Nifty Index Chart Analysis

Nifty gained over one per cent during the last week of July, 2016 following node of euphoria over tabling of crucial GST Bill in the Rajya Sabha. Also the US Fed decision to maintain status quo on rates improved the sentiments in the markets. FIIs remained net buyers for the week ended July 29, 2016. On the quarterly results front, PSU bank PNB disappointed the Street and even private sector ICICI Bank witnessed pressure on the NPA front. Now going forward, markets will keep eye on the parliamentary proceedings.

The Nifty Index managed to close at 8638 on July 29, 2016. Since the low of 6825.80, Nifty has moved upwards without much of a hassle. Yes, it did face resistance at crucial level but the overall structure was a bullish Dow formation i.e. higher top and higher bottom structure and all the dips were opportunities for creating longs. At present, Nifty is hovering around its 78.6 per cent retracement of the entire down move from the high levels of 9119.80 to a low of 6825.80. Now going forward, Nifty has first resistance placed around levels of 8680-8685. If this resistance is pierced, next resistance is placed around the levels of 8780 and 8850. On the downside, Nifty has support pegged at levels of 8510-8530 and breach of this zone will attract sellers and it will open gates for further correction up to levels of 8400. RSI on the weekly chart is trending upwards and quoting around 68 levels. It is also likely to enter into overbought zone but as long as the RSI stays above 60, its positive for Nifty.

Here are key levels to watch out for the medium term

Nifty Index Daily Chart Analysis

On the daily time frame, Nifty has formed a Bearish Tweezer Top like Candlestick pattern on July 29, 2016. This pattern occurs during an uptrend when bulls take prices higher, often closing the day off near the highs. However, on the second day, the markets open and correct, often eliminating the entire gains of the first day. On the daily chart, we can see the first important support zone stands at levels of 8570 and breach of this support zone will open gates for correction up to levels of 8490. On the upside, zone of 8680-85 will act as a resistance zone. A close above 8680-85 levels will help Nifty to gain further momentum and in this case, it’s likely to test the levels of 8780.

Here are the key levels to watch out for the short term

HERO MOTOCORP

The stock is currently trading at `3260. Its 52 week high/low stands at `3395/ `2259 were made on August 01,2016 and September 07,2015. After the stock broke its 200-day EMA level, the stock is forming sequence of ‘higher tops higher bottom pattern’. Looking at the present scenario, the stock is consolidating in the range of 3220-3280 levels. The 14-day RSI is quoting at 62-53 levels, which indicates there is strength in the stock. On the other hand, the stock has been trading above its crucial supports at `3134 which is its 50-day EMA level and `3022 which is its 100-day EMA level. By considering the above, the stock may witness a good run-up from current level in the short-medium term. we recommend buy in Heromotocorp at 3237 level with a target of 3300 followed by 3350 and a stop loss of 3100, so traders can initiate long position with given stop loss.

INDIABULLS HOUSING FINANCE

The stock is currently trading at 783 levels. Its 52 week high and low stands at `820/`551 made on August 10, 2015 and February 24, 2016. The stock has reported fifth consecutive weekly upbeat since end of June 2016. The stock recently gave a multiple resistance breakout which can also be treated as an inverse ‘Head & Shoulders’ pattern breakout at around 750-755 levels. The stock did witnessed correction on back of some negative news flow but bounced back from the 31.8 per cent retracement level of the prior upward rally at 753-754 which acts as a resistance turned support. On Aug 02 it has given a pullback with reasonable volumes. The momentum oscillator, RSI is quoting at 77 levels and has reversed in upward direct that suggests retained strength. We recommend a buy in the stock from CMP to 788 levels with a target of 820 followed by 840 and a stop loss of 743.