Monthly Archives: September 2017

Markets in confused state of Mind!

Nifty Saw a Quick fall from 10178-9813 in just 6 sessions which was a night mare to most of the traders! But i am sure whosoever ready my blog on 19th Sept last week , when Nifty closed at 10148, they would have made good money in this fall. In my last post recommended to liquidate Long positions and Even go short for risky traders for the target of 9950 which was achieved yesterday.

So What next now??..Lets study some signs on Nifty Weekly Time frame

 Last week fall has given a birth to Bearish reversal pattern ” Bearish Engulfing” right on the top of the chart. Generally such patterns are major sign of reversal for a medium term trend. To confirm bearish reversal, we require a low lower than the pattern in subsequent week and we have got that in first two days of the week itself. Now this pattern is said to be valid unless its high is breached which in our case is 10178!  So from First instance it looks that we  have turned around for a fall now…

Take Second instance , “Negative Divergence” of Nifty to it RSI! As marked with the Yellow line, while Nifty pinched a New high last week, simultaneously failed to make a new high on RSi which in simple terms denote that we were not able to close anywhere near to new high last week. Just sign is of losing rally momentum. So now this surely compliments Bearish Engulfing as stated above.

But now lets take a look at some other side of picture which is making market sentiments some confusing…..

Now if consider Wave theory, the recent top has two probability, 1) Wave 5th Truncated which supports downside momentum or 2). Wave C of a corrective pattern which can end this week. 20 Weeks average which also ought to be 100 days Average level is exactly at same level of 9780 which makes it a strong support zone. Even a quick fall has resulted in Daily indicators entering oversold zone . So this all factors are making some confusion at the Street..

So What should be next strategy ???

Looking at derivative Setup, traders are indicating range of 9700-10000 for a while. So difficult to take a one way call on either side completely. So as a risky trader we recommend to buy Nifty with Stop loss of 9780 and Sell when its near to 9980! Buy for safe traders would recommend to avoid trading unless the range 9700-10000 is breached convincingly with volumes.

To conclude my view in a line, “Short term view is of Strong short covering but for medium term tables have termed bearish for which i am awaiting confirmation soon”……

Do hedge your positions and i will see you guys soon!


Time to liquidate Short term trading positions on Index!

Nifty has been range bound in recent sessions after it gives a first tick of movement. But in such a course it has given a perfect move on 5 Wave theory! Nifty is currently into a 3rd Wave of a minor trend and its expected to end this Wave within next 2 sessions.

Technically, Nifty is about to resist for a small term near to 10200-10230 mark which is a probable tgt as per Elliot wave count. This view is supported by Derivative data which has highest open interest at 10200 CE which is suggesting Writers resistance level. Indicators too are overbought zone on daily charts which supports a near term correction. We dont have any reason on fundamental or economic side, therefore this correction would be mixed bag and not sector specific. Generally banking stocks do fall with heavy momentum but PSU Banks which havent moved equally are expect to counter fight profit booking in High beta banking stocks.  On other hand, Pharma counters, which are generally defensive bet against the fall have already started showing signs of improvement. Even the currency market has consolidated on lower levels for much of the time and now a counter rally in Dollar is expected. Accumulating, views from different segment of markets, we can be more sure on profit booking in near future.

Our view:  Liquidate all Long position on Nifty in next two sessions and risk takers can go short on index with Stop loss of 10280 where in tgts on downside are 9950. As its just a profit booking move, we dont recommend to liquidate long term investment. We will update you soon if we get any major melt down or breakout. Thanks and Trade safe!

Time to accumulate Pharma stocks!

Pharma stocks has been worst performing since 2015 and which is the reason why investors are now shifting their investment out of Pharma , but i would say STOP off loading! Pharma index have tested patience of investors. We could feel the pinch because almost all front line pharma stocks has corrected atleast 50% from 2015 high’s. But if we talk technically, 50% correction is the time when one should start looking back for a long entry point.

Rupee appreciation was one of the fundamental attribute for pharma stocks under-performing. But now time is going to change around for this sector. Companies like Sun pharma and Lupin had been taking over many crucial pharma companies overseas and at expanding pace. Now its to time harvest pharma stocks for the seeds they have sown in last two years are about to give fruits and we must get them before they are ripped in markets. Almost all pharma companies have started getting USFDA approve for their facilities India which were previously banned. It was believed that Trump would charge high tax on foreign good imports which was the reason for last lag of melt down in pharma stocks but i dont think in such a global trade economy its possible to avoid better products to be imported in any country. If at all we assume that any such step is taken, Stocks like Lupin and Sun pharma can be still bought as they own many US pharma companies which wouldnt be impacted by any such step. So basic Qualitative outlook seems to be positive at this team while quantitative analysis would have to be done on company to company basis.

Now lets study some charts for Pharma….I have considered NSE Pharma index Weekly time frame for having a common consensus for the sector. If you could notice in the chart above, index has fallen down from almost 12000 to as low as 8400 in 2 years. But technical it took support at the previous rally resistance . The Horizontal line where it took support had been a strong resistance before it broke out for life highs 5 years ago. As one the simple guide state’s: “Support and resistance reverse their role after they have been taken away” and this is the perfect situation.  Take second instance where support since 2014 which was at 10000 , as marked horizontally, is currently acting as a strong resistance. Therefore we could notice that as per Friday’s  closing , pharma index is trading between strong levels of 8400-10000 which are acting as support and resistance. Such situations are generally considered to be cautious time but if i consider other factors it gives me strong signs of accumulating pharma stocks. Consider channel marked on the chart where pharma index has been travelling. It has a strong resistance now exactly at 10000 which is also  the resistance on horizontal line.  So 10000 is surely a confirmation for Pharma reversal  and a safe investor should keep some liquidity in his portfolio to invest as soon as it closes above 10000. If you want to get early benefits, start investing as a SIP in Pharma themed Mutual funds as soon as tomorrow. But if u are risk taker, you should straight away start buying good pharma stocks as look at the RSI which has given a positive divergence on Weekly charts.  Even recent weeks volume has been more than average volumes as its clear visible which means stocks are accumulated.

To sum up when markets are looking volatile and uncertain to sustain at high levels, we should keep a watch on Pharma stocks which could outperform and give us best returns from here with a view of 2-3 years of investment. Before investing on my idea do read disclaimer and also consult your Financial analyst.