Nifty Index Chart Analysis

Nifty witnessed an excellent up move during July 11-15 week and closed with gains of around 2.62 per cent. The earning session has now kicked off and it saw two sets of diverse results from bellwethers. Infosys disappointed the Dalal Street with weak growth and a weaker guidance even as TCS was at par with expectations. On the other hand, MDAG promoted Reliance Industries bettered market expectation with sharp growth in profits, higher GRMs and healthy NPMs. The key trigger for the Indian markets hereon would be passage of long awaited Goods and Service Tax (GST) Bill in the monsoon session of Parliament and also Q1 results.

The Nifty Index managed to close at 8541 on June 15. After registering low of 6825.80 level, Nifty has continued its sequence higher high and higher bottom. However, it faced some resistance around 61.8 per cent retracement which stood around levels of 8243-8280. Once this zone was cleared, the bulls regained its momentum and went to register new swing high around the level of 8594. Now going forward, the zone of 8620-8650 is going to act as a strong resistance level for the bulls as its 78.6 per cent retracement level from high of 9119.20 to low of 6825.80 and in the year 2015, Nifty twice failed to clear this zone on weekly basis in the month of April and July. A sustained move above 8620-8650 levels will extend the momentum further up to levels of 8760-80. On the downside immediate support for Nifty is placed around levels of 8400 and major support is placed around levels of 8240 which is also its 61.8 per cent retracement level.  Momentum will turn in favour of the bears once the zone of 8240 pierced by them.

On the daily time frame, Nifty formed a ‘High Wave’ Candlestick pattern. This candle consists of small body and long shadows. Usually, formation of such high wave pattern at a significant resistance level more often leads to a top reversal pattern. But we need a confirmation for this pattern in the form of bearish candlestick pattern during the next trading session. Now going forward, the zone of 8620-8650 will act as a stiff resistance for Nifty. A decisive move above this zone will open gates for further upside till the levels of 8700-8780. On the downside, immediate support for Nifty is placed around levels of 8470 and next support is placed around the level of 8380. A breach of 8380 level will open up gates for correction up to the level of 8230.

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The stock is currently trading at Rs 60.20. Its 52 week high/low stands at Rs 71.55/ Rs 41.35 and have been made on July 21,2015 and February 12, 2016. On the one year daily time frame the stock is forming sequence of higher tops higher bottom pattern. However, after a registering high of around Rs 63.50 the stock witnessed some profit booking. The stock has been trading above its vital supports at Rs 54.90 which is its 200-day EMA level and Rs 53.97 which is its 100-day EMA level. The momentum oscillator RSI is quoting at 62-63 levels, which indicates strength. By considering all the parameters, the stock may witness a bounce back from its current level to re-test its major hurdles at Rs 67-70 levels. Traders can initiate long position in the stock with a target price of Rs 66-70 and maintain a stop loss of Rs 53.5.