Short-term outlook for market negative: Devang Shah

NIFTY      

CLOSE- 10316.45 (05.10.2018)

Market closed 5th consecutive week in positive territory. It witnessed sharp sell off from higher levels beyond short term targets levels. It was highly volatile during the week. It made a low of 10,262 levels on Nifty & 34,202 levels on Sensex during the week. One can expect lower levels targets as mentioned below in case of any kind of further panic situation if these lows breaks further. As market is in oversold zone, one should also watch out any sign of initial pull back rally in near term. The divergence between midcap/small cap & large cap needs to end till finally conclude end of short term trend reversal. 

The wave counts are not conclusive at current levels, as there is divergence between midcap & small cap indices. I would prefer to watch out this divergence to end to finally conclude end of short term correction. These scenario looks like 2015-16 correction case to me so far. Further development of market will give more clarity.

Short-term outlook for the market remains negative till Nifty trades below 11,603 levels and expecting targets in the range of 9,950-10,000 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 9,951 levels and expecting targets in the range of 12,500-12,800 levels in medium term.

BANK NIFTY also closed 5th consecutive week in negative territory. It has made a low of 24,365 levels so far in this correction. 23,600 levels is crucial support & my short term targets levels as well for Bank Nifty in short term. While medium term outlook for Bank Nifty still remains positive till it trades above 20,900 levels & expecting targets in the range of 32,000-33,000 levels in medium term.

10,000 & 10,500 levels is strong support & resistance levels respectively based on option open interest data for expiry perspectives for expiry perspectives next week. Any kind of such short term correction or consolidation is buying opportunity for medium to long term Investment perspectives till medium term reverses.

Momentum indicators Daily KST & DAILY MACD both are in sell supporting short term trend. One should be stock specific & follow the trend with trail stop loss levels till it reverses. Close above short term reversal levels will finally confirm end of these correction & rally towards higher levels targets as mentioned above in medium term.

Stock Picks:

As market is highly in oversold zone, Risk reward is not favorable to initiate any fresh trading ideas and also market is near crucial medium term support levels, I would not recommend any new trading ideas for this week till we get further clarity on overall trend of market. One should closely watch out market behavior at these crucial levels.

Devang Shah: The author of www.trendtechno.com (Trade with Trend) and an independent market analyst.

Disclaimer: The analyst may / may not have a position in the scripts mentioned above.