Trading Week Ahead (India) – 15-Sep-2019

Updated: Dec 6, 2019

As stated in our last week Trading Ideas (Trading Week Ahead (India) - 9-Sept-2019) , we are seeing confirmation that the big picture uptrend is intact. The market may have broken slightly below low of the channel, but now it is showing signs of getting back into the channel. Notice the break above the pin-bar. A break above the consolidation will indicate that the market wants to retest earlier highs at 12000.

NIFTY index Upward Channel intact
NIFTY Weekly Trading Chart

The NIFTY mid-cap index, though in a clear downward channel in the big picture, is now bouncing off the bottom of the channel, and has broken above an area of consolidation as seen in the picture below. We also see confluence of that price level with a significant Fibonacci level, giving strength to the bounce up, suggesting that many market players are watching this price action.

NIFTYMIDCAP index reversal in play
NIFTYMIDCAP50 Weekly Chart

Fundamentally – amid all the recession fears (after GDP growth dropping to 5%), though the Government of India is in denial mode, the Finance Minister announced stimulus package for housing and auto industries. While such steps do not result in immediate job creation, it sends some positive signals to the market. We do not expect following upward move as enthusiastic as the earlier bull run, but can expect the market trying to make one attempt to test earlier high.

In daily time frame, we see that NIFTY has yet to clear the consolidation area convincingly. Unless it clears 11200 convincingly, we do not have confirmation. However given that the market is making lower highs, and that the 11150 level has been tested three times, we have a reason to believe that the level is weakening and can expect a break above soon.

Upward confirmation awaited on NIFTY short term index
NIFTY Daily Chart

What Next?

For now we do not have any immediate call unless the market breaks above 11200. Once it does, we can expect it to try to test 12000, and every pullback can be a short term buying opportunity (with proper risk management in place). Failure to break above 11200 will see the market trying to retest the recent lows at 10600. We can expect influence of worldly event on the Indian market too – such as Fed outlook.

We shall be watching closely the next moves and will keep posted.

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