CREALTH NIFTY VIEW
Nifty closed at 10227 after correcting almost 1000 points from the starting of Feb. Nifty had broken its previous swing low of 10300 and now it is trading below it which proves that it has become a sell on rise market. Though all oscillators are in oversold zone and 200 Day Exponential Moving Average stands at 10100 which will be a crucial level for Nifty, 10300 will act as a big resistance for Nifty to cross in the near term. We would suggest to stay long, only if Nifty closes above 10300 on closing basis otherwise sell every rise and below 10100 if Nifty goes then we may see 4 figures very soon.
Gyan Word – Moving Average
A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random price fluctuations. It is a trend-following, or lagging, indicator because it is based on past prices.
The two basic and commonly used moving averages are the simple moving average (SMA), which is the simple average of a security over a defined number of time periods, and the exponential moving average (EMA), which gives greater weight to more recent prices. The most common applications of moving averages are to identify the trend direction and to determine support and resistance levels.
Important Moving Averages – 50 DEMA, 200 DEMA.
(DEMA – Days Exponential Moving Average) Source : Investopedia
CREALTH SECTORIAL VIEW
Bank Nifty closed at 24296 below its 200 Day Exponential Moving Average at 24480 after 1 year which proves that it is more weaker than Nifty and has more downside ahead. On monthly charts it has formed a bearish engulfing pattern which is another bearish signal. We suggest a sell on rise strategy in Bank Nifty and we expect it to touch 23850 in few weeks. It is the weakest sector in Nifty as per charts hence we would suggest to stay away from banking stocks for few days.
Nifty IT and Pharma are the two sectors which looks good as they include many good heavyweights which were underperformers of 2017 and early 2018. History also proves that IT and Pharma have been the safest bets when Nifty has underperformed. We would still suggest to stay away from small, mid caps and buy quality mid, small caps stocks only on dips as we may see more pain ahead in them. In the current scenario low beta large caps like Sun Pharma and Infosys would be safer bets as they are available at a reasonable valuation.
STOCK SPECIFIC VIEW
Bearish Stocks – Tata Steel.
Tata Steel has given an ascending triangle breakdown with good volume and Open Interest Build Up. It has broken the 200 Days Exponential moving average after 2 years which is the major area of concern. As per charts the next crucial support is 590 which if broken then it can test 550. Though the pattern breakdown signals that the stock is headed towards 550 in few weeks.
Bullish Stocks – We are bearish on overall markets hence no bullish stocks for this week. Though one can add quality stocks like Jamna Auto and Dilip Buildcon on every dip.
CREALTH SUGGESTION TO TRADERS & INVESTORS
Our suggestion to all traders will be to stay away from longs as it has now become a sell on rise market as all rises have been shorted into and Nifty has shown no clear signs of reversal. Though Nifty has formed a double bottom at 10150 but its confirmation will be done only if Nifty closes above 10325, chances of which are very less. We expect Nifty to head towards 4 digits in the next few weeks.
Our suggestion to investors is to keep booking profits in high beta stocks and buy quality stocks like South Bank, Lic Housing Finance, ITC, Tata Motors, which are undervalued at cmp, safer bets, and has not participated much in the rally of 2017 and early 2018.
Disclaimer – All the above writings are our own technical view, research and not a recommendation to buy/sell! We are not Sebi registered Investment Advisers. Our clients may have position in the above mentioned stocks. We are not liable for any profit/losses. Every person should do their own research before investing/trading or consult your financial adviser.
Note: The article/calls and advice are subject to caveats. Postman News doesn’t bear any losses on these advices as such.