Short-term outlook for market remains negative: Devang Shah

Short term outlook for market remains negative till it finally confirms end of these wave-IV short term correction, says Devang Shah.

NIFTY      

CLOSE- 11143.10 (21.09.2018)

Market closed third consecutive week in negative territory. It has fallen sharply beyond anticipation during the week. It has completely deteriorated wave count structure on main indices as expected. It made a low of 10,866.45 levels on Nifty and 35,993.64 levels on Sensex so far in this correction. Break of these lows will lead to extension of correction for further lower levels targets as mentioned below in short term. Till then, market may trade in range with high volatility. Short term outlook for market remains negative till it finally confirms end of these wave-IV short term correction.

It looks like either flat or triangular structure as per short term wave count chart attached in these wave-IV short term correction. It can be possible to take as impulsive structure as well as an another alternate. But these corrections came as surprise beyond anticipation to me. Therefore, I would like to wait till this correction ends or volatility settles to finally conclude any kind of preferred wave counts.

Short-term outlook for the market remains negative till Nifty trades below 11,603 levels and expecting targets in the range of 10,700- 10,550 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.

MIDCAP & SMALL CAP indices witnessed sharp selloff and it has broken recent lows in this correction. It remained underperformer and still not bottom out as per my earlier expectation. One should closely watch out broader market behavior for reversal of short term trend.

BANK NIFTY also closed third consecutive week in negative territory. It also made a bull trap at higher levels beyond anticipation and it’s still in wave-IV either flat or triangular correction as per chart attached. It looks much more clear either flat or triangle correction in wave-IV on bank nifty.

It has made a low of 25,228.10 levels so far in this correction. Break of these low will lead to extension of these correction for further lower levels targets till 24,700-23,600 levels in short term. Till then, it may remain in range with high volatility. Short term outlook for bank nifty remains negative till it trades below 27,770 levels in short term. While medium term outlook for bank nifty still remains positive till it trades above 23,133 levels and expecting targets in the range of 32,000-33,000 levels in medium term.

11,000 and 11,400 levels are 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 and follow the trend with trail stop loss levels till it reverses. Close above short term reversal levels will finally confirm end of these correction and rally towards higher levels targets as mentioned below in medium term lead to sharp correction till 10,500-10,400 levels on Nifty and 34,900-34,300 levels on Sensex in short term.

Stock Picks:

GRASIM - BUY

CLOSE – Rs 1,048.40

TARGET – Rs 1,100 -1,150


GRASIM closed the week in negative territory. Its consolidating in narrow range in short term. Its daily momentum indicators are in BUY. It’s trading above 40DMA. Risk Reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs 999 for the target of Rs 1,100-1,150 levels in short-term.

POWERGRID - BUY

CLOSE – Rs- 200.20

TARGET – Rs- 210

POWERGRID closed the week in positive territory. Its Outperforming in short term. Risk Reward is favorable to BUY at current levels. Its daily momentum indicators are in BUY. One can BUY with a stop loss of Rs 186 for the target of Rs 210 levels in short-term.

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

Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.