Hi All,
Nifty, as expected rallied sharply towards
the key levels of 8600-8640, thanks to the Hammer pattern seen on the hourly
charts. As mentioned in the earlier posts, 8660-8700 will remain a crucial
hurdle as there are many negatives which are hovering around the markets
currently
On the Technical Front – Please refer the chart
·
Nifty is trading near a key resistance are
of 8660 after rallying by almost 27% in 5 months without any major correction.
·
Nifty is trading near 78.6% retracement, 8630-40
of the entire fall from 9119 to 6825
·
Nifty is also trading near the upper end of
the rising channel
·
On daily charts RSI, at 68 is nearly
touching the overbought territory
Based on Fundamentals – Refer the chart
·
One of the reasons for markets rally is
optimism about the GST clearance in the upcoming parliament session, non passage
of the bill can be a huge setback for markets
·
One more sign of concern is the Nifty PE,
which is currently trading near alarming levels of 23.69 (as of 25th
July 2016) and usually levels above 24-25 have resulted in a decent correction
/ fall in the Nifty
What can we expect -
If Nifty fails to breach the 8660-8700
levels convincingly, we can expect it to correct to the lower support areas and
8470-8540 will remain as crucial level for deciding the short to mid term
trend. Below 8470-50 Nifty can come down till 8400-8280 levels
If Nifty keeps on scaling new highs with
muted results the PE might swell and go above the alarming levels of 25,
however good quarterly results for Nifty can help in cooling down the PE and
thereby reducing the uncertainty
In a nutshell –
It is better to wait and watch as a trader
for the levels based on charts and trade only after a proper evidence.
For an investor there is no need to worry
as historically it is also seen that after those corrections given by PE
valuations markets have bounced back decently. It is ideal time for starting the SIPs in Equity
related MFs and/or investing directly in equities with proper stock selection and diversification.
