Nifty outlook and key trading ideas by Devang Shah

NIFTY CLOSE: 10760.60 (02.02.2018)

Market finally witnessed sharp sell off near from upper end of log channel as mentioned earlier. It finally closed weekly in negative territory after preceding 8th consecutive weekly positive close. One should expect market to trend towards lower levels targets till it reverses in short term. Market will remain volatile for short term, Trader should be cautious & be stock specific in short term & use any kind of pull back rally to sell or exit till short term reverses. 

From wave count perspectives, I have attached two alternate for this short term correction for both possibility of whether its shadow/minor correction from monthly chart perspectives like preceding all or it will be larger wave-4 correction this time as a preferred alternate. AS Bank Nifty is not having so far any other bullish alternate, I prefer to go with alternate-1 as larger correction in short term till other evidences found. One should expect large cap to fall more in this phase of correction to catch up with mid-caps indices. One should also watch out larger-cap stocks & main indices behaviour in short term for validity of preferred wave count.

As mid-cap was falling & showing short term divergence ahead of large cap indices in short term. It was giving warning sign in spite of being sharp rally on main indices after 19th January 2018. One should expect mid-cap to fall further in this sharp wave-4 correction. Mid-cap & Small-cap indices also closed weekly in negative territory.

Short-term outlook for the market remains negative till Nifty trades below 11,172 levels and expecting target of 10,650-10,500-10,400 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 8,968 levels and expecting targets in the range of 12,000-12,200 levels in medium term.

Bank Nifty also closed weekly in negative territory. We have seen sharp sell off on Bank Nifty confirming short term reversal at the end of weekly trading session. It clearly looks like end of wave-3 with ending diagonal pattern with so far no other bullish wave counts in short term. Short term outlook for Bank Nifty remains negative till it trades below 27,661 & expecting lower levels targets till 24,000-23,600 levels till short term reverses in these wave-4 correction.

10,500-11,000 levels is strong support & resistance levels respectively based on option open interest data so far for current month series. Market will remain very volatile in this corrective phase. Any kind of short term correction or consolidation is buying opportunity for medium to long term Investment perspectives till medium term reverses.

Momentum indicators Daily KST & daily MACD both are in SELL supporting short term trend. One should be stock specific & follow the trend with trail stop loss levels till it reverses. Close above short term reversal levels will finally confirm further rally towards medium term higher levels targets.

Stock Picks:

RIL- SELL
CLOSE – Rs 905.70
TARGET – Rs 860/840

RIL closed weekly in negative territory. Its showing sign of correction in short term. It’s still trading above 40 DMA. Its momentum indicators are in SELL. One can SELL with stop loss of Rs 960 for the target of Rs 860/840 levels in short term.

L&T- SELL
CLOSE – Rs- 1414.40
TARGET – Rs 1370-1330

L&T closed daily in negative territory. It looks like end of 5 wave advance rally in short term. Its daily momentum indicators are in SELL. One can SELL with a stop loss of Rs 1,470 for the target of Rs 1,370-1,330 in short-term. 

TCS- BUY
CLOSE – Rs- 3,149
TARGET – Rs 3,300

TCS closed the weekly in negative territory. It has wave-V up pending as per daily chart. It’s managed to close above 20 DMA. Risk reward is favourable to buy at current levels. Its weekly momentum indicators are in BUY. One can buy with a stop loss of Rs 3,080 for the target of Rs 3,300 in short-term.

HCL TECH- BUY
CLOSE – Rs- 988.25
TARGET – Rs 1,040-1,050

HCL TECH closed the weekly in negtive territory. It has wave-V up pending as per daily chart. It’s managed to close above 20 DMA. Risk reward is favourable to buy at current levels. Its weekly momentum indicators are in BUY. One can buy with a stop loss of Rs 930 for the target of Rs 1,040-1,050 in short-term. 

Devang Shah: The author of www.trendtechno.com (Trade with Trend) and an independent market analyst

Disclaimer: The analyst may / may not have a position in the scrips mentioned above; the views given above are the personal views of the analyst.Consultant & Advisors in the world of Financial Market.Disclaimer: 

The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.