Weekly Analysis of Nifty and Banknifty from 13th July to 17th July and Views ahead plus stocks to watch out.
What took Nifty so high from 7500 to 10900 ?
For those who are still wondering this question or got trapped who were waiting for 5-6-7k in Nifty ..Let me answer you.
1. We saw a Big fall from 12000+ to 7500, almost 60% fall from mid-February to mid-March. So there is definitely good upside expected
2. On the technical side, it was a cup and handle and a pole and a flag pattern in the making while going upside down and around. When May month ended, we had a BREAKOUT
3. Also, note maximum Demat accounts have been opened in this lockdown, so small retail investors came to the market for investment when there was a heavy discount in good stocks. Also, data shows they were not big mutual fund houses or investment firms, but retail investors took the market up not just in India but in the world market as well.
4. Though corona cases were rising, there were pharma stocks which had a strong bullish sentiment in this pandemic which helped Nifty to sustain
5. How can we forget Reliance which broke all The high’s it keeps on making thanks to huge investment from the world’s top companies.
6. Crude oil saw a historic low which helped the Indian market, especially in the sentiment.
7. Global market and how can we forget the new high made in NASDAQ (USA market) which boosted sentiment of all over the world.
And there are many other reasons like Government packages, vaccine news, Recovery rate in India in Covid 19 , positive sentiment in insurance stocks and also the Make in India campaign etc.
Now, what next? Will it fall in the coming days or will it go Up? We are going to study with the help of all technical indicators.
Technical analysis of Nifty and Banknifty
Daily chart of Nifty50
There is a daily chart of Nifty50 above the picture. The candle which formed is Bullish MARUBOZU not perfect one but little variation as a small shadow on up.
Now let’s check the daily chart of Nifty weekly and monthly candles.
Weekly chart of Nifty50
If you look at the weekly chart of Nifty50, MACD already gave a buy when Nifty was near 9100, and as of Now it is still MACD showing a bullish sign. But the Important thing to notice here is that last week a candle was hanging man who is a caution sign for Bulls. But as of Now, it’s above all moving averages 5,10,50,100, so if it slides, it has good support below.
This is a monthly chart of the Nifty50 July month candle. It is still incomplete but a strong sign for Bulls that it is not showing weakness at least now and also, as of now, it is above the 20-month EMA. Now let’s look at the Daily Chart of Nifty bank.
In case of Nifty bank again, bullish candle. Not the perfect Marubozu , it’s a spinning top, but shadows are very less on either side. So, Bulls are very strong at the moment.
PIVOT POINT ( SUPPORT and RESISTANCE)
Immediate support for Nifty is near 10750 near Friday’s low, and then the 10650-10700 zone is a very strong support zone if broken. Next strong support will be near 10400 (0.618 FIBONACCI RETRACEMENT) .
Now for Resistance to move towards 11000-11200 Nifty has to sustain at where it closed near 10900. if it slides from here, then it will be strong resistance again, but if it crosses with good volume, then 11200 will be an easy target.
Now in the case of Nifty bank, 21500 is immediate support, but the 21000-21100 zone is strong support from where Nifty bank took a bounce, as you can see in the daily chart.
Upside 22000 is now strong, but if the Nifty crosses it, it will go to another strong resistance zone from where it came down, which is the 22900-23200 zone.
Moving average -:
Nifty50 in the daily chart has a 200-day SMA at 10869. So Nifty has to sustain above that for the upside. Rest 5,20,50,100 EMA already crossed comfortably by Nifty and will act as supports if Nifty50 slides but 100 EMA will be strong support.
Friday it crossed 5 and 20 day SMA. Now the next Resistance is 22346, which is a 100 day EMA, and if you slide, then support is 50 day EMA at 21300.
Option chain -:
Nifty had a strong resistance of 11000 but now it’s getting a little weak, and the OI shifted to 11200.
On the other hand, PUT side on every regular interval, huge Writing has done and also more open interest, especially near 10800 and 10700.If broken next support as per option is 10500.
On the call side, more volume is getting build-up and less writing especially at the strongest Resistance of 23000. Immediate Resistance is at 22000 levels and then 22500 – 23000 level.
On put side huge writing takes place and immediate support is near 21500 and then 21000 levels.
PCR ratio -:
Below 0.7 = Over sold
Near 1 = Neutral
Above 1.5 = Over baught
Put call ratio for
And in Nifty bank = 0.968
So, as per PCR ratio, Nifty is near not inside but near to overbaught zone but Nifty bank has still good scope for Upside as it’s near the neutral zone.
Nifty PE ratio on Thursday was 28.19 and Friday it’s 28.55. so this is a second thing as a caution for bulls as Nifty PE ratio above 26 is an overbought zone though no sign of weakness in short term period except hanging man in the weekly chart.
Heikin Ashi -:
Heking ashi though shows an accurate trend, but it’s lagging Indicator as it follows previous candle prices.
In case of Nifty bank, it’s showing a trend reversal from bearish to Bullish trend.
And now Nifty50 Hekin Ashi was bearish for the past 3 days but now again showing an indication for the Bullish side after Friday’s upside.
Stock to watch out
Voltas has shown a very good upside and now formed a pole and flag pattern. The immediate Resistance is near 580, so has to close above Friday’s high and then 600 if crossed, 650 will be an easy target
Now there are 35 candles in above chart pattern and will be 36 if a breakout comes on Monday, so the total time frame will be 36/3= 12 days ( daily chart)
Target will be pole height from the lower line in the flag, first target will be 650.
Stop loss for safe traders will be low of the BREAKOUT candle for risky traders will be Friday’s close.
BEL also has a pole and a flag in the making. Can you find out Target, stop loss, and time frame if it gives BREAKOUT on Monday?
3. HDFC BANK
This is one of the best stock which long-term investors must have in their portfolio, but is it the right level to buy ? Also it posted a quarterly result on Friday. What does it say?
Year or year profit has been increased by almost 20% but on quarter performance. Quarterly growth is very less, and it was expected in the lockdown
If we talk about the fundamental side of the stock, then market capital is more than 6 lakh Crores and this stock is a leader in the banking sector. So it’s a performance not just affecting the Banking sector or Nifty but also the country’s economy. Nothing wrong with the fundamental though
As of now if we check yearly performance stock is a discount of 7% and for the past 3 years stock gave 30% returns.
For 5 years stock almost doubled the money.
Now let’s see the best price to buy this stock
200 day SMA is at 1120, so closing above that will make stock fly on Upside on the same side if the trendline is broken, then I expect the stock to slide towards 1000-1050, which is a very good price for long term investment.
So the best price to add HDFC Bank will be near 1050, and anything below 1000 will be a great price to add.
If it close above 1120 with good volume, then min 5-8% upside is on the way very soon.
My view on Nifty and Nifty bank -:
Nifty broke very crucial Resistance of 10900 and also gave a closing just above that. As long as Nifty is holding up here, Not rising only holding up, I am expecting 11200 very easy targets. Only if Friday’s low is broken, then Nifty will head towards 10650 first.
So range become Below 10900 towards 10800-10750-10650
Above 10900 towards 11000-11200
The nifty bank is heading for 23000 from the support zone of 21000 where it took a bounce. Not as a straight upside, but it may rise with ups and downs. Bears will be strong only if it closes below 21000.
Below 21500 towards 21000-20500-20000
Above 22000 towards easy resistance of 22500 and then 23000 zone.
Also, please note IT stocks, Reliance, and especially HDFC bank movement after the result will decide the Nifty50 trend on Monday.
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