Daily Morning Outlook – 23 Jan 2017

Daily share market updates 20 JanNIFTY: The  Nifty  had  a  rather  large  decline  today,  falling  over  one  percent,  in  the process breaking below the lows and support levels of a six day trading range. This decline should be taken in context. A rally from 7893 to 8461 saw a gain of 568 points. From these highs, the Nifty has fallen 100 points or about 18% of the up move. Even a normal correction can witness a 38% retracement of the rally. Thus, 18% pullback remains a minor move in what looks like a robust up trend.

The short term trend for the Nifty is sideways while the intermediate trend is also  sideways.  Opposing  these  neutral  signals  is  the  fact  that  the  Nifty  has broken down from a trading range. This is not bullish. We do not have a trade for the Index. Going short in an uptrend is not a good idea. Not yet. We need some bearish patterns to justify a short position. Also, there is no buy signal. Thus, for short term traders, the best trade is to step aside and wait for new patterns.

BANK NIFTY: BANK NIFTY had registered a decline today; prices opened with a gap down just below 19000. The index traded sideways for initial part of the day. However, a decline after lunch, took bank index to intraday low below 18800. Eventually, index closed near the lows at 18806 with a loss of more than 300 points.

We have been long in the index from 19150 when prices broke out from its resistance with a stop loss of 18900. Today, prices opened lower and crossed down 18900, so our long trade was stopped out at 18,900.

While the Banks have broken below a trading range, there is significant support just below – at 18725. A short trade could find itself facing this possible support. We have a bullish bias, therefore, we prefer not to take a short trade which may have high risk (due to the possible support just below). We do not have a new trade. We wait for fresh signals in the Bank Nifty.

TECHNICAL PICKS

COMPANY NAME CMP B/S RATIONALE
HAVELLS 402 BUY Intermediate as well as short term trend is up in HAVELLS.   Prices have handsomely broken out from its resistance of 392 and closed higher. We may see an upside move from current level. Buy this stock above 402. If this trade executes then place your stop just below 392 and a target near 422.
DIVISLAB 711 SELL Intermediate  Trend  is  down  in  DIVISLAB.  The  stock  has  been  consolidating  inside  a  range.  Prices  have  seen  a breakdown  and  closed lower. We may see a decline here. Sell this stock below 710. If this trade executes then place your stop just above 725 and a target near 680.

DERIVATIVE PICKS

dirivity

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