Technical Outlook
Trader’s Guide
Updated Version: May 14, 2020
OUR RESEARCH PHILOSOPHY
The POP Approach
What is POP Approach
The POP Approach
Process Driven Objective Product Based
NIFTY OUTLOOK
Is there a sharp fall on the cards?
Nifty Short Term Outlook: Daily Chart shows bearish developments
Short Term Outlook Based on Daily Chart
KEY OBSERVATIONS:
- Pullback from the March low of 7511 is over at the April high of 9889
- Retraced nearly 50% of the Jan – March fall
- Seen a bearish Island formation over there
- Momentum indicator has triggered a bearish crossover
EXPECTATIONS:
- The short term trend to remain bearish going ahead
- Strong resistance near 9600
- Short term targets on the downside: 8400 & 8000
ALTERNATE CASE SCENARIO:
- Nifty may not immediately start the next move down
- In that case, Nifty can form distribution near 9600-9000
Major Declines Comparison : 2000 - 2008 - 2020
Major Declines Comparison : 2000 - 2008 - 2020
2000 Fall:
- Total decline: 53%
- First leg of the fall: 39%
- Followed by bounce: 28%
- Next leg of the fall: 40%
2008 Fall:
- Total decline: 64%
- First leg of the fall: 40%
- Followed by bounce: 23%
- Next leg of the fall: 51%
2020 Fall:
- So far witnessed only first leg of fall: 40%
- Followed by bounce: 31%
- Next leg down awaited in the medium term
Nifty Medium Term Outlook: Monthly Chart – Weakness to Persist
Medium Term Outlook Based on Monthly Chart
KEY OBSERVATIONS:
- Nifty formed multi month Ending Diagonal pattern (Distribution pattern)
- Pattern broke out on the downside resulting in a sharp fall in March
- Retraced 61.8% of the rally from 2011-2020
- Had nearly 40% fall from Jan High (12430) to March low (7511)
EXPECTATIONS:
- As the short term pullback is over, Nifty is expected to resume the medium
term downtrend
- As per the Wave Structure, Nifty is expected to test the 2016 low
- Medium Term Targets on the downside: 7511 - 6825
ALTERNATE CASE SCENARIO:
- Nifty can get into a base formation
- It can trade in the range of 8000-9500 for next couple of months
BANK NIFTY OUTLOOK
Are we going for a steep decline?
Bank Nifty: Short Term Outlook Based on Daily Chart
Short Term Outlook Based on Daily Chart
KEY OBSERVATIONS:
- Bounce from the March low of 16116 is over at the April high of 21967
- Was a shallow bounce; couldn’t reach 38.2% of Jan – March fall
- Failed to sustain near 22000
- Started the next leg down in sync with the momentum indicator
EXPECTATIONS:
- Short term cap in place at the swing high of 21967
- Momentum to remain in favor of the bears going ahead
- Sharp decline is around the corner
- Short term target on the downside: 16116
ALTERNATE CASE SCENARIO:
- Bank Nifty can form a distribution before heading lower
- In that case, the index can trade in the range of 18300-20200
Bank Nifty: Medium Term Outlook Based on Monthly Chart
Medium Term Outlook Based on Monthly Chart
KEY OBSERVATIONS:
- Bank Nifty witnessed bearish developments in Dec - Jan
- The monthly momentum indicator was showing negative divergence
- It led to a sharp fall in March
- Retraced 61.8% of the rally from 2011-2020
- Nearly 50% fall from Dec High (32613) to March low (16116)
EXPECTATIONS:
- Likely to witness sustained selling going ahead
- Expected to breach the March low & retrace 61.8% of the rally from 2009-2020
- Medium Term Target on the downside: 14500
ALTERNATE CASE SCENARIO:
- Bank Nifty can get into a base formation
- It can trade in the range of 17000-20000 for next couple of months
TRADING IDEAS
Trading Ideas At A Glance
STOCKS ACTION CMP REVERSAL TARGET
SUNPHARMA BUY @ CMP 456 440 505-570
CADILA BUY @ CMP 338 315 381
HEALTHCARE
LIC HOUS FIN SELL ON RISE 262 287 228-210
NEAR 266
AMARA RAJA SELL @ CMP 554 585 494-438
BATTERIES
SRTRANSFIN SELL ON RISE 648 730 566-500
NEAR 665
Green : Buy side Recommendations
Red: Sell side Recommendations
SUNPHARMA
SUNPHARMA
Broken out from a large Ending Diagonal pattern
A medium term bottom in place at the low of 312
Momentum Indicators in support of the price breakout
Positive divergence on the monthly chart is playing out
Buy @ CMP
Reversal: 440 Target: 505-570
CADILA HEALTHCARE
CADILA HEALTHCARE
330-320 acted as a strong support zone
Gap area along with other Technical parameters offered support
Bullish Wedge pattern broken out on the upside
Daily momentum indicator is about to start the new cycle on the upside
Buy @ CMP
Reversal: 315 Target: 381
LIC HOUS FIN
LIC HOUS FIN
Resistance near 38.2% retracement mark
Couple of bearish candlestick patterns
Broken a rising trendline
Daily momentum indicator is in bearish mode
Sell on rise near 266
Reversal: 287 Target: 228-210
AMARA RAJA BATTERIES
AMARA RAJA BATTERIES
Resistance near 50% retracement mark
About to break down from an Ending Diagonal pattern
Recently broken down from an Inside bar
Daily momentum indicator in favor of the bears
Sell @ CMP
Reversal: 585 Target: 494-438
SRTRANSFIN
SRTRANSFIN
Formed a bearish Triangular pattern & broken down
Retraced 38.2% of the Feb – March fall
Poised to start the next leg down
Daily momentum indicator has given a fresh sell signal
Sell on Rise Near 665
Reversal: 730 Target: 566-500
RECAP
RECAP - INDICES
• NIFTY OUTLOOK:
SHORT TERM - DOWN RMEDIUM TERM - DOWN
TARGET 8400-8000 TARGET 7511-6825
• BANK NIFTY OUTLOOK:
SHORT TERM - DOWN RMEDIUM TERM - DOWN
TARGET 16116 TARGET 14500
RECAP – Trading Ideas on Radar
STOCKS ACTION CMP REVERSAL TARGET
SUNPHARMA BUY @ CMP 456 440 505-570
CADILA BUY @ CMP 338 315 381
HEALTHCARE
LIC HOUS FIN SELL ON RISE 262 287 228-210
NEAR 266
AMARA RAJA SELL @ CMP 554 585 494-438
BATTERIES
SRTRANSFIN SELL ON RISE 648 730 566-500
NEAR 665
Green : Buy side Recommendations
Red: Sell side Recommendations
Thank You
