NIFTY OUTLOOK FOR THE WEEK

CAUTION @ HIGHER LEVELS

Inputs by

Dr.Bhuvanagiri Amaranatha Sastry

Astro Technical Analyst

Saketha Consultants, Hyderabad

sastry.saaketa@gmail.com

09848014561

During the current week Moon would be transiting  from Chitta in Virgo to Visakha in Libra. Sun transits in Aswini in Aries . .  Mercury transits  in Revath  in  Pisces. Mars  transits in  Hastha  constellation in Virgo  and has been in  Retrograde motion from 1^st March till 20^th May.    Saturn too in  Retrograde motion from 2^nd March till 20^th July and presently in  Visakha  constellation in  Gemini navamsa.   Jupiter transits in Aardra constellation and in  Pisces Navamsa during the week.  Nifty’s monthly astro range was 6730 and 6644 and the targets are 6815 / 6900 on the upside and 6560 6485on the downside and it had achieved first target on upside .During the week, Moon (representing Mind) would be conjoing / hemmed between malefic planets ie., Mars, Rahu and Saturn and with hard aspects among outer planets, wild moves with bearish bias can be expected. Further, global markets can be expected to correct in Second half of April (appears to have already started in US markets) and whether our markets would follow is to be seen?

Nifty Outlook for Next Week :: 15.04.2014 to 18.04.2014 (Truncated Week but Large Moves)…  

NIFTY :: 6776 (+82)  

 

Nifty closed with a gain of about 1.25% and the entire gain coming on Wednesday and other days were narrow and negative. Quarterly results season would be commencing from next week and latest IIP numbers could be a temporary dampener to the upbeat sentiment. However, the upbeat sentiment is on account pre-election rally and a precursor to a stable and performing Government. However, it has run up too much with out a reasonable correction / retracement  which is a prerequisite for a healthy market. Hence, correction is to be expected sooner and before the announcement of election results, setting the stage for a rally incase of a positive election outcome. Sectoral rotation has become order of the day and different sectors should be tracked to discern individual trends. If Friday’s movement is any indication, IT and Pharma could go up for a while giving result to cyclical and financials. However, market’s nature is to surprise and this time could be no exception. With the recent rise, Nifty has clearly come out of the trading range and 200 DMA could become a strong base even from long term point of view.   Technically, though the trend is firm and bullish,  caution is advised at higher levels as  and  retracement  is to be expected. .There are only 6 trading session in this derivative series and in view of the truncated season, Gap up / Gap down opening and large moves could be expected. However, any sharp fall for any reason would be an opportunity to Buy for Medium / Long term.

Nifty continues to be above 200 DMA and 50 DMA too is above 200 DMA suggesting that the long term bullish trend is intact. Bank Nifty too exhibited strength recently  and is above 200 DMA.  Big event of 2014 is Loksabha Elections and the outcome would dictate the future trend.  As of now, market expects NDA to return to power and carry the development agenda and stock market discounts future in advance.  Even with the recent  rise, Nifty is quoting at a PE of 18.80 , which is only 4% above the long term PE multiple  of 18. Hence, further upside (upto 7500 to 8000) is possible  in case  a stable and performing Government returns to power at the centre as earnings go up over the time in an inflation ridden economy.

Further, Nifty has been trading in a range of 4600 to 6300 for more than 4 years and  a  powerful breakout appears to be unfolding. (expected post election results but the liquidity is in a hurry  to complete the task as stock market is  usually ahead by about  Six months. Hence strong long term support would be around 6100 level.  

For Short term,  the stop loss is 6700 (on close basis), and for Medium term, stop loss is 6100.   For the current week, Last week’s range is to kept as reference as strong resistance and support could be expected around 6850 and support around 6650.  Breakout level for the week is 6850 and break down level is 6625. If breakdown is breached, Sell on Rise policy may be followed and vice versa. However,  as there are only Three trading sessions followed by long weekend, caution may be exercised at higher levels..

For the coming week, Nifty spot is expected to face resistance at
6860,  6940, 7025 and find support at 6695, 6610, 6530.

Nifty in short term bullishness would come out of the same only if it closes below 6700, .

Advice for Traders :: There could be a tug of war between weak global cues and strong domestic sentiment. As a reasonable retracement is to be expected before derivative series, caution is advised at higher levels and the breakout point of 6850 may be kept as a logical stop loss for the week. While above is the advice for traders, investors can utilize any decent correction to “Buy” in view of the promise it holds for medium / long term.

WD Gann’s
natural numbers which would act as natural support and resistance are
, :  ,  ,6281,6361, 6441 , 6521, 6628, 6769,6913 during the week.

Further , Weekly Open level is very important for the entire week.
Short positions may be avoided as long as it maintains / closes above
Weekly open and vice versa