Week ahead for Nifty with technicals :: HDFC Sec

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--> Observation: • Daily Timeframe: After showing consecutive weakness in the last three sessions, Nifty seems to have halted its downside momentum in today’s session and closed the day higher by around 59 points. • Nifty opened today with upside gap of around 69 points and started to show weakness from the highs of 7052 levels. It later slipped into intraday decline and filled the opening upside gap completely. Showed minor upside recovery towards the end. • We observe a formation of ‘high wave’ type candlestick pattern, which is suggesting a minor upside bounce back during a trended decline. This is echoing a volatile swing movements and suggesting a confusion state of mind among investors. This pattern needs a confirmation by the way of Nifty sustaining above 7050 levels to consider a beginning of upside bounce back. • The immediate support of previous swing low of 17th Feb around 6960 is held today, as Nifty bounced back so far from near the support. The Nifty is in a downtrend, where the supports are broken easily one by another, hence the Nifty holding on this support for long period is unlikely. • Daily momentum oscillator like 14 period RSI has placed on the edge of 40 levels. If daily RSI moves above 40 levels then it may coincide with the continuation of upside momentum in the market for short term. If the daily RSI turns down from here, then it could indicate a sharp weakness for the underlying.



Weekly Timeframe: After showing a smart upside bounce back in last week, Nifty was not able to sustain the gains during this week and slipped into decline by around 181 points, as per w-o-w basis. • We observe a formation of side by side candle pattern, as the Nifty has moved within a similar high low range over the last couple of weeks. This could be considered as a temporary halt in downside momentum and indicates of minor upside bounce back for near term. • The negative sequence of lower tops and bottoms is intact in Nifty as per weekly timeframe chart. After the formation of recent lower bottom around 6869 levels (week before last), the sideways consolidation or minor upmove of the last couple of weeks could be considered as a process of a formation of new lower top as per the sequence. Hence, we are unlikely to see significant upmove from here. • During its trended declines of the last few months, Nifty witnessed sharp decline post completion of lower tops (the quantum of declines from lower tops to a formation of lower bottoms was sharp in nature, with the formation of long range red candles). Hence, the expected upside bounce back carries less significance, but the fresh declines after the bounce back could be sharper one. • The key economic event of Union Budget-2016 is scheduled on 29th Feb (Monday) and there is a possibility of occurrence of high volatility in the market/sectors/stocks by early part of next week. Summing Up: • Nifty is now making attempt to show minor upside bounce back, but still is lacking strength. Maximum upside levels to be watched for next week could be around 7150-7180 and the beginning of weakness from the highs could be a steeper one. The expected decline from the highs could even slip below the key support of 6870 levels (swing low of 12th Feb) in the next couple of weeks.

LINK:
http://hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3016620