RETAIL RESEARCH 03 Feb 2017

HSL Weekly Insight

Nagaraj Shetti
[email protected]
Tel-022-30750021

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Nifty Daily Timeframe

Observation:
Daily Timeframe: Nifty shifted into consolidation for second consecutive session today and closed the day higher by around
06 points.

After opening with flat note today, Nifty has shifted into intraday narrow range for the whole session (with in a high low
range of around 41 points). The underlying trend remained choppy for the day.

A high wave type candlestick patterns have been formed in the last couple of sessions, post sharp upmove of 1st Feb (Union
Budget), which is suggesting a temporary halt in upside momentum.

The positive sequence of higher tops and bottoms is intact in Nifty as per daily timeframe chart and present upmove could
be in line with the formation of new higher top of the sequence. But, the higher top has not been confirmed yet.

Over the last one month we observe formation of more no of long bull candles on the way up and relatively small bear
candles during declines or minor corrections.

One day weakness/downward reversals have been lacked with follow-through moves so far. This pattern is displaying an
inherent strength in the upside momentum and indicates more upside for near term.

Daily 14 period RSI has turned flat around 72-73 levels and a negative divergence pattern in Nifty/RSI seems to have started
to form.

The upper area of daily RSI around 72-73 level has been important swing high for the last one year, as the RSI has turned
down sharply for many occasions from this area in past. Hence, the indications of this momentum oscillator is suggesting a
possible dip in RSI down to 65 levels (from the current reading of 73 levels). This expected pattern could mean minor
correction for the market in the next few sessions, before showing further upmove.

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Nifty Weekly Timeframe

Weekly Timeframe: After showing sharp upmove during last week, Nifty continued with follow through upmove during this
week and closed the week higher by around 1.15%, as per w-o-w basis.

Bull candle has been formed this week with long lower shadow, which is indicating an emergence of buying interest during
intra-week dips. This is positive indication.

The important area of 8500-8550 levels (green dashed horizontal line) has come into play again during this week, as Nifty
witnessed sharp upside bounce back this intra week from near this support area.

Previously, the area of 8550-8500 levels have acted as a significant support/resistance band for the market in past and have
led to formation of long range candles (both bull and bear candles-marked in X).

Nifty showing sharp upside bounce back this week from near that support is however validating the upside breakout of the
said resistance during last week (long bull candle-later part of Jan), as per the concept of change in polarity. Hence, this is
showing a significance of the area 8550-8500 levels-green line.

Next important resistance/target for the market could be a down sloping trend line (orange dashed line, which is
connected from the important top of 9119-March 2015). This hurdle could encountered around 8925 levels for the next 2-3
weeks.

Weekly momentum oscillator like 8 period MACD has moved up and it is now showing positive crossover signal from near
its equilibrium line (MACD line cutting above its signal line).

This is positive indication for the market as per larger degree and such positive crossover formation in MACD after long
time is suggesting more upside to come for near term.

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Summing Up:
The underlying trend of Nifty as per smaller and larger timeframe is up and some more upside is likely for the next couple
of weeks.

There is a possibility of minor correction by early part of next week and Nifty is expected to show upside bounce back by
later part of the week. The upside target to be watched is around 8925-9000 levels, which could be achieved in the next 2-3
weeks.

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