Author Archives: Kush Ghodasara

Is it Start of the End?

Infosys which has been pillar of many large investor portfolio since almost 2 decades, has taken a hit in last two sessions. This hit could be the Start of the End of Infosys era!  On 13th April, in my post “Can INFY loose its decade old rally?” , i already warned and initiated SELL call with tgts of 920, 840 and 790 of which we have almost reached 2nd destination.  Stock had been in long term consolidation of 3 years long in the range of 900-1100 and was finding out a reason to move out of the range on either side…And finally, we got…….

Resignation of  Mr. Sikka has been the reason of breakout from the consolidation pattern that too on downside. With such an instance it has also given two other bearish confirmation on monthly charts which means we need to be cautious for the stock in long term portfolio.

Firstly, Stock has breached 10 year old channel on Monthly chart which is a strong sign of trend reversal as the selling has been pretty much with higher volumes than average volume. BUT still confirmation would be done if it closes below 880 this expiry.

Secondly, we have got a probable H&S breakout on monthly chart with neckline at 880 level which is exactly at the same level where we got channel breakout.

Now technically on charts, 880 is crucial level to watch for next two weeks but on other side as of now buy back price is set 1150 levels which might be revised.   So when technical and fundamental is not going in same direction, we should avoid any new position unless we have clear picture of future. As a trader i would recommend shorts and as investors i am still intact with my targets of 840 and 790 which now trailing SL at 950! 

Read disclaimer on

Bottom is yet away!

Hello Readers! Finally after a long break am back to my blog. Nifty has crossed 10000 mark in pretty short time and so the correction which has kicked off is gonna be more sharp and deep from current close of 9837. Lets have a look at the Nifty daily chart!

So if we mark our recent rally to 10137 it was into a perfect channel which was breached down simultaneously with a bearish H&S pattern giving a tgt of 9839 which was achieved in No time. But  does that mean correction is over??..No…. H&S tgt is not a sign of end ….So now when we turn on it other parameters, we are getting some sign of more bearishness in markets. If you look at 20 day SMA (Orange line), was acting as strong support until the day we breached neckline of H&S. Now 20 day SMA is acting as strong resistance which is around 9950. We did resisted last week exactly at the mark making average a valid resisted.

What’s next stop?… Calculating Waves, i feel we are in the last thrust of corrective wave, Wave C. Though it would be a complex structure formation but we might be heading to 9500 (+/-50) in coming weeks.  Indicators on Daily time frame are approaching oversold zone so be u might get some lumps of bulls on the way down but we shouldnt get fascinated until we are completely over 10000 mark again. So as a trader  i would square off all longs on index on any rise near to 9900 mark this week and try my hand on selling with sl of 10000 for next series with tgt at 9500.

Nifty closed below two strong supports!

Nifty Continued with is volatility throughout the week but Evening star pattern on Weekly charts and Bearish Engulfing pattern on daily chart which i mentioned in my last post : “Nifty near to triple Support” are still Valid.  Additionally , Two supports out of three which were crucial for the week has been breached on Friday and markets have closed below the same. The third support has been void as the channel is no more intact on daily chart.

So as marked in the graph Nifty has confirmed weakness by closing below 20 Day SMA and also the closing below the support line which was intact since January this year. Indicators have finally lost buying momentum and are now showing some support for the sellers in near time. On weekly charts too we have seen consecutive two red candles and failure of bulls to false out Evening star patter which was formed during initial weeks of June. So overall trading mood is weakening but stock specific buying momentum should continue on Street.

Weekly Charts

Now lets study weekly charts for the downside possibilities as we had seen a strong rally in recent past. Evening Star pattern is still intact but still we havent got confirmation for the pattern. Whats the confirmation ?…A trade and close below 9550 on Week on Week basis. Looking at last two weeks Red candle it seems we are all set to break that support this week. For the support on the downside, have considered Fibo which gives probable target zone to 9225-9317 while its coinciding with Elliot wave 4th Wave support at 9227!

To sum up , am still bearish on markets for Short term trade and strategy remains the same as i mentioned in my last post….. “strategy for traders would be buying 9500 PE and selling 9700 CE for tgt of 9300!”

Rd disclaimer before investing.

Nifty near to triple Support

Nifty has been pretty range bound since last two expires with slowly pinching new high but since this monday we have got some signs of profit booking. Since my last two posts i was awaiting a small profit booking on the index and finally this week has given some strong signs of downside move.  Though this fall would be considered just a profit booking against the strong long term bull run and so consider this as a opportunity to accumulate quality stocks for long term. Nifty has crucial support levels at 9250-9300 which could be the max as of now in near future. Todays close on Nifty has been at crucial triple support level at 9578! 

So as you all can notice in the graph above, 9578 is support for three factors

  1. Trend line from the low of 2017 year 8148 on 2nd Jan
  2. Downside Channel Support which is drawn from life high at 9709 
  3. 20 day EMA which is also taken as support since start of this calendar year

Supporting above all factors, we also have momentum indicators weakening from Over bought zone with some negative divergence from RSI to price. On daily chart at life high we also have got Bearish Engulfing candlestick pattern which is bullish reversal and its a strongly valid  near to such highs. Even if we looking at Banking sector than that too is weakening which is a strong sign of reversal. From derivative side too we had constantly witness 9700 CE been written by traders which acted as strong resistance. On the downside 9500 is currently suggested as strong support below which gates open straight away for 9250! So strategy for traders would be buying 9500 PE and selling 9700 CE for tgt of 9300!

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After daily chart, Weekly follows for bearish reversal on Nifty

Nifty had been quite volatile in last few sessions between 9400-9500 but during this course, as as expected in my last post: Is Doji Indicating a false breakout? , Doji did confirm bearish reversal pattern “Evening Star”  on daily chart. What did confirm Doji? ….Red candle on 18th May which closed 50% below green candle just prior to Doji and another red candle on 19th May which made lower low and lower close than the pattern as whole

Nifty Daily Chart

So as we can notice in daily chart above, Nifty has clearly giving Evening star bearish reversal and its approaching crucial level of 9370 which is 20 day SMA (Support intact since dec) and also trend line support stretched from December low. So next week being expiry, do watch out for 9360-9380 as strong level to go fresh short.

But now lets look at weekly chart….

Weekly Chart

Interestingly, On weekly chart  we have got a Grave Stone Doji right on the top which means we can even get another evening star pattern. If we close below 9355 in next week than we can expect 8980-9080 in June which would be just a 38.5% correction to previous rally.  On the other side Good results from PSU Bank and GST is would try to resist fall but we need to wait and watch whats unfold next week.

Strategy for Traders: Short 9500 CE May and Buy 9300 PE June tgt: 9210 sl :9580 on closing basis

Rd disclaimer be4 investing

Is Doji Indicating a false breakout?

Nifty managed to close above 9500 for the second day which made some traders over confidence for some more long trades…but STAY CAUTIOUS! In my last post (Range volatility expected but find sector specific moves) i mentioned to WRITE  9200 PE and 9500 CE , surely you might be in loss for M2M in CE writing but wait.  Open interest data is still suggesting a strong resistance at 9500.

To support our profit booking view for near term on Nifty, today on daily chart we have got a Doji candle which is a sign of pause to current trend. It has got more significance today as it is at the high of current trend and also indicators are in overbought position. So what could confirm its role of reversal???…”Candle Tomorrow” ! Watch out for Opening of Nifty, if its below  9517 and we dont pinch a new high, there are 70% chances that we could get a reversal sign on close tomorrow.  May be i would consider last two sessions close as a false breakout for short term traders.

On other side if we look at global markets, they are already showing signs of weakness since last two sessions and also bullion markets are in strong short covering move which is a sign of Equity market reversal. So strategy would remain the same on Markets as last post:  writing calls on Nifty and going short on Nifty Bank! 

Happy summer trading with strict stoploss!

Range volatility expected but find sector specific moves!

After a long time got something to write for Nifty as until last week we were trading strictly in the range of 9000-9360! Finally, this week we got new high 9450 and managed to get life high weekly close. Banking sector was leading markets with PSU Banks outperforming as i had predicted on 25th April in my post “Still some more time to have trust in PSU Banks” ! But now i feel for short term things are turning around.

After a massive rally in Banking stocks , now we have started getting some negative news from banking companies such yesbank’s AGM report, weak mid-cap numbers and many more.

As we can notice in daily charts of Nifty bank above, index has weakening momentum. RSI has already given bearish crossover on its average which is the first sign of weakness. Secondly, two consecutive bearish candle’s on the top are also support profit booking view in coming months. The Blue Box marked is the area of trading until May expiry which suggest that now Nifty Bank could be volatile in that range of 22000-23000. So avoid any long trades as of now because we are near to the higher range. Can look out for stock specific short term selling in Banking Counters.

Where we can expect strong profit booking in Nifty bank with almost 1000 points, on other side, Nifty is expected to be volatile with profit booking on Nifty bank to be balance by IT and to some extent Pharma sector. 

As we could notice in the nifty Daily chart above, we broke out of consolidation range of 9000-9380 last week and now we have widening range of Nifty to 9250-9500 for the rest of the series. One steep fall to 9280 could be expected but we should hold around 9250 as still weekly momentum is expected to be strong. 9250-9280 has lots of support factor like 20 days SMA, trend line support stretched from 9th Nov low and Open interest support. So as a trader i would short Nifty for few session with sl at 9500 while as a investor would wait for 9250 to park my liquidity.

Then what could counter balance Index and Banking fall?…….. IT Sector….

IT sector as noticed in the above weekly graph was in a strong down trend since start of the 2015, as in the white channel. But now new weekly upward channel (Blue channel) has taken a lead which would mean now IT stocks could outperform. Already in last week we some signs from TECHM IT leading markets ahead. So be Long as a trader in next week

Which could be other sector to watch out? …Pharma Sector.

Pharma sector has been most under-performing after IT sector since 2015 where our pharma companies have been under USFDA scanner. But now things are looking to be cooling down and worst seems to be have discounted in pharma sector. NSE Pharma index is at 9 years support which is 200 Weekly average as represented by yellow line in graph above. So still strong momentum hasnt build up which could confirm long positions but we can start accumulating pharma stock as we could expect sharp surge anytime in next 3 months. Start scanning pharma counters.

So strategy now for public participants:

Nifty Index: Write 9200 PE and 9500 CE 

Nifty Bank: Write 23000 CE and Buy 22500 PE with stop loss at 23200

IT Sector: Be long on INFY (tgt 1000) and TECHM (tgt 460)

Pharma sector: Accumulate Sun Pharma and Mid cap pharma stocks.

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100 days report card not satisfactory!

In the year of 2016, Equity markets around the globe were having a Roller coaster ride with a rally in start of the year in anticipation of good economy growth around where bars were raised of Global economy growth. But then BREXIT referendum in June mashed up with the rally and second half of the year was a bit nervous until 9th Nov. On the 9th day of November, Mr. Trump surprisingly won presidential elections in US which changed winds for equity markets.

Above chart is a weekly chart of DOW Index and we could notice that post 23 June, BREXIT Referendum week, we saw some profit booking while then from 9th Nov, trump win, we have got 17% rally in equity markets. The rally was in anticipation of reforms which was promised by him during campaign but his report card on 100th Day on Friday was not cheering for many economist.

Some of the achievements which he mentioned for 100th day were efforts to roll back Obama Care, steps taken to control criminal activities, answer to chemical attack, some steps to stop trade with Mexico and Promoting Made in the USA.  But why were economist not happy? Because nothing has changed the world for financial market as another promises such as spending in investment, Tax cut and financial reforms have not been implemented. Rally of 17% in equity markets have been in just anticipation of good reforms but statistics is not showing in improvement. Consumer confidence index has started losing which means now US citizen’s hopes in Trump is fading away. As you all can notice in the graph below, that consumer confidence was at just 88 before trump win but it than zoomed to 99 in Jan but than took a dip to 96.

University of Michigan Consumer Confidence Index

To gain back confidence, Trump must implement tax cut asap which could be cheerful amongst citizens and industrialists. But he is now stuck between his words (where he promised tax cut in campaign) and fear of widening of fiscal deficit due to tax cut. So that this the reason why he is still spending some more time before he takes any steps in form of tax cut.

Personal Expenditure

Another factor which has not supported economy in Q1 has been personal expenditure which has been in decreasing state which means consumers have been saving more than spending.


Economic barometer index of US,GDP, has been in falling trend since Mr. Trump has joined the party. So now Mr. Trump has get some quick reforms to show world some results on financial stats. Until now rally was just based on liquidity and consumer expectations but now if we need any rally, it should be on improving fundamentals and not just liquidity.

Technically, DOW has given a breakout on weekly charts from a pattern for a rally but if we get any fear of war than things might change. But world shouldnt wait for any result of War because that’s uncertainty and no one can predict. Its better to buy on each dips in equity markets because next few years its going to be for finance if the trump gets everything right. And I believe we must give some more time than just 100 days to judge him.

Still some more time to have trust in PSU Banks

Markets had been pretty range bound since the UP election results were out in mid-march, but finally we gave a breakout today and closed at new life highs. Who has led the breakout? Banking Sector! So lets talk about Nifty bank in my today’s post.

As we all could notice in the Daily chart of Nifty Bank, we are about to give a breakout from a Channel.  This was a long channel with a time wise stretch of almost 3 months starting from Early February which is on the edge of rally breakout tomorrow over 22140 on spot level.  Banking stock has been in good momentum since last 3 weeks but who could lead breakout in Nifty Bank? PSU Banks……………..!

On MoM rally which we got on nifty bank from almost 16000-22000 was lead by private sector banks like Indus Ind, Yes Bank, HDFCBANK, Kotak bank and just one PSU Bank SBI. Other Mid-cap and PSU Banks were lagging rally due to NPA concerns. But as we have already seen banks following Swacch Bharat on their NPA’s, we are getting attractive deal on Risk: Reward for long term on such banks. I Had been pretty much avoiding trades in such banks but now i would surely keep them in my watch list for trading purpose.

Lets check out PSU Bank Index

So when we are witnessing Niftybank closing above its own high of 2015 , PSU bank index is still far away from 2015 high and then we could think of it catching up with its own private peers. As we all could notice in weekly chart of PSU Bank index, we have almost witnessed a inverted h&S bullish reversal pattern. This clear suggest that we are going to get some good medium term trends from PSU Bank stocks. The index is expected to kiss 4800 from current levels of 3540 from pattern breakout. So any dip in quality PSU bank stocks is a buying opportunity for 6 months.

Strategy: Buy stocks like Bank baroda, SBI, Andrabank and mid-cap bank like federal bank for a 6 months time with stop loss on PSU Index at 3270 

Was it a Wave 4th truncation today at 9120?

Nifty has been in consolidation since UP election results on 14th March which is almost a month now. We have been consolidating strictly between 9000-9250 but with strong stock specific movement. On the other side Nifty Bank has been out performing by holding 21500 level since quite a long time.

Looking at Nifty daily chart , as attached, today we have closed with almost a Doji which signals pause to current trend which was a down trend. Now if at all we open a point positive and trade above todays high than we may get somewhat like a morning star pattern which is a positive reversal pattern. Though on negative side we have more factors such as todays close below 20 day average first time after 6th jan and overbought indicators. But what makes me strong for a short rally in near future is strong breakout of market leader Reliance and strong option support at 9000 by PUT writers.  Also if we consider Wave count theory, then probably we have given a close to wave 4th today by completing Wave C of A-B-C zigzag formation in 4th Wave. So as of now there are equal forces of Bulls and Bears on Daily chart and only tomorrow move could decide market sentiments ahead. But would still recommend to remain long ton stock specific .

Strategy for traders: ” Avoid Nifty trade specifically, but  buy Reliance 1400 CE and buy 9000 PE Nifty.” …tgt 1480 on reliance…!