Market Outlook – 10 April 2017

DECLINE IN NIFTY MAY BE A SIGNAL OF CORRECTION; PRIMARY TREND REMAINS UP IN THE MARKETS; BUYING OPPORTUNITIES WILL EMERGE WHEN CORRECTION ENDS; AVOID PHARMA, IT INDEX FOR BUYING;

NIFTY:

Nifty had a downtrend day in the markets. Index started with a gap down and short positions were taken on intraday rallies that forced Nifty to close near the lows below 9200. Day’s correction should be justified because of the fact that prices have seen a noteworthy up move of nearly 300 points in last two weeks or so which facilitated index registering new highs. Correction after an up move like this should considered normal. We had a sense of correction in the markets hence we had advised traders to take profits from their long positions. Now it is possible that this correction may continue for some time and prices may stretch 9100 which is a short term support for the index. Correction is a part of an up trending market so we should accept it too. Overall trend is up but short term view is sideways hence we should avoid trading in Nifty as well as in Bank Nifty for the short term and look for a buying opportunity in individual stocks. Next buying opportunity in the Nifty will emerge above 9275 which acts as a strong resistance level in the index. PHARMA and IT stocks continue to underperform. We may see choppiness inside their stocks; hence traders should avoid buying here.

BANK NIFTY:

Bank Nifty started the session with a gap down below 21550 and then traded sideways in a range. A breakdown in the last hour took prices lower below 21400. Eventually index closed in the lower side of intraday range near 21435 with a drop of nearly 180 points. On the daily charts, the upside surge which brought the index to 21700 levels have losing some momentum. Index has rallied approx. 1000 points after prices bouncing back from short term correction; so we may see some consolidation or even a correction. We do not have any position in the index now because we had taken a profit of nearly 185 points from long positions recently. We would advise traders to avoid trading due to falling momentum and a possibility of consolidation or even a short term correction. As of now we do not have a new pattern which suggests a new trading opportunity here. So, avoid trading in the index till next opportunity arises.


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