The market was up for a second week in succession. One may be tempted to say, ‘So, what?’ The point is two weeks up from an ‘expected bottom’ at end-March, that is what. I had mentioned that the market will put in March third week and so far, we have the low for the current move recorded into that exact time window. In an earlier article, I had also stated that post the bottoming, the market will put in a series of higher bottoms before setting off on a rise later.
The last two weeks have seen the index post gains and green candles and this has come after the first of several higher bottoms that we may see now—so, one can say that the trend is following the script.
In last week's column, I had mentioned that the Nifty Future could head towards the 17,775 area and it has hit a high at 17,715 so far.
Here is the pathway followed by the Nifty so far. See chart 1.
The market was up for a second week in succession. One may be tempted to say, ‘So, what?’ The point is two weeks up from an ‘expected bottom’ at end-March, that is what. I had mentioned that the market will put in March third week and so far, we have the low for the current move recorded into that exact time window. In an earlier article, I had also stated that post the bottoming, the market will put in a series of higher bottoms before setting off on a rise later.
The last two weeks have seen the index post gains and green candles and this has come after the first of several higher bottoms that we may see now—so, one can say that the trend is following the script.
In last week's column, I had mentioned that the Nifty Future could head towards the 17,775 area and it has hit a high at 17,715 so far.
Here is the pathway followed by the Nifty so far. See chart 1.
So, will the rally continue or go in for another bottom retest? Time cycles again to the fore on this. In last week's letter I had written: “Overall, I feel the market will maintain bullish trends until around April 19 or so.”
The market managed to see though the truncated week with the bullishness sustained. For the next week, it appears like we may have initial portion of the week continue the bullishness. I have only one down time signature for the week—on April 14. Important results on April 13, setting off the Q4 earnings season with Infosys Ltd. and TCS Ltd. scheduled for results on that date. So, is it possible that the numbers of the tech majors may disappoint the market? Quite possible.
So, how much higher can we head on the Nifty Future? Using a modified Gann angle method, I reckon we may continue till 17,900 area (or slightly above it) during the first part of the week. Now, that ought to set some bullish juices flowing.
In the last week, I had written that intraweek dips should be bought. Same goes for the coming week as well. Chart 2 shows the price and time set-up that helped call the low and the rally.
Now, prices need to cross the last week's high at 17,775 (Futures) by April 11, in which case it should run further about 150-200 points more. Chart 3 shows the projections for the next week. Dips should be contained near 17,490 and should be used to buy. This entire rally will culminate by April 19.
The Bank Nifty has revived as well, jumping with a wide gap. A pause by the RBI would allow traders to play a bit unhindered for a while. Prices have halted last week at the site of the former gap zone as well as the main resistance trendline coming off the Dec. 14 high. The takeoff seems promising and hence, we should expect some continuation of the upmove. Crossing of the important resistance of the last week at 41,400 area should enable the BN Future to reach about 42,300 by April 20 I reckon. Chart 4 shows the Bank Nifty hourly.
Given its volatility, this is a train that shall halt at many stations along the way. So, expect a volatility-led move in the Bank Nifty.
Very strong moves seen over recent times in the Nifty Pharma. The move came just out of the blue and bespeaks some active buying in leader stocks of the sector.
Chart 5 shows the index with the target zone marked, which is about 5% above current levels. This can translate into 10% moves in stocks from the sector. So, that is the area to concentrate on.
Here is a list of pharma stocks that are positioned well with high Bull Scores in Ichimoku charts. This list is from Neotrader software designed by me for analysis and trading assistance. Take note of the score and the time frames (60m/Day/Week) for selecting the right stock to trade.
If Bank Nifty has to go higher, then the private banks should do well, so that is another area to keep track. I had mentioned a line about IT stocks earlier. The IT index still looks tentative. So, higher levels early this week may be used to exit pending longs and then review after a few leader stock results are out.
Summing up, continue the bullish posture, look for higher targets in both main indices and pharma may be the pick of the sectors for the month ahead.
CK Narayan is an expert in technical analysis; founder of Growth Avenues, Chartadvise, and NeoTrader; and chief investment officer of Plus Delta Portfolios.
The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.
RECOMMENDED FOR YOU
POPULAR