Short term outlook for markets remain negative, says Devang Shah

One should be stock specific & follow the trend with trail stop loss levels till it reverses

NIFTY

CLOSE- 7029.75 (26.02.2016)

Market closed weekly in negative territory. It witnessed correction from higher levels as expected last week. It made a low of 6961.40 levels during week & not broken crucial support of 6960.65 levels as mentioned earlier by aprrox one point. It started to rally after holding these support levels & closed in positive territory at the end of weekly trading session. Its sign of positive divergence in which Nifty is still holding higher Top lower bottom bullish formation as per Dow theory. Its good sign for BULLS at current levels of market till these lower levels breaks its now crucial support levels for short term. All the other indices such as Bankex, Midcap & Small cap etc also closed weekly in negative territory.

As I mentioned earlier that if its wave-V down then, it has to straight away achieve short term targets levels with out giving any kind of daily positive close in between. Friday’s daily positive close with positive divergence on nifty indicating initial sign of caution for BEARS. One should Book profit on short position till we get further confirmation of Trend.

Short term out look for the market still remains negative till nifty trades below 7252 levels & expecting targets in the range of 6800-6750 levels in short term. Medium term out look for the market remains still negative till nifty trades below 7600 levels.

BANK NIFTY closed in positive territory today. There is inter-market divergence between BANK NIFTY & NIFTY as per chart in which NIFTY failed to make new lows. Such kind of divergence normally we see at TOP & BOTTOM levels indicating advance warning sign of trend reversal till its proven otherwise.

Momentum indicators daily KST & daily MACD both went in to SELL may create volatility in short term ahead of budget event next week. One should wait for further evidences to take clue of short term trend & till that be stock specific & follow a trend till it reverses. Sustain above short term reversal levels will lead to rally towards 7500-7600 levels in short term.

. Stock Picks:

WOCKHARDT: SELL

CMP: Rs 778

TARGET: Rs 700
 

Wockheart closed weekly in negative territory. It closed below 20 DMA. Its  weekly momentum indicators are in SELL. Risk reward is favourable to SELL at current levels. 

HERO MOTOCORP: SELL

CMP: Rs 2,551

TARGET; Rs 2,438
 

HERO MOTOCORP closed weekly in negative territory. It closed below 20 DMA. Its momentum indicators are in SELL. Risk reward is favourable to SELL at current levels. 
 

The author is Portfolio Manager- PRO TECH-PMS at Sharekhan
 

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