Below is the Views On Some tentativeness around 12000, but odds in favor of bulls By Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking)
“All global markets had a mid-week hiccup in the previous week and we too reacted to it in the form of a decent single day correction on Thursday i.e. 15th October. Fortunately, the major support zone of 11650- 11600 was defended successfully on the subsequent day. The follow up of the same was witnessed this Monday as our markets kick started the week on a cheerful note. Although we could reclaim 12000 this week, the momentum was clearly lacking as the benchmark once again looked a bit tentative around this. For index specific traders, it was clearly a dull week as we witnessed a lot of choppy trades with no clear direction. Eventually, the Nifty concluded the week with more than a percent gains as compared to the previous week close.
Now, let’s dig into a bit of technicals and understand why 11650 – 11600 is considered to be a strong as well as crucial support zone. If we connect all major highs from record highs in a descending order, the trend line / pull back support comes around this level, which coincides with the 20-day EMA as well. Hence, as long as this support is not violated, one should adopt a buy on dips strategy. A close below 11650 – 11600 would result in a short term trend reversal and hence, traders should start lightening up positions after it. Before this, intermediate supports are at 11820 – 11775. Now, we are tad below 12000 and if we have to pre-empt any direction, we expect the Nifty to surpass 12000 – 12050 levels in coming days to head towards 12200 – 12400.
If we are anticipating this to happen then there has to be some technical evidences to back this hypothesis and they are as follows: 1) The ‘RSI-Smoothened’ for Nifty on weekly time frame chart has started moving northwards after entering a bullish territory above the 70 mark, which is likely to provide impetus, 2) After a long underperformance, banking started to show inherent strength and as we all know when financial starts participating in any rally; it is to be considered the robust one. To add to our conviction, the ‘ADX 14’ indicator on the daily chart is moving northwards after surpassing the 25 mark. This development generally unfolds a big trended move, 3) The undercurrent is strong and we are seeing different sectors participating one after another and the way midcap index is poised, another percent up move from hereon would confirm a strong breakout in ‘Nifty MIDCAP 50’ index. So, considering all this, odds are very much in favor of the bulls. But since we are approaching a mega global event (US Presidential election), we may see some volatility increasing and hence, keep a regular tab of all above mentioned levels.”
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