Technical Outlook Trader’s Guide · Nifty Short Term Outlook: Daily Chart shows bearish...

Updated Version: May 14, 2020

Technical Outlook Trader’s Guide

OUR RESEARCH PHILOSOPHY

The POP Approach

What is POP Approach

The POP Approach Process Driven Objective Product Based

NIFTY OUTLOOK

Is there a sharp fall on the cards?

Nifty Short Term Outlook: Daily Chart shows bearish developments

Short Term Outlook Based on Daily Chart

KEY OBSERVATIONS: - Pullback from the March low of 7511 is over at the April high of 9889 - Retraced nearly 50% of the Jan – March fall - Seen a bearish Island formation over there - Momentum indicator has triggered a bearish crossover EXPECTATIONS: - The short term trend to remain bearish going ahead - Strong resistance near 9600 - Short term targets on the downside: 8400 & 8000 ALTERNATE CASE SCENARIO: - Nifty may not immediately start the next move down - In that case, Nifty can form distribution near 9600-9000

Major Declines Comparison : 2000 - 2008 - 2020

Major Declines Comparison : 2000 - 2008 - 2020

2000 Fall: - Total decline: 53% - First leg of the fall: 39% - Followed by bounce: 28% - Next leg of the fall: 40% 2008 Fall: - Total decline: 64% - First leg of the fall: 40% - Followed by bounce: 23% - Next leg of the fall: 51% 2020 Fall: - So far witnessed only first leg of fall: 40% - Followed by bounce: 31% - Next leg down awaited in the medium term

Nifty Medium Term Outlook: Monthly Chart – Weakness to Persist

Medium Term Outlook Based on Monthly Chart

KEY OBSERVATIONS: - Nifty formed multi month Ending Diagonal pattern (Distribution pattern) - Pattern broke out on the downside resulting in a sharp fall in March - Retraced 61.8% of the rally from 2011-2020 - Had nearly 40% fall from Jan High (12430) to March low (7511) EXPECTATIONS: - As the short term pullback is over, Nifty is expected to resume the medium term downtrend - As per the Wave Structure, Nifty is expected to test the 2016 low - Medium Term Targets on the downside: 7511 - 6825 ALTERNATE CASE SCENARIO: - Nifty can get into a base formation - It can trade in the range of 8000-9500 for next couple of months

BANK NIFTY OUTLOOK

Are we going for a steep decline?

Bank Nifty: Short Term Outlook Based on Daily Chart

Short Term Outlook Based on Daily Chart

KEY OBSERVATIONS: - Bounce from the March low of 16116 is over at the April high of 21967 - Was a shallow bounce; couldn’t reach 38.2% of Jan – March fall - Failed to sustain near 22000 - Started the next leg down in sync with the momentum indicator EXPECTATIONS: - Short term cap in place at the swing high of 21967 - Momentum to remain in favor of the bears going ahead - Sharp decline is around the corner - Short term target on the downside: 16116 ALTERNATE CASE SCENARIO: - Bank Nifty can form a distribution before heading lower - In that case, the index can trade in the range of 18300-20200

Bank Nifty: Medium Term Outlook Based on Monthly Chart

Medium Term Outlook Based on Monthly Chart

KEY OBSERVATIONS: - Bank Nifty witnessed bearish developments in Dec - Jan - The monthly momentum indicator was showing negative divergence - It led to a sharp fall in March - Retraced 61.8% of the rally from 2011-2020 - Nearly 50% fall from Dec High (32613) to March low (16116) EXPECTATIONS: - Likely to witness sustained selling going ahead - Expected to breach the March low & retrace 61.8% of the rally from 2009-2020 - Medium Term Target on the downside: 14500 ALTERNATE CASE SCENARIO: - Bank Nifty can get into a base formation - It can trade in the range of 17000-20000 for next couple of months

TRADING IDEAS

Trading Ideas At A Glance

Green : Buy side Recommendations Red: Sell side Recommendations

STOCKS ACTION CMP REVERSAL TARGET

SUNPHARMA BUY @ CMP 456 440 505-570

CADILA HEALTHCARE

BUY @ CMP 338 315 381

LIC HOUS FIN SELL ON RISE NEAR 266

262 287 228-210

AMARA RAJA BATTERIES

SELL @ CMP 554 585 494-438

SRTRANSFIN SELL ON RISE NEAR 665

648 730 566-500

SUNPHARMA

SUNPHARMA

Broken out from a large Ending Diagonal pattern A medium term bottom in place at the low of 312 Momentum Indicators in support of the price breakout

Positive divergence on the monthly chart is playing out

Buy @ CMP

Reversal: 440 Target: 505-570

CADILA HEALTHCARE

CADILA HEALTHCARE

330-320 acted as a strong support zone Gap area along with other Technical parameters offered support

Bullish Wedge pattern broken out on the upside

Daily momentum indicator is about to start the new cycle on the upside Buy @ CMP Reversal: 315 Target: 381

LIC HOUS FIN

LIC HOUS FIN

Resistance near 38.2% retracement mark Couple of bearish candlestick patterns Broken a rising trendline

Daily momentum indicator is in bearish mode Sell on rise near 266 Reversal: 287 Target: 228-210

AMARA RAJA BATTERIES

AMARA RAJA BATTERIES

Resistance near 50% retracement mark About to break down from an Ending Diagonal pattern

Recently broken down from an Inside bar

Daily momentum indicator in favor of the bears Sell @ CMP Reversal: 585 Target: 494-438

SRTRANSFIN

SRTRANSFIN

Formed a bearish Triangular pattern & broken down Retraced 38.2% of the Feb – March fall

Poised to start the next leg down

Daily momentum indicator has given a fresh sell signal Sell on Rise Near 665 Reversal: 730 Target: 566-500

RECAP

RECAP - INDICES

• NIFTY OUTLOOK:

• BANK NIFTY OUTLOOK:

SHORT TERM - DOWN RMEDIUM TERM - DOWN

TARGET 8400-8000 TARGET 7511-6825

SHORT TERM - DOWN RMEDIUM TERM - DOWN

TARGET 16116 TARGET 14500

RECAP – Trading Ideas on Radar

Green : Buy side Recommendations Red: Sell side Recommendations

STOCKS ACTION CMP REVERSAL TARGET

SUNPHARMA BUY @ CMP 456 440 505-570

CADILA HEALTHCARE

BUY @ CMP 338 315 381

LIC HOUS FIN SELL ON RISE NEAR 266

262 287 228-210

AMARA RAJA BATTERIES

SELL @ CMP 554 585 494-438

SRTRANSFIN SELL ON RISE NEAR 665

648 730 566-500

Thank You