Ashish Nambisan: Last week it was stated “Nifty50 has reclimbed the ceiling of the falling wedge which indicates a slower falling rate with a bullish view again. An Inv H&S was under development but failed to form. A ‘Broadening’ formation has been spotted with a positive divergence on the charts. The above formations have helped the Nifty index to reach near its resistance at 22923.9. So, further rally should be expected only above a close of 23000. The downside supports are seen at 22600/22400/22250. If Nifty50 manages to close above 23000 then it may try to touch 23400 mark. Situation may go in hands of bears, if it fails to protect 22600 on downside, as a close below will mean we are again inside the wedge. Bullish views should be welcomed above the falling wedge but this time watch the mark of 23000 closely and be bullish only above it, as whipsaws have become common in such an event and it can be a fake breakout, so for further confirmation Nifty50 has to give 2 consecutive close above 23300”.
Trading Range
Upside can be expected above 23000. Bears can short the index near 23000 with a stop of 23400 while bulls should try to go long near the dips of 22400 with stop of 22000. Remember the breakout point of the upside ‘broadening’ pattern is 23900 and the downside is 21200. So, any close up or below will decide the further facets of the market. Till then buy on dips and sell on rise will be the strategy. Bulls will try hard to protect the mark of 22600 which is the breakout point of the falling wedge and bears may hit it hard to knock back below this level. Henceforth 22600 and 23000 are the most crucial points which decides the further play. For bears the risk will be closing above 23000, while for Bulls the risk will be closing below 22600.
Note: The upside point of the ‘broadening’ pattern is 23900 while the downside is 21200. Any breach of these points will decide the further move.
What happened next? Nifty50 on 15th April opened above 23000, a positive sign and the opening was seen much higher at 23368 which was a tough resistance zone and once the mark of 23400 was taken it zoomed to touch the “broadening” pattern formations resistance zone which was mentioned of 23900 placing a high of 23872.35 for the week. Now, can we assume that Nifty50 will breakout above this “Broadening” pattern formation and zoom past it giving a upside breakout? Let’s try to evaluate this.
Nifty50 continued its vigorous upward trajectory on Thursday, April 17, rising for a fourth consecutive session of gains with significant advances across the board. Elevated up by strong buying interest, particularly in financial stocks, auto and oil & gas stocks leading the charge, the benchmark indices closed firmly in positive territory, reaching notable milestones. Among the top gainers were Eternal, ICICI Bank, Sun Pharma, Bharti Airtel, Sbin and Bajaj FinServ. The bullish sentiment remained strong throughout the day. At the closing bell, Sensex stayed steadfast at 78553.20, having surged an impressive 1508.91 points or 1.96%.
The broader NSE Nifty50 index also reflected this strength, climbing 414.45 points or 1.77% to settle comfortably at 23851.65. Market breadth was unquestionably positive, with approximately 1837 advances and 1038 declines on NSE. This broad participation added fuel to the rally, pushing the total market capitalization upwards reaffirming investor confidence amid improving global sentiment and steady FII participation. Nifty50 now hovering around the upside resistance of 23900 which is a ceiling level of the “broadening” pattern. The focus now may shift to the earnings announcements from heavyweights.
FIIs remained net buyers in cash segment for the week worth 14670 crores while DIIs remained net sellers for the week worth 6471 crores in cash segment.
Investor hopes are high for a possible mutual trade deal between India and the US, which could meaningfully benefit the Indian exporters. The market is discounting the possibility of a bilateral trade agreement between US and India within a few months. The US esteems India as among the four allies (UK, Japan, South Korea and India) with whom the US may strike trade deals first. If this happens, India will benefit out of the ongoing trade war between US and China.
Global equity markets witnessed sharp volatility amid uncertainty surrounding global tariff actions in the last seven trading sessions. The mounting US-China trade war has further positioned India as an attractive alternative for global manufacturing, with India maintaining a peace-making approach and working towards a provisional trade agreement with the US.
India is actively negotiating a trade deal aiming for $500 billion in bilateral trade by 2030. “Sectors such as electronics and gems and jewellery are expected to face significant headwinds due to the increased import duties, while the pharmaceutical industry appears relatively insulated due to exemptions.
Conclusion
FIIs remained net buyers in cash segment for the week worth 14670 crores while DIIs remained net sellers for the week worth 6471 crores in cash segment. Nifty50 is now at the ceiling of the “Broadening” pattern. Indicators are pointing towards an upside breakout from the “Broadening” pattern sooner than later hinting to hit 26000 soon. But this point is very critical and needs to be carefully monitored before jumping to any conclusions, as there is also a risk of fake breakout at this juncture. “Although the outlook is positive, we should maintain a cautious approach to mitigate any unforeseen risks.” Two closes above 23900 will finally mean a breakout above the “Broadening” pattern which may help Nifty50 to blast till 26000.
Trading Range
Nifty50 close was at 23840 which is the upper limit of the “Broadening” pattern. If Nifty50 on Monday happens to open above 23900 we may likely be trading above the breakout point. A sustenance and crossover above 23900 we may touch 24050 which will be the last hurdle for this upside. Crossover above 24050 we may test 24250/24800 however on the downside the intermediary supports remain at 23400/23200. A bearish sentiment will prevail only below a crack of 23000. Market remains in the hands of Bulls, a bullish breakout above the “Broadening” pattern may take this market to 26000. Overall be bullish till we do not surrender 23000 buy the dips at 23600 keep a stop below 23200 or wait for the market to give a breakout on the upside. Major support remains at 22900 for all bullish implications.
Note: Above the breakout of 23900 Nifty50 may blast till the highs of 26000. Have a cautious approach at the time of make or break. Don’t be in a hurry to jump as sometimes u may get trapped on the top. Be prudent and monitor your risks.
Positional Stocks on Radar
- Sbin future: Closed at 794.10 This stock can rally till 825 with a stop of 775. Best entry point will be 780-785.
- Ntpc fut: Closed at 363.8. An upside breakout seems on cards above 370. Buy this stock with a closing stop of 355. Above the breakout of 370 this stock can rally till 400.
- Maruti fut: This stock closed at 11632 after forming a Triple bottom it looks like the stock may try to target 12500. The stop loss should be 11300.
- Heromotoco fut: This stock closed at 3767.5. On the verge of breakout this stock above 3830 can try to rally till 4000.
- Bel fut: This stock closed at 294.60. It seems that it is ready to rally till 308. Above 308 it may target 325 levels soon. Best buy near 289 and the stops should be 275 for positional traders’ day traders can keep a stop of 282 for a target of 308.
- Bajajauto: This stock closed at 8006. It seems ready for a swing. Buy this stock with a stop below 7685 it may target 8500 in coming days.
- Bajfinance: This stock has closed at 9157 and seems ready for a breakout soon above 9255 which would be the last hurdle for this stock. Buy with a stop below 8950, above 9255 this stock has the potential to rally till 10200.
