Technical Analysis of Indian Equities by Nooresh

Nifty at 8500 up 25% from February Lows. Time to Ride or Step Aside ?

#Nifty has bounced back almost 25% from the lows of February at 6825-6860.

Many stocks have bounced back much sharper.

#YesBk up 75% , #HDFCBk 26% , #KotakMahindra 30%, #SBI 52% , #BOB 45% , #canbk 52% , #PNB 75% #BankNifty 38% from the Feb lows. #randomfact

, #Vedanta 165% , , #Hindalco 125% ,#DLF 100%, #TataMotors 82%. The major gainers from top 100 companies. #randomfact

At the same time midcaps and smallcaps have also done well.

Bse Midcap Index just hit a new all time high with strong momentum.

Bse Midcap

BSe Smallcap Index close to a 2-5 year high.

Bse Smallcap Index

Nifty Technical View

Nifty

Nifty Technical View

The previous posts and expectations.

Current Technical View

  • Nifty has continued in a channeled move in last 2-3 months.
  • We are now at the upper end of the channel at 8500-8550.
  • Previous top and breakdown point of the uptrend at 8650 is another resistance.
  • Ideally we should see a pause here in coming days.
  • At the same time midcap and smallcap indices have broken out sharply and momentum can continue in select stocks even with a correction in Nifty. This is also the time when we see a lot of crap stocks do much bigger moves.
  • Supports at 8200 and 8300. Recent lows and channel support.
  • But the medium to long term trend remains Up and Strong. A major turnaround and bottoming confirmation was done by crossing 7600/8000.
  • So on a longer term basis it still remains a buy on dips and stick to the bullish stance of 1-3 years.

Strategy

  • The big problem with such massive moves is the stocks you own may not have rallied 60-100 % from the lows and that would make you feel left out.
  • Secondly if you would have not bought or deployed fresh cash in the dips to 7200 the big confusion is to deploy fresh cash or increase cash from the portfolio.
  • The big mistakes which happen in such momentum moves and left out feeling is you end up buying some companies just for momentum/news or compromise on quality and fill up your portfolio.
  • If you had deployed additional cash at 7200 and not booked partially it at 8000-8300 can do so now at current levels. Sit on that cash for a dip or a new opportunity as every new trend gets new movers.
  • Be very selective in stock selection. If trading momentum then be strict with stoplosses. Avoid over-leverage.

Conclusion - Step Aside out of the momentum unless you are very disciplined with position sizing and stoplosses. As an investor increase some cash but be on look out of fresh ideas with an open mind.

 

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Article by Nooresh Merani

Nooresh has written 2733 articles.

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{ 2 comments… add one }
  • Jai July 12, 2016, 22:21

    Please let me know if training happens in bangalore

    Reply
  • Swapnil July 12, 2016, 23:41

    Sir what about session in delhi?? Pls let me know

    Reply

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