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Market Commentary
Nifty heading towards 8275, expect a breakout soon - Angel Broking
Posted On : 2016-12-30 08:42:40( TIMEZONE : IST )
The benchmark index (Nifty) began the trading of the week on a pessimistic note on Monday. In the process, Nifty sneaked below the November low and eventually ended the session to post a new seven months low. However, the bulls came back quite strongly in the opening trades on Tuesday and continued their intraday rally for the remaining part of the day. In fact, due to immense interest in follow-up buying, we witnessed a v-shaped recovery throughout the week. Nifty ended the week at its high point gaining 2.40 percent on weekly basis led by the FMCG index (+5.93 %) and the IT index (+3.26%).
Key Moving Averages:
- The '89-day EMA' and the '89-week EMA' for the Sensex/Nifty are placed at 26961 / 8304 and 26467 / 8094 levels, respectively.
- The '20-day EMA' and the '20-week EMA' for the Sensex/Nifty are placed at 26330 / 8104 and 26952 / 8312 levels, respectively.
Future outlook
It was a remarkable week for traders (especially bulls) as we not only saw respite after a decent corrective move but also a stupendous recovery after posting a low of 7893.80 on Monday. More importantly, this bounce back looked robust as we witnessed a strong buying interest across the broader market. Referring to our previous articles, it is quite evident that our recent strategy to hunt for buying opportunities in dips has worked well for us.
Technically speaking, we were seeing 7900 as a major support for Nifty as it coincided with recent lows as well as 50% Fibonacci retracement level of the entire rally from 6825.80 to 8968.70. Now, due to the recent recovery, this support has become sacrosanct level for the index. During the week, we expected Nifty to bounce back towards 8100; but Friday's move has confirmed a key price development on monthly chart. We can now observe a 'Bullish Hammer' on monthly chart along with prices closing above the '20 EMA' level of 8137.
This has provided a conviction of breaking the recent swing high of 8274.95 quite soon. In this scenario, Nifty may extend the rally towards 8400–8460 level. On the flipside, 8100–8020 would be seen strong support zone in the forthcoming week. To summarize, traders should continue to remain optimistic in the market and focus more on individual stocks in order to find potential trades.
