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ICICI Securities

Published on 16/07/2019 11:18:55 AM

Technical Outlook

• The price action formed a small bear candle, indicating extended breather as Nifty failed to witness decisive move above immediate hurdle of 11600

• Key point to highlight, over past four sessions index has merely retraced 38.2% of the preceding three session’s decline. Shallow price retracement clearly suggest inherent weakness in the near term • We expect, immediate bias would remain negative as long as index maintains a lower high-low formation on the weekly basis and head towards 11300 in coming weeks amid stock specific action as we enter Q1FY20 earnings season.

• Going ahead, we believe only a decisive close above 11600 would open further pullback option, else prolonged consolidation (11600 -11300)

• In the coming session, 11600 – 11620 would continue to act as stiff resistance for Nifty futures. Therefore, intraday pullback towards 11585 - 11600 should be used to create intraday short position for target of 11540

Structurally, past six weeks 640 points decline dragged index toward upward sloping trend line. Going ahead, a decisive close below upward sloping trend line (11500) would lead to acceleration of downward momentum towards 11300. However, we do not foresee index breaching below key support threshold of 11400 - 11300 as it is:

*  lower band of positive gap (11592–11407) recorded on exit poll

* 80% retracement of last major up move (11108–12103), at 11307

* price parity of last major decline seen in mid-April-May (11856 – 11108), at 11355

The Nifty Midcap index extended its breather over a seventh consecutive week however it retraced less than 78.6% of preceding three week’s rally. The slower pace of retracement along with elongated time consolidation signifies healthy consolidation, aiding weekly stochastic to cool off the overbought situation (currently at 35). Going ahead, we advise investors to stick to quality stock as we enter Q1FY20 earnings season.

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ICICI Securities

Published on 16/07/2019 11:16:32 AM

Market Outlook

Equity benchmarks opened the week on a positive note, led by traction in IT heavy weights owing to healthy Q1FY20 set of numbers from Infosys. The Nifty settled at 11588, up 36 pints or 0.3%. Market breadth remained negative with A/D ratio of 1:2, leading broader market to underperform the benchmark indices. Barring IT, pharma and auto all other indices ended in red weighed by financials.

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ICICI Securities

Published on 16/07/2019 11:15:08 AM

Opening Bell (July 16)

Indian markets are expected to open flat to negative given the weak Asian market cues. Key monitorables include Q1 earnings, global news flows and monsoon progress. Domestic markets ended higher on the back of healthy Q1 earnings and lessening of worries over China’s economic data. US markets ended marginally positive ahead of commencement of corporate earnings season.

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ICICI Securities

Published on 16/07/2019 11:14:13 AM

Derivatives View (July 16):

Nifty

The Nifty is likely to open flat on the back of mixed global cues. Sell Nifty in the range of 11585-11600 Target: 11554-11528, Stop loss: 11606.

Bank Nifty

Post a positive start, Bank Nifty failed to hold onto gains as selling continued in private as well as PSU banks. However, late buying in HDFC banks and Kotak Mahindra Bank helped the index to recover almost 150 points from the day low of 30325. On the weekly option expiry, significant OI is distributed from 30700 to 31000 Call strikes suggesting any rise can be utilized to sell at higher levels. Sell Bank Nifty in the range of 30600-30650, Target: 30500-30400, Stop loss: 30750.

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ICICI Securities

Published on 15/07/2019 11:00:08 AM

Derivatives View (July 15): Sell Nifty in range of 11570-11590; Sell Bank Nifty in range of 30650-30700…

Nifty

The Nifty is likely to open flat on the back of mixed global cues. Sell Nifty in the range of 11570-11590 Target: 11554-11528, Stop loss: 11606.

Bank Nifty

The Bank Nifty opened gap up and made a high of 30848. However, it could not hold on to gains and drifted lower due to selling in leading private and PSU banks. Looking at weekly option data, 30500 Put has maximum OI that should act as support on downsides. However, on upsides, significant OI is distributed from 30700 to 31000 Call strikes suggesting any rise will be utilised to sell at higher levels.Sell Bank Nifty in the range of 30650-30700, Target: 30550-30450, Stop loss: 30800

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ICICI Securities

Published on 15/07/2019 10:58:33 AM

Opening Bell (July 15)

Indian markets are expected to start on a flattish note on the back of weak global cues. Domestic earnings and global newsprint to remain as key monitorable ahead.

Domestic markets ended lower on the back of rising oil prices and worries over US-China trade tensions. US markets ended in the positive zone due to sustained optimism surrounding interest rate easing by the Federal Reserve.

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ICICI Securities

Published on 13/07/2019 9:49:35 AM

Market outlook for week beginning July 15, 2019 by Dharmesh Shah, Head – Technical, ICICI direct

Benchmark index witnessed sharp decline of more than 2% during previous week to close at 11547 levels. The broader market also observed sharp decline as the Nifty midcap and Nifty small cap index closed the week down by ~ 2.5% each.    

The weekly price action resulted in a sizable bear candle with a lower high and lower low signalling pause in the ongoing uptrend. Contrary to our expectations, the Nifty breached the crucial support area of 11600 held since exit poll session and in the process retraced its entire previous 11 session’s up move (11625–11981) in just last two sessions. Faster pace of retracement signifies pause in prevailing up trend indicating extended breather in the coming weeks.    

Key point to highlight in last week’s decline, has been that the index has retraced less than 38.2% of the preceding three session’s decline (11981-11461) in recent three sessions. Shallow price retracement signifies inherent weakness in the near term. Going forward, we expect bias to remain negative below 11600 levels and extend correction towards 11300 levels in coming weeks. Only sustained close above 11600 would open pull back options.    

The current corrective decline has helped the weekly stochastic oscillator to cool off the overbought situation (currently at 29). Going ahead, we expect the ongoing corrective decline to get anchored around 11400-11300 being the lower band of positive gap (11592–11407) recorded on exit poll session and 80% retracement  of last major up move (11108–12103), at 11307

 

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