Technical Analysis of Market Trends - January 2015:: Edelweiss

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• We expected a range bound consolidation in January between 7800-8250 levels but a positive surprise delivered by RBI governor (repo rate cut by 25bps) changed the direction of the market and the index has resumed its uptrend. We changed outlook mid month to bullish for Nifty targets of 8800 to 9000.
• Nifty’s monthly chart has formed a bullish candle in January till now as the index hits a new all time high after a negative December month. After a brief correction of 7 weeks, Nifty is now showing bullish momentum in the weekly chart.
• RBI’s initiation to start its interest rate cut cycle has given strong boost to the sentiments. Easing of inflationary pressures since July 2014 and large decline in global commodity prices are strong positives for the domestic economy. India continues to outperform versus its global peers despite geopolitical and economical concerns from eurozone and China.
• With GDP growth bottoming out and a 23% YoY growth in a consensus two year forward EPS indicates signs of economic revival. Government’s proactive approach in pushing GST, “Make in India”, coal block auctioning process and enhancing the ease of doing business is a start of a new growth trajectory.
• India’s 10 year bond yield has fallen from 9% to 7.72% in last 10 months. With fall in Bond yields and rise in bond prices, we expect that the Indian equities are likely to move higher.
• Gold has moved higher from $1170 to $1290 in a span of 20 days and has changed its short term trend on back of rise in geopolitical tension. We are bullish on MCX Gold and expect it to move towards 28900 levels.
• The recent run in the Nifty post the breakout from the symmetrical pattern above 8460 is bullish. The move has been supported by strong purchases by FIIs in cash as well as futures segment. We expect that the outperformance of Nifty is likely to continue versus its global peers. Hence, we continue to remain bullish for the long term.

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https://www.edelweiss.in/research/Technical-Analysis-of-Market-Trends--January-2015/10005456.html