Charts suggest indecisiveness along with bearish bias

Mr. Mustafa Nadeem, CEO, Epic Research

Nifty ends another week in consolidation with a fourth week in a range that was established Second week of august. A bearish Hanging man is formed on Nifty weekly chart suggesting indecisiveness along with a bearish bias which may be seen incase validated in early sessions of next week.

A week that started off with a negative global cues as Geo-political tensions mounted post Nuclear test of North Korea. Investors across globe got jitters as it triggered a second round of profit booking. With ease off in the same during later part of the week we have noticed a support being held around lower levels. A historical look on charts suggest overall positive bias in September month for Nifty while indecisiveness in first two weeks have turned investors cautiously optimistic. A better than expected data on Wall-street helped markets to see a rebound pairing some losses.

A hanging Man, bearish, formation is usually formed in an uptrend which indicates reversal. It is characterized b?y a long shadow which is bigger than the body while any gap down open in coming week will further trigger the squeezed range out of a bearish momentum. Immediate support on weekly chart comes at 9850 which if breached on closing basis will turn sentiments downward to 9750 - 9600 while Upside is capped by bulls at 9980 - 10020. A lot will depend on participation of sectors since recent support is held due to buying in heavyweights like Metals, Banks, Auto and Infrastructure coupled with buying in consumption stocks in later part of the week. A bearish move in these major sectors will weigh on sentiments in coming week.

Lackluster cues from Derivatives stats also kept investors and traders on back-foot since no major shift in range was seen. Any significant change in the 9700 - 10000 strikes will also give some much needed breathe and cues market need. We will have select stocks that will be focused with higher weight on Consumption, Infra and chemicals stocks. Tata Chemicals, Sobha Developers, DLF and select stocks from Auto like Ashok leyland will be seen with buy on dips strategy.

Source : Equity Bulls

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