA, 161.8% and 61.8% Retracement levels.The bounce-back this week saw the Indices bouncing back to the 20dma and 50dma and closed just short of it. Thus a closing above Sensex 41405 and Nifty 12160 will see the indices moving higher to test the recent Life-high levels again.
Both the indices will then 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.This week, both the indices tested all three critical averages i.e. the short term average of 20dma (Sensex - 41180 and Nifty - 12116), the medium term average of 50dma (Sensex - 41148 and Nifty - 12118) and the long term average of 200dma (Sensex - 39299 and Nifty - 11663); but managed a close only above the long term average of 200dma. Thus the Trend in the short term and medium term Timeframe continues to be down whereas the Trend in the long term Timeframe continues to be Bullish.
MACD and Price ROC are both negative and in Sell mode. RSI (51) has just turned positive,which suggests Bullish momentum. Stochastic Oscillator %K (69) is above %D and hence is in Buy mode. ADX (19) suggests further consolidation. Directional Indicators are in Sell mode as +DI is below -DI. MFI (45) suggests Negative Money Flow. OBV continues in Buy mode. Thus majority of Oscillators are suggesting a mixed bias.
Options data for February 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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