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Technical Outlook: January


Way Ahead                                               Technical Observation:
                                                        •	 On the monthly chart, we are observing a spinning
Going ahead, the New        of the Uttar Pradesh            top which gives small clue that the prior down
Year will be challenging    state elections. Rumour         trend is losing breath.
for Indian equity           mills are abuzz with
markets owing to post       news of possible hike on    •	 On the weekly chart, we are observing a bullish
demonetization effects      short-term capital gains        engulfing pattern. The said pattern would get
and continuing economic     or imposition of tax on         activated once Nifty trades and close above 8197.
recovery in US leading      long-term capital gains
to strengthening of US      in the budget. This fear    •	 On the daily chart, we are observing an upward gap
dollar. In the short term,  of taxation has created         area in the range of 8111 to 8114. Normally, upward
the corporate earnings      widespread uncertainty          gaps are continuation pattern. Hence, momentum
will be impacted due to     amongst market                  on the upside is likely to continue where gap area is
fall in consumer demand     participants which will         likely to act as support going forward.
and weak consumer           be only cleared once the
sentiments. Timely          budget gives clarification  Outlook:
rollout of GST will be      on this matter. Further,
positive for our country.   the dollar-rupee            The multi time frame analysis suggests that the
The market has factored     movement, movement          monthly trend is down. However, looking at the weekly
US Fed rate hike but if     in crude oil prices,        and the daily time frame a bounce from current level
Fed will increase interest  foreign fund inflows,       cannot be ruled out. At present Nifty has resistance
rates further at a faster   and upcoming corporate      at 8371 – 8483 – 8612 levels whereas on the downside
pace as expected, it will   earnings are also likely    it has support at 7999 – 7888 – 7759 levels. In coming
increase FII’s outflows     to affect equity markets.   week if Nifty trades and close above 8260 level then it is
from India.                 We recommend investors      likely to test 8371 – 8483 – 8612 levels. However, if Nifty
All the eyes will be glued  to remain cautious and      trades and close below 8111 level then it can test 8036 –
on the upcoming Union       invest in fundamentally     7948 – 7845 levels.
Budget which will be        sound companies for
unveiled on 1st February,   long term perspective.      Broadly, for current month 7995 – 7950 is a make or
2017 and the outcome                                    break zone. As long as Nifty holds these levels and
                                                        at any time on the upside if it crosses 8197 on closing
                                                        basis, then the bullish engulfing pattern formed on
                                                        the weekly chart would get activated. In such scenario
                                                        Nifty may test 8371 – 8483 – 8612 levels. Hence, trade
                                                        with positive bias once Nifty trades and close above
                                                        8197. Stock specific activity is likely to continue.

                                                                                        5 ARIHANT CAPITAL ¡ JANUARY 2017
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