For the counter-trend rally to unfold Nifty needs to get past 10,985 levels convincingly. If that happens, then we may see the index initially heading towards 11349 levels.
Presently, we are heading for multiple events like F&O expiry, Budget, Monetary Policy, etc. and the market may remain volatile and unpredictable at least till the union budget, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, said in an interview.
Q. In the past week, Nifty managed to reclaim 10,900 but once again faltered to cross 11k. Is 11,000 unconquerable for Nifty ahead of Budget?
A. It looks like a very tricky question right now as the trend is unclear at this point in time. But, one thing which is very clear is that the Nifty is still on a pullback mode from the lows of 10,004 registered in October 2018.
It means this entire rally is still part of a counter-trend rally as suggested by the pace of upmove and chart patterns unfolding. Recent breakouts from conventional chart patterns like diamond formation, or symmetrical triangle, etc. have failed, which is a cause for concern.
From Elliot Wave perspective, it is still a corrective up move that has kept the room open for enough downsides going forward. But, in the near-term, this counter-trend rally still has scope for expansion on the upside.
For the counter-trend rally to unfold it needs to get past 10,985 convincingly. If that happens, then we may see the index initially heading towards 11,349.
Presently, we are heading for multiple events like F&O expiry, Budget, Monetary Policy, etc. and the market may remain volatile and unpredictable at least until the Union Budget.
Q. What are your views on Bank Nifty?
A. Well, Bank Nifty is looking relatively better than Nifty. It, in fact, outperformed Nifty50. But, last four weeks of price action is pointing towards impending weakness as it is struggling to retain gains above 27,000.
For more strength, it needs a strong close above 27,600 on weekly charts. In that scenario, we don’t rule out the test of new highs for this index around 28,400.
This week it has registered a bearish engulfing kind of formation after a couple of narrow candles, which is a cause for concern. Hence, a correction in the near-term towards its 50-day EMA (26,945) can’t be ruled out.
Q. More stocks hit a fresh 52-week low in the week gone compared to stocks hitting 52-week highs. Do you see we could see some buying in near future?
A. When a large number of scrips hit 52-week low, then it is a sign of weakness for the broader markets. Hence, if the lined up events disappoints then this weakness may get aggravated further leading to bigger sell-off whereas upsides will continue to remain limited even if the lined up events remain normal.
Q. In the last couple of weeks, rupee appears to have resumed its downswing. How are the charts looking?
A. After bottoming at 74.48/$ in October 2018, the rupee was on a multi-week upmove and tested its critical resistance point of 69 from where it appears to have sold-off once again.
Hence, unless it trades above 69, it continues to remain weak and trade in the range of 70-72.50/$. On daily charts, it has decent support in 71.35–71.48 zone, and interestingly, a couple of days back it started appreciating after testing this support with a low of 71.52.
Hence, as long as this support is respected it can be expected to appreciate towards 70.30/$. On the contrary, if the support of 71.52 is breached then it can slide towards 71–72.50.
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