Short-term outlook for market remains negative: Devang Shah

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

NIFTY      

CLOSE- 10,930.45 (28.09.2018)

The markets closed the 4th consecutive week in negative territory. It was highly volatile for the week. It was traded in the broad range of 11,170-10,850 levels during the week. It made a low of 10,850.30 levels during the week. Break of this lows will confirm the extension of correction for further lower levels targets as mentioned below in short term. Till that market may trade in a range with high volatility. As Market is in oversold zone, we may see surprise pullback rally in short term. But one should follow trend till it reverses. The short-term outlook for the market remains negative till it finally confirms the end of these wave-IV short-term corrections. 

It looks like either flat or triangular structure as per short-term wave count chart attached in these wave-IV short-term corrections. It can be possible to take as impulsive structure as well as 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.

The short-term outlook for the market remains negative till Nifty trades below 11603 levels and expecting targets in the range of 10700- 10550 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 9951 levels and expecting targets in the range of 12500-12800 levels in the medium term.

MIDCAP & SMALL CAP indices extended correction & Witnessed stock specific sharp sell off further for the week. It has broken recent lows in this correction. It remained underperformer & still not bottom out as per my earlier expectation. One should closely watch out broader market behaviour for reversal of short-term trend.

BANK NIFTY also closed the 4th  consecutive week in negative territory. It also made a bull trap at higher levels beyond anticipation & its still in wave-IV either flat or triangular correction as per chart attached. It looks much more clear either flair or triangle correction in wave-IV on bank nifty. It has made a low of 24706.80 levels so far in this correction. Break of these low will lead to an extension of these corrections for further lower levels targets till 24000-23600 levels in short term. Till that it may remain in range with high volatility. The short-term outlook for bank nifty remains negative till it trades below 26707 levels in short term. While medium-term outlook for bank nifty still remains positive till it trades above 23000 levels & expecting targets in the range of 32000-33000 levels in the medium term.

10800-10500 & 11200-11500 levels are strong support & resistance levels respectively based on option open interest data for expiry perspectives this month. 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 the 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 the end of these correction & rally towards higher levels targets as mentioned below in medium-term.lead to sharp correction till 10500-10400 levels on nifty & 34900-34300 levels on Sensex in short term.

Stock Picks: 

TATA GLOBAL - BUY

CLOSE – Rs 232.50

TARGET – Rs 242-252
 

TATA GLOBAL closed the weekly in negative territory. Its outperforming in short term. Its consolidating in a narrow range in short term. Its daily momentum indicators are in BUY. It’s trading above 20DMA. Risk Reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs-212 for the target of Rs 242-252 levels in short-term. 

NTPC - BUY

CLOSE – Rs 167.60

TARGET – Rs- 178
 

NTPC closed the weekly in positive territory. Its Outperforming in short term. Risk Reward is favorable to BUY at current levels. Its weekly momentum indicators are in BUY. It closed above 40 DMA. One can BUY with a stop loss of Rs-163.80 for the target of Rs-178 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.