(Image Credits- Moneycontrol)



Nifty has formed a Hammer on weekly charts consecutively which again shows indecision among the Bulls and Bears! Though in the process of the formation of a hammer Nifty Fut has created a Triple Top at 9982 which is a sign of danger for the bulls. All lagging indicators/oscillators like RSI, Stochastics, MACD are at DIVERGENCE which is again a danger sign for bulls as divergence in indicators are a clear sign of a 8-10% correction in near term. A new trend will be established this week if Nifty breaks 9980 on the upper side or 9880 on the down side on closing basis which could show a 200-250 point move either side. The pick-up in volumes in Nifty in the past 2 week have given an early indication that a breakout or breakdown will happen in the coming week.

CREALTH Technical Funda

Hammer – A hammer is a candlestick chart pattern that occurs when a security trades significantly lower than its opening, but closes either above or near its opening price. This pattern forms a hammer-shaped candlestick, in which the body is at least half the size of the tail or wick. The pattern has different names/significance in different time frames :-
Made at a downtrend – Reversal Pattern which states that the security can bottom out at the current price. It means that the stock can rise significantly from current levels.
Made at a uptrend (Hanging Man) – A Hammer is called a Hanging Man when it is made in a uptrend. It states a Reversal/Indecision Pattern which states that the security may fall or move sideways for the next few days. It means either the stock will fall or move in a certain range for the next few days.
Made at the middle of a trend – Breakout/Breakdown Pattern which states that the security may either give a big rise or big fall in the next few days.


Our suggestion would be to stay away from Nifty trades until and unless Nifty breaks on either side. Even if one takes a trade he/she should keep strict SL or trade in option strategies rather than keeping naked positions. Nifty will make a decisive move on Wednesday after core inflation data will come on Tuesday. Hence one should keep a close eye on Tuesday’s closing too which may show some signs of the Wednesday’s opening as the data may come after market hours on Tuesday.

Options Strategy
Create a Bear Put Spread i.e Sell 9800 PE at 55-58 & Buy 9850 PE at 69-72 of 28 Sep expiry. As OI is highest at 10000 CE hence crossing that seems difflicult. This should only be initiated only if Nifty opens below 9970.
Bear Put Spread – A bear put spread is a type of options strategy used when an option trader expects a decline in the price of the underlying asset. Bear Put Spread is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price.

All sectors are having a mix match story as Nifty remains range-bound. The next breakout/breakdown will be led by Bank Nifty as it has been totally range-bound from 24000 to 24500 . With global tensions still unsolved it is advisable to stay away from Nifty IT, Metal & Pharma as they are positively correlated with foreign markets.

Bullish Stocks – Engineers India, Icici Pru.
Bearish Stocks – Bharti Airtel, SBI.


Our suggestion to all traders will be to avoid long, short positions in index until & unless Nifty breaks on either side in next week. Though one shouldn’t be afraid to buy/sell stock specific themes. Housing Finance, Gold looks like promising sectors & is expected to perform really well in the coming months as festival season is beginning. We like L&T Fin, Manappuram Fin, Titan in the above pack though it is better to hedge your position as their can be a sudden gap down any day & no one will get time to cut their position on SL due to core data/global clues.

Our suggestion to investors will be to book profits in mid, small cap stocks at higher levels & have cash in hand to enter at lower levels as this correction was much awaited and one will get quality stocks at lower levels. Investors can buy quality stocks in SIP mode in the current market scenario. So sit like a hawk to enter at lower levels and don’t just jump at current levels as more pain can be seen ahead if Nifty breaks 9880.

Disclaimer – All the above writings are just a technical view, research! Every person should do their own research before investing/trading. Our clients may have position in the above mentioned stocks!

Note: The article/calls and advice are subject to caveats. Postman News doesn’t bear any losses on these advices as such.



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