ArcherDAVIS

NIFTY 50 Analysis

Short
NSE:NIFTY   Nifty 50 Index
As shown on the chart, the double top pattern has occurred 3 times in the recent few months. Each time, the market has corrected significantly.

The entire second week of February, Nifty has been moving in a tight 200 point range, with buying coming at 15000 levels and strong selling at 15,250 levels. With the current levels of volatility and narrow contracting range, I believe that the market will be looking at an expansion in the coming week/s. If the Nifty closes below the neckline (marked on the chart) this will complete the "M" pattern and will result in a downward expansion. Whereas, a closing above 15,250 will result in a continuation of the general bullish trend .

Although, I am still bullish on the Indian Markets, there is a strong chance that a downward breakout may occur.

Reasons:
- The strongest sector in the recent weeks post budget, has been the financial and Infra sector. BankNifty is stuck in the middle of the range and Friday's morning rally, did not see much follow through on the upside either.
- Large sectors like IT and Pharma have also seen a cool off and not seen much of a rally post budget either.
- Market has created a large 200 point (1.4%) gap. Gaps create space for demand in the market.

Giving due consideration to the heavy liquidity in the economy, the sentiment around the market seems to be fearful. Hence, I believe that investors are likely to book some profits and drive the market below 15,000.
If the market does give a close below 15,000, it could move towards filling the gap.

Since, the general trend remains bullish , it would not be wise to take huge short positions by putting more capital at risk.

The short trade will only be viable as long as the NIFTY CLOSES BELOW 15,000 ON THE 1 HOUR time frame. The stop loss for the view the position will then be the current high point of 15,250.

These are my personal views and I reserve the right to be wrong.

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Comment: Nifty has broken above 15,250. The bullish trend is continuing. Taking positions into 15,300 CE.
Comment: The gap got filled.