HDFC Securities’ Weekly Technical Report: Maintain mildly positive stance till 10700 |


– Last week’s action formed a high wave type of candle which means a temporary halt for the market. This could lead to minor bounce towards the gap area witnessed on Feb 05, 2018.

– Index fell sharply in first two days of the week and attained our 1st target of 10400 levels; the fall further extended till 10276 levels. As the fall from 11117 to 10276 was too sharp, most of the oscillators went into oversold territory; to cool them off, index has to either go sideways or bounce up which is happening now. [We have given enough warning that Mid-cap weakness while Nifty strengthens is a major threat to the market as it is happening first time in the last major rising leg. We have been mentioning this from mid of January, actually Mid-Cap index has topped out on Jan 09, 2018 itself. Some time back we had indicated that Cycle degree wave ends only when underperformance observed in Mid-Cap space; which is happening for last three weeks; so Nifty may have topped out for medium to long term (Little early calling) Overall continue with the negative stance (maintaining from 10975) for the downside targets of 10400 – 9900 in coming months with the reversal level of 11117 (Close).]

– 1st round of selloff is completed and now index is taking breather before the next round of selloff towards our 2nd target 9900 levels in forthcoming weeks.

– The current bounce may stretch towards the gap witnessed on Feb 05, 2018 which is placed between 10703 and 10736 levels. If the bounce continues (Counter trend rise) till 10703 to 10736 band, then next round of selloff could take place from those level. Make note that the next fall could be sharp which could easily test 9900 and lower levels. Once it happens we will show some other inter-market evidences why will give indication of the extent of the move.

– In simple terms, index is in upward retracement before the next fall. Key short term base is placed at 10276; next falling leg could begin either after testing the above said gap zone of 10703-10736 or on a fall below 10276.

– We have showed alternate waves in cycle degree on above chart which we have hinted last week but explanation will be given once it happens or once the picture is clear. We are moving with majors and not given much priority to extreme internals; so intermediate top or cycle degree top is placed at either 11171 or 11117 levels.

– Overall maintain mildly positive stance till 10700 with reversal level of 10275. Turn negative after reaching 10700 with the reversal of 11000 (Close) for the downside target of 9900 or lower. On any break below 10275, turn negative immediately for the target of 9900 or below but our reversal level is same as 11000.

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