Technical view by Nooresh

Be Fearful When Others Are Greedy and Greedy When Others Are Fearful – Nifty/Sensex Technical View

2 months back Nifty was at 6000-6100 levels with all investors, business channels – CNBC/ET Now etc , investors being gung ho about the Indian economy.


Now Nifty is at 5500 and suddenly everyone on the street has become ultra negative.


This is how market works – Sometimes surprises that all bad things seem to be visible only in bad markets. In 2011 the analyst/investors consensus was bearish and we saw Nifty move from 4500 to 6000. Again in start of 2013 the analyst/investors consensus was bullish and within a 10% cut in Nifty the consensus has quickly shifted to ultra bearish.


Will not argue on fundamental parameters  like forward P-E , P/B of Nifty etc even though they are below the median average. For Indian Markets P-E = Price to Enthusiasm

Currently the enthusiasm is definitely at the lowest which makes it an interesting time for investors.


Now lets look at the Technical Picture.


-> Globally markets are nearing 12-13 year highs or major bullish trend change. With no euphoria in sentiments globally a fresh 12 year high implies we might be staring at a possibility of new bull market in global indices.


Have attached the report which has been released by us for institutional clients and being pitched for this whole month of April – ( takes time to meet a lot of people )  

Special Report – Equities – Get Ready for a Bright Future Special Report – Equities – Get Ready for a Bright Future


Hope this report works out like the last one in August – Forget the Past when we turned extremely bullish at 5200 – Forget the Past - 


As mentioned in the report we were expecting positive divergences and test of bottoms around 5500-5550 Nifty in the bottom case which we have come to today.


Lets look at current charts.


Sensex – Technical View


-> Nearing the long term support trendline

-> Gap at 18000-18200 being filled.

-> Previous tops/Bottoms and last breakout being tested.


17800-18200 remains a very strong positive

Sensex Trendline


RSI making positive divergence and Sensex below 200 dma




Sensex RSI



-> Testing the long term trendline which comes around 5350-5420 zone and rising daily

-> The last major breakout gap at 5450-5520 being filled.

-> Previous bottoms/tops and breakout being tested.


Nifty Trendline


RSI making positive divergences on current lows.


Nifty RSI  





-> The last time Nifty was similarly oversold was at 4530 and 4800. The bounce backs were huge post those levels.

-> We may in minimum case expect a bounce to 5750-5950 or higher in the next few months where one may review to hang around for a long term bull market or trim positions.

-> Downside could see 5350-5420 levels which is the trendline.

-> Broader market has fallen much more than the benchmark index making it very interesting.

-> Oversold conditions can remain for couple of weeks creating volatility and opportunity. Investors may aggressively look to buy quality stocks like Reliance, Cipla, M&M ,BPCL , Ongc on sharp declines or take a simpler view to buy Niftybees, Junior Bees. Later convert to specific stocks when your are convinced.

-> My gut feel is this uncertain painful period may start till max of Mid May and we might be in a different rally altogether from June. So the strategy should be to accumulate and this could be one of the best opportunities for a long term investor.

-> We may review the long term bullish stance if we were to break 5300 levels.


Midcap Favorites – Godrej Inds, Aditya Birla Nuvo, Smartlink, Aarti Inds, NBCC and quite a lot of them look interesting.

As said by Warren Buffet - Be Fearful When Others Are Greedy and Greedy When Others Are Fearful 


It is easier said than done. Right now a lot of portfolios might be down 5-20% that's part of the investment cycle. Do not get scared if your are into quality or rather take this opportunity to do a quality check on your portfolio.


Disclosure: Investing aggressively over the last few sessions and intend to be fully invested by mid-may with a long term view so there can be a strong positive bias. Please do your own research / risk management.


Happy Investing


Nooresh Merani  ( For more of our services.

Article by Nooresh Merani

Nooresh has written 2531 articles.

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{ 14 comments… add one }
  • GM April 9, 2013, 20:02

    Hi Nooresh,

    Your views on National perox, Himatsingka, Vivimed and Tide water. Are they good to hold for the next couple of quarters?

    Thanks, GM

    • Nooresh April 9, 2013, 21:16

      All are good for the next 1 year. Some concerns on Vivimed Labs so keep a stoploss of 250. Very bullish on the other three

  • Vinu April 9, 2013, 22:58

    RSI was making positive divergence for a long time big deal ….
    Nifty 50 stocks should lead nifty first and nifty and bank nifty have broken
    down from the H&S pattern ….and nifty is still trading at a premium
    it would never bottom out at a premium

    • Nooresh April 10, 2013, 10:42

      How long is long time according to you vinu. Seeing divergence for past 5-10 sessions.
      Never seen a co-relation with Nifty bottoming at premium or discount. Would like if you have some data on it. Do mail me

      • vinu April 10, 2013, 11:03

        Except when nifty makes a bottom on expiry days major bottoms are made with discount where the selling is at the highest rate. This time when nifty was making new lows it was trading with a premium of 20-250 points means retail traders were buying nifty and they got trapped selling climax has happened yet. Many stocks which were holding nifty are breaking down like ITC, l&t, Indusind bank, TCS. Banknifty and nifty is showing a H&s pattern and above all nifty has formed a 5 wave pattern on the upside. S&P is in a 5 wave formation on the upside , european mkts are making topping out patterns. I would still wait to be a buyer …would like to know ur thoughts

        • Nooresh April 10, 2013, 22:12

          Would like data on it. Not seen a co-relation in discount.

          My view is am a buyer below 5600 till 5400 as cannot catch an exact bottom. Will bet take more trading positions on a turnaround signal.

  • Avinash April 10, 2013, 07:24

    how are the charts and fundamentals of Reliance ind.Hind oil(HOEL) Transport corporation and Delta all fallen from grace but have moat in their line of business in one way or the other, Regards

    • Nooresh April 10, 2013, 10:41

      Prefer only Reliance from the above stocks. Transport corporation have not looked closely. Delta will prefer when markets turn around.

  • Amit Aggarwal April 12, 2013, 19:04

    ‘Special report – Equities – Bright future ahead’ is missing in your last post.

    Please upload. Thanks.

    Amit Aggarwal

  • Harish Patel April 13, 2013, 12:50


    What’s your opinion on Opto Circuit, Orchid Chemical, Srei Infra, Ybrant Digital & Suzlon Are they good to hold and buy it @ current leval to get good returns in long terms !!!(1 to 2 years) regards

    • Nooresh April 14, 2013, 23:48

      No views on all the above stock. Pretty high risk for me to understand

  • Sathiya April 17, 2013, 12:17

    What is your view on Real Estate Space especially DLF and Unitech, Public Sector Banks? Do you have any particular picks on PSBs?

  • nitin rathod May 8, 2013, 18:28

    you are a great nooresh sir……really…..


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