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
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…!
Earning season for last quarter kicked off today with Infosys announcing results lower than market expectations. Its top line grew mere at 9.7% approx last year against more thn 17% growth for a decade before. Looking at such disappointing numbers i feel its all over for front line IT stocks for short term. As we all know 62% of Infosys revenue is from North America and when i expect Rupee to get stronger and stronger for coming years and Trump imposing some threat on H1-B Visa than its surely going to impact more negatively on Infosys top line.
This all negativity is almost near to be proving on charts of Infosys….
So above chart is a monthly chart of Infosys which is showing some similar pattern as head and shoulder which if is proven with a close below 900 then we can expect 525 level over few quarters. Secondly if we mark recent most heavy volume months then they all have been negative movements which can hint that investors are unwinding position from portfolio. Thirdly, a support line which has been intact during a decade growht of 17.6% on top line is also coinciding with neckline breakout line so 900 is level to watch out to empty infosys for time being from your long term portfolio.
Strategy for Investors: Sell below 900 from portfolio and buy 1000 CE to hedger your sell until we confirm monthly close
Strategy for traders: Sell on rise with Stop loss of 1050 ..Tgts 920/840/790 over quarters.
Read disclaimer before investing.
Nifty has been on a dream run since start of 2017 but Friday’s last 30 mins shook long term traders and many of them squared-off longs in fear .After studying fall on chart , it seems it was just a speculator’s profit booking as still we havent got any clear pattern of strong reversal on charts.
So as we all could notice on the chart, Nifty is taking strong support on a trend line which is intact since Jan and also travelling to 20 day average (Orange line) since mid-feb. Currently, both 20 SMA and Support line, are at 9120 making it a crucial support for next week. Looking at the option data we are building strong supports from PUTS writing at 9100 and 9000 so any dip in the market is a buy for a positional traders. Now if we apply EW Theory then we will now have a 5th Wave up with minimum tgt of 9350. So the strategy remains buy on dips with SL of 9000 for positional traders.
BHEL has been a outperform in last 3 months with almost 50% return to investor but now its time for some profit booking. Stock has manage to close below 20 day Average after 3 months and even the indicators have given bearish crossover to confirm some profit booking ahead. Crucial support of 165 has also been breached with heavy volumes on Thursday. So now one can short BHEL from current levels for almost 8% gain in quick time
Strategy for Traders : Sell BHEL tgt 150 sl 168 and to Hedge buy Nifty tgt 9280 sl 9050
Reliance Industries has been one of the most under-performing stock in Index since the 2008 Crisis but finally we are hoping for a turnaround i…You feel the recent rally from 1000-1335 is enough for now?….Naaaa..The Game has just begun today .
Reliance industries is not just technically undervalued but also fundamentally. Lets have a look at Fundamental snapshot
Though am not a best Fundamental analyst but what i can understand from above figures is that sales have increase 119% with profit rising 40% which are the most crucial numbers to arrive at market price but still the stock price has just risen 12% during this last 9 years. The best part what i understand is that indicators which affect PAT, which is GRM, Crude prices and USd-INR, all have been negative but still PAT was sufficient to grow at health rate. Now when we expect Crude prices to rise globally with Rupee getting strong, am sure GRM would increase PAT for the company from Current levels. This is surely gonna help to shoot up Reliance’s Oil business.
BUT the cherry on the top would be Reliance Jio. As you all could notice in Businesses row, company has added so many businesses in last 9 years and from tomorrow its biggest investment Reliance Jio would start giving fruits. Almost all fixed investment and expenses on Reliance Jio has been discounted with 0 revenue. But from tomorrow revenue of Jio would be start flowing in which would raise bars of PAT in next quarter. So you must have Reliance on Jio.
Now coming to some Technical know-hows, today Reliance has managed to close above 1320 after 9 years where we last saw close at 1320 on 21st May 2008. This was the reason why we took comparison of 2008-2017 in the above table.
As you all could notice in the chart above, Reliance has given a Flag pattern breakout today with high delivery volume with highest closing in last 9 years. Flag pattern breakout almost gives another lap of equally fast rally as we saw just before profit booking in march. Which means we are moving for 1550 on stock within next 3-5 weeks. So now the stock is going to be purely a out-performer even at this levels.
So strategy would purely be BUY for tgt 1550 sl: 1200 for traders while investors can accumulate for nexr 3 months until Jio revenue gets reflected on balance sheet. Stock could surely be a multi-bagger for long term investment.
Good evening Readers. Last 3 weeks have been pretty much of a rally and it was difficult to say we wont get any correction until we opened gap up after UP results on this Monday. Many of my blog followers would have felt they lost money as i was bearish on Nifty since my last post on 27th Feb? ….BUT THATS NOT TRUE… Why? …My strategy was to Short Nifty (8890) 8890 and Long reliance (1180). So strategy Finally closed today with Reliance hitting my than tgt 1325 and Nifty triggering stop loss at 9150.
Profit on My strategy
Buy Sell Margin P/L (for one Lot)
Nifty (SL) 9150 8890 55000 -19500
Reliance 1180 1325(tgt) 85000 + 72500
So Net payout: Rs. 53,000
So above strategy was a perfect example how a spread strategy could be the best thing to trade to avoid any side trend
Now what next after such a bullish closing?….
We have got the perfect Inverted H&S breakout on Weekly chart with Runaway gap up on Monday on back of UP results.. Though m posting a day early for a confirmation but it seems we will get breakout above neckline at 8980. And interestingly pattern target is coming up to 10600 minimum if we sustain above my stop loss. So now its better late than never. If you guys still feel left out of markets or investment , enter now with part investment and may be some after few months. But you must surely invest stock specific at current levels for long term. Few good stocks to invest are Tata Steel, Reliance and Sun Pharma. Want me to design your long term portfolio than can mail me at email@example.com
Strategy for traders:
Buy 1 lot of Nifty at CMP tgt 9350 and SL 8980 and buy 1 lot of tata steel with tgt 550 sl 480 and maximum loss: 52750 if you strictly follow my strategy.
Thank you readers for following my blog! Happy trading with strict stop loss.!
Nifty charts have been like a pendulum between red and green candles. But finally we have resisted near to 8980 or to say 9000 level which i had been mentioning in my previous post and it looks like it was the end of 5th Wave of a smaller degree. So next would be correction phase which could be a sharp fall or consolidation phase. Fundamentally we dont find any trigger in coming weeks but may be politically we have UP election results to decide whether correction is going be a sharp fall or consolidation.
Technically we can decide to support levels which could help us to decide degree of correction, 8780: if current fall takes support at this level, which also has a gap unfilled, than we could consider this phase to be a consolidation but if we fall below this support than it can be more sharp correction towards . 8480 which is another gap unfilled. Taking some snap from indicators, we are in overbought zone on daily charts since January and a correction is surely due this expiry from Option data setup. So now i would short fresh on the index…
Strategy for Traders: Short Nifty with tgt of 8780,8560,8480 while Stop loss could be 9150 and would hedge buy going long on reliance with tgt of 1325 sl: 1150
Strategy for Investors: Arrange for some liquid funds as in next 20 sessions its gonna be opportunity to accumulate stocks at 8600 and than 8450 levels on Nifty.
New year 2017 has been good for traders until now and even on monthly chart gave strong reversal for investors. But the rally couldnt be without any hiccups and we are going to have one. 8530-8980 was my range mentioned in last post , but couldnt touch the high of the range but can get closer to downside range.
As we could notice in the chart, last 7 sessions have been sign of losing momentum. We got 7 consecutive red candles which means markets closed below the level where it open for the day which clearly signs that traders are selling on any positive opening fearing markets to fall. This fear finally turned to reality today as Nifty closed below 4 day SMA and 9 day SMA after 36 straight sessions of positive close over the same. Even indicators such as RSI and MACD has given negative crossover to confirm bearish signs from price and MA crossover.
So now to sum up, still the charts for long term are positive but we may witness some profit booking before expiry which may take support at 8652/8600/8580.
Strategy for Traders: Square-off Longs and short with stop loss of 8860
Strategy for Investors: Buy on each dip with stop loss of 8410 for investors.
“Achhe Din aayenge” had been most chanted slogan around India Since 2013 but now actually “Achhe Din aa Gaye” in last two months. Though Demonetization has been criticized by most the population of India but thats because short term pain they went through during Nov-Dec. But as saying goes “सब्र का फल मीठा होता है” , we as a responsible citizen of India should wait for Demonetization’s fruitful results in long term. Few of the fruits have started ripening such as economy outperforming other developed economy, decreasing Indian CAD, rising digital transactions, decreasing bank rates, rising tax payers, rising tax slabs, increased government spending on infrastructure, liberalized FII norms, passing on benefits to farmers and counting…So actually we are moving towards a phase where our each day would be labelled “Achha Din” and credit will go to citizens of India!
So coming back to markets and particularly to Nifty, we are sensing a strong pattern on Monthly time frame…..
As you all could notice in the chart above, circled candles symbolize a Morning Star pattern which is bearish reversal and being on monthly chart it has strong significance. But investor to get confirmation, we need to hold 7900 level for next two series. Looking at other indicators on Monthly chart, we can be sure of buying on each dip for next few month holding
Strategy for investors: Buy on each dip with stop loss of 8200!
Coming to short term traders, i had a target of 8720 which was just achieved before closing on Budget day.
If you look at daily chart above, we are in overbought zone and nearing to resistance line of the channel but that doesnt mean we will resist for cent %. If the momentum is still strong on stocks, we may still get 300 points rally this series as indicated by option data. So for a fresh position its risky but still may go with a a hedged spread above 8725 tomorrow.
Strategy for Traders: Hold existing longs with trailing sl of 8530 with upside tgt at 8980 and for fresh buyers go long on PSU Banks (Preferably SBIN tgt 290, BoB tgt188) with a hedging of 8500 PE.
See you guys until we kick out 8980 or slip down 8530..!