Nifty Index Chart Analysis
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Nifty Weekly Chart Analysis
The last week passed by was a data-heavy week. The week started off on a positive note and remained in the grip of bears for most of the day; however, on Friday Bulls took over the bears and ended the week on a flattish note. In the coming week market participant week key a close eye on activity in global market which is likely to dictate the market in near team.
The Nifty Index managed to close at 8672 as on August, 12 2016. On the weekly time frame Nifty has formed ‘Hanging Man’ Candlestick pattern and on the weekly chart we have observed Nifty has formed back to back two hanging man candlestick pattern. This pattern is viewed as a bearish sign. This pattern occurs mainly at the top of uptrends and can act as a warning of a potential reversal downward. It is important to emphasize that the Hanging Man pattern is a warning of potential trend change, not a signal, in and of itself to go short. At present, the Nifty is playing around its 78.6 per cent retracement. Now going forward Nifty has first resistance placed around levels of 8730-8745. If this resistance is pierced next resistance is placed around levels of 8800 and 8850. On the downside, Nifty has support pegged at levels of 8620 and breach of this zone will attract seller and it will open gates for further correction up to levels of 8500-8470. RSI on the weekly chart is trending in upwards direction and quoting around 69 levels and likely to enter into overbought zone but as long as RSI stays above 60 it’s positive for Nifty.
Here are the key levels to watch out for the medium term
| Ideas | Nifty Levels | Action to be Initiated | Probable Targets |
| Resistance for the medium term | 8730-8745 | Close above 8730-8745 on the weekly chart
would give further momentum to the bulls. | 8800-8850 |
| Support for the medium term | 8620 | Close below 8620 on the weekly chart would
trigger sell-off. | 8500-8470 |
Nifty Daily Chart Analysis
Nifty after registering swing high of 8728 level witnessed a sell-off on the RBI policy day and the very next day as well. However, Nifty took support around the rising trend line joined from the low of 6825 levels. On the daily time frame, Nifty has formed a ‘Bullish Belt Hold’ like Candlestick pattern as on July 12, 2016, this pattern is a single candlestick pattern that is identical to a Marubozu candlestick indicating the strength of bullish activity. Now going forward immediate support for Nifty is placed around levels of 8600 and breach of this support will open up gates for correction up to levels of 8510. On the upside zone of 8730-8745 will act as a resistance zone. A close above 8730-8745levels will help Nifty to gain further momentum and in this case it’s likely to test levels of 8800-8830.
Here are the key levels to watch out for the medium term | Ideas | Nifty Levels | Action to be Initiated | Probable Targets |
| Resistance for the short term | 8730-8745 | Close above 8730-8745 on the daily chart
would give further momentum to the bulls. | 8800-8830 |
| Support for the short term | 8600 | Close below 8600 on the daily chart would
trigger panic sell-off. | 8510 |
[PAGE BREAK]STOCK RECOMMENDATIONS
BHARAT FORGE
BSE Code : 500493 BUY CMP @ Rs.839
Target 1 @ Rs.900 | Target 2 @ Rs.940 | Stoploss @ Rs.780(CLS)
The stock is currently trading at 839 level. Its 52 week high and low stands at Rs.1296/ Rs.686 which was made on August 20, 2015 and June 24, 2016. From last couple of months, the stock of Bharat Forge has consolidated in wide range majorly around 720-760. At the same time it witnessed a sell-off to register fresh 52 week low. Recently, Bharat forge gave ‘Bullish Engulfing’ pattern breakout with huge volumes at the technical level of Rs.800. The stock also witnessed a breakout from its 777 level, which is its 100-day EMA and 822 which is its 200 day EMA level. At present, the stock is poised for a decent upside and likely touch the level of Rs.900. Moreover, the momentum oscillator RSI is indicates some more strength. Considering all the parameters, we recommend buy in Bharat Forge with a target of 900 followed by 940 and a stop loss of 780.
DIVI’S LABORATORIES
BSE Code : 532488 BUY CMP @ Rs.1261
Target 1 @ Rs.1320 | Target 2 @ Rs.1360 | Stoploss @ Rs.1180(CLS)
The stock is currently trading at Rs.1261. Its 52 week high/low stands at Rs.1279/ Rs.918 and were made on August 16,2016 and February 29,2016. On the 1-year daily time frame, the stock is forming sequence of higher tops higher bottom pattern. Recently, the stock made its 52-week high after piercing the resistance levels of Rs.1200-1210 which is the multiple tops in 1 year daily chart. Subsequently, the momentum oscillator RSI is quoting at 64-65 levels, which indicates strength. Putting all the studies together, its likely the stock will continue to march in northwards direction and may scale up to levels of 1320. Hence, we recommend buy in the stock with a price target of Rs.1320 followed by 1360 and a stop loss of 1180. So traders can initiate long position with given stop loss.