Monday, January 18, 2016

Is Nifty near bottom? - NIFTY View For Week 18-22 Jan

In this newsletter read about how critical Nifty fall is and where is it expected to stop 
Indian markets joined world markets to continue northward journey. The 'make it or break it' point of 7540 is finally broken by Nifty. Falling oil continued to panic world markets. Last week I had indicated at the fall if Nifty breaks 7540- this has come about. 
Question is - where is bottom? 
Technical Overview: Last week Nifty made high of 7605 and low of 7425 to close at 7437. A range of 180 points. Nifty closed near its low. However Nifty chart and technical indicators are indicating that Nifty is extremely oversold. (When a stock or market is extremely oversold, the chances of it being bought are high) This buying can bring about a relief rally. 
Supports I had mentioned  in last post are brutally broken by forceful bears.  
Next support emerges at 7368-7193 range. Resistance is at 7535-7605 range.  
My View: On a larger scale Nifty can see further downside. On a shorter time frame Nifty deserves a pullback. Options data indicating no unwinding of puts at 7400 and OI is 53.5 Lac. So smart money can pull the markets up. Now the base has moved down to 7368 level. 
Wise man's act: A wise trader or investor should always have plan ready for his risk and money management during this kind of eventualities. Analysis can fail on shorter timeframes- we should be ready for rescue plan.  
Check the influence areas (supports and resistance on chart below)