 "Short term outlook for the market remains negative: Devang Shah")
NIFTY
CLOSE- Rs 7,610.45 (11.12.2015)
The Nifty closed consecutive second week in negative territory. It continued its down trend as anticipated last week. It made a low of Rs 7576.79 levels. It has achieved first short term targets of Rs 7690 levels as expected last week. All the other indices such as madcap, small cap & Bankex etc also closed weekly in negative territory. It looks like beginning of wave-III of C of Z. One can expect market to trend towards second short term targets of Rs 7539 levels in near term.
Short term out look for the market remains negative till nifty trades below Rs 7825 levels. It looks like extension case in wave-III of C. therefore, its equality targets coming around Rs 7370-7350 levels on Nifty. Sustain below Rs 7539 levels on nifty will confirm extension of this correction towards further lower levels targets of Rs 7370 levels on nifty in short term. Its very important levels to watch out for end of Wave C of Z in short term. Sustain below it will lead to further sharp fall towards extended medium term targets levels of Rs 7250 levels i.e. lower end of channel, its also important support levels for completion of end of wave-C of Z. And lastly, in case of super extension of (1.618% of C) one can expect collapsing lower levels targets of 6950 levels on nifty.
We are entering in final phase of this TRIPLE ZIG ZAG correction. It may be truncated or extended. But one should keep in mind for possible lower levels targets that may come in short to medium term. One should watch out market behaviour around these all support levels as mentioned above.
In case of weekly cycles, we have seen so far 4 weeks negative cycle in all preceding wave-C correction. If it has to continue in similar way, then we may see further at least one to two week negative close in market. It also indicates that we are going to go down from current levels of market.
In case of bank nifty we may see further lower levels targets till Rs 15,800-15,300 levels in short to medium term in this correction.
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Momentum indicators daily KST & Daily MACD both are in SELL supporting Short term view. Market will remain volatile ahead of important FED MEET & GST ambiguity in parliament next week. Close above short term reversal levels will lead to rally towards Rs 8000-8150 levels in short term. One should be stock specific & follow the trend with stop loss levels till it reverses.
Stock Picks:
ASHOK LEYLAND: SELL
CMP: Rs 86.25
TARGET: Rs 81/78
ASHOK LEYLAND closed weekly in negative territory. It looks like beginning of wave-III or C down. Its momentum indicators are in SELL. Risk reward is favourable to sell at current levels. One can SELL with Stop Loss of Rs 89.20 for the target of Rs 81/78 in short term.
ADITYA BIRLA NUVO: SELL
CMP: Rs 1,931
TARGET: Rs 1,860/1,800
ADITYA BIRLA NUVO closed weekly in negative territory. It looks like beginning of wave-III or C down. Its momentum indicators are in SELL. Risk reward is favourable to sell at current levels. One can SELL with Stop Loss of Rs 1,995 for the target of Rs 1860/1800 in short term.
KOTAK MAHINDRA BANK: SELL
CMP: Rs 660
TARGET: Rs 640/634
KOTAK BANK closed weekly in positive territory. It looks like beginning of wave-III or C down. Its momentum indicators are in SELL. Risk reward is favourable to sell at current levels. One can SELL with Stop Loss of Rs 677 for the target of Rs 640/634 in short term.
ITC: SELL
CMP: Rs 320
Target: Rs 308/302
ITC closed weekly in negative territory. It looks like completion of wave-IV up pull back rally & it has wave-V or C down pending. Its momentum indicators are in SELL. Risk reward is favourable to sell at current levels. One can SELL with Stop Loss of Rs 325 for the target of Rs 308/302 in short term.
RELIANCE INFRASTRUCTURE: SELL
CMP: Rs 419
Target: Rs 400/380
REL INFRA closed weekly in negative territory. Its momentum indicators are in SELL. Risk reward is favourable to sell at current levels. One can SELL with Stop Loss of Rs 433 for the target of Rs 400/380 in short term.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst
The author is Portfolio Manager- PRO TECH-PMS at Sharekhan