Market analysis for next week

In the last week's Market Analysis we have told that Market slightly volatile and still it is buy on dips where few stocks shared were offering excellent risk reward buying opportunity for traders. One can read the blog by clicking on highlighted text. Nifty is up 1.3% this week and BankNifty is marginally up by 0.37%. Also, some of the stocks were shared for short term and their performance in this week was:

Bharti Airtel and Sun Pharma gave good returns whereas others have taken some of our gains. Market was rangebound and Nifty had moved around 400 points this week. Major movement was seen in Midcap and Smallcap stocks. Some of the stocks that we had bought in that space have given more than 50% in short duration. Net we made returns of 10.7% in these 8 stocks.

We are adding News and Event Summary for last week and it will be discussed in start of this Analysis Series:

• HDFC Q4 profit rises 8.7% to Rs 3,180 crore QoQ

• Hero MotoCorp Q4 result beats estimates: Profit jumps 39% to Rs 865 crore on strong revenue, operating growth

• MCX Copper near lifetime high, LME surges above $10,000/tonne on resumption in economic activity

• Gold prices near Rs 47,000/10 gm as US dollar slides; silver rises Rs 465 a kg

• Tata Consumer Products posts profit of Rs 54 crore for Q4, revenue surges 26%

• Tata Steel posts profit of Rs 6,644 crore for Q4; revenue, operating earnings beat estimates

• Proactive measures by RBI to boost business & economy, no blanket moratorium a right decision

• Kotak Mahindra Bank Q4 profit jumps 33% to Rs 1,682.4 crore, provisions remain high

Click on the news and it will redirect you to the article.

Now let's see what can happen in Nifty, BankNifty and broader market for next week. Some charts of the constituents are also shared at the end as a bonus for all the readers, so read till the end.

• Nifty

Starting with long-term chart or higher time frame (Weekly Chart)

Chart remains same on weekly time frame. Since it is weekly chart so analysis of this won't change daily or in the short term.

Nifty weekly chart is still in uptrend and it didn't form lower lows or broke previous low yet. Positional Traders and Investors can still hold their position and try to use the opportunities to average or pyramid your position.

As long as we are above 13600 and Nifty doesn't close below 13600, there is nothing to worry. Weekly closing below 13600 will be a trigger for bulls to exit.

Let's look at a daily chart of Nifty and analyze what price action says.

Nifty is trading in this Demand and Supply range for almost 2 months now. Best strategy a trade can use is to buy stocks for the short term when Nifty is at Demand Zone (14160-14250) and keep closing basis stop loss below demand zone. Then exit all the short-term trades when Nifty is trading at Supply Zone (14960-15050). This is 2 months consolidation and if breakout above supply region or breakdown below demand region will trigger sharp one sided move in that direction. Currently, we are trading close to supply region and one should be cautious as of now.

Fibonacci Levels:

In this consolidation, Nifty was forming lower lows in this consolidation phase and after plotting Fibonacci Retracement, we can see that Nifty can face resistance at 61.8% level which is 14942 and it is exactly where our supply region is. If Nifty closes above 14942 then the trend can change for Nifty.

Option Writers:

This two (15044 and 14416) are key pivot for Nifty and option writer can look to short call options above strike price of 15050 and put option below strike price of 14400. Do proper overnight hedging and trade with stop loss.

View on Nifty would be slightly cautious as we are trading near various resistance. Unless we break 15050 on a closing basis, we cannot see strength in Market. Try to accumulate stock when Nifty goes down to demand region.

---

Now let's see BankNifty chart.

Starting with long-term chart or higher time frame (Weekly Chart)

BankNifty weekly chart is still in uptrend and it didn't form lower lows or broke previous low yet. Positional Traders and Investors can still hold their position in Banking stocks and try to use the opportunities to average or pyramid your position.

As long as BankNifty doesn't close below 29000, there is nothing to worry. Weekly closing below 29000 will be a trigger for bulls to exit.

Let's look at a daily chart of BankNifty and analyze what price action says.

As discussed in last week's analysis that BankNifty can take support in near 31700-31900 range. It's support based on trendline and fibonacci retracement. This trendline is still intact and now support move upwards toward (31450-31700). Breakdown and close below 31400 can bring sell off in BankNifty index as it would be third attemp and it would be severe this time. Currently BankNifty is offering low risk buying opportunity for short-term traders and one can add banking stocks in their watchlist.

Inverse Head and Shoulder Pattern:

After this downtrend from 37000 to 30000; BankNifty is forming Inverse Head and Shoulder reversal pattern. Its bullish pattern and if it closes above 34000, then first target seen is 37600. One can start buying Banking stocks or BankBees now and add more after final confirmation.

No option trading in BankNifty as it is very volatile and I myself don't do it hence won't recommend that.

---

Some sectors that are looking good for short term and positional trades are:

1. Nifty Auto

2. Nifty Fin Services

3. Nifty Metal

---

Let's see some chart of Nifty 50 and BankNifty constituents.

• ITC (Daily):

Taking support near Demand Zone. Low risk buying opportunity.

• Maruti (Daily):

Maruti giving breakout last week. Can see target of 8050 and stop loss 6350.

• M&M (Daily):

M&M trading near trendline resistance and bullish divergence. Can wait for breakout above 780.

• Bajaj Auto (Daily):

Bajaj Auto forming inverse head and shoulder reversal pattern. Can be added in watchlist and wait for breakout above 4000.

• Bajaj Finance (Daily):

Bajaj Finance gave breakout and now retracing. Can be a good positional buy.

• Cipla (Daily):

Cipla breakout and retest example. Good to buy for short term.

• Glenmark (Hourly):

Glenmark rounding bottom formation and today gave breakout.

I am sharing these charts only for study purpose. One can track these stocks for short term or long-term perspective. Planned your trade with proper stop loss and target and then take action.

Also, if you have any chart that we can track then share it with us in the comment section.

---

Conclusion:

Currently, market is volatile, and it is seeing big moves in intraday as well. Time to stay little cautious because the market is trading near resistance levels.

---

One can master this simple art of Technical Analysis by reading these blogs and practicing daily.

Readers can checkout and read first three blogs of Technical Analysis here:

1. Starting with Charting, Tools and Setup

2. Identifying Trend in Market

3. Demand and Supply

We have covered Online Food Delivery Analysis, so read that too and it can help you to understand the business and get an overview of Zomato Business.

---

If there is something that I can improve upon, then please suggest that too so that I can create true value in this our Market Analysis.

Thanks for giving your precious time in reading this blog. I hope I have added value to your market analysis for next week. Like and share with others too if we can create value for others.