Short-term outlook for the market remains negative: Devang Shah

NIFTY      

CLOSE- 11823.30  (14.06. 2019)

Market closed second consecutive week in the negative territory. It is showing loss of momentum after achieving my short-term target as mentioned earlier. It made a high of 12,103 levels on Nifty and 40,312 levels on Sensex. It seems market will correct first before heading towards higher targets in medium-term till short-term reverses. On the other hand, we may see market to trade in the range between 11,500-12,000 levels on Nifty as time-wise consolidation before heading towards higher targets in medium term.

It looks like the possibility of the end of 5 wave advance from bottom of October 2018 on main indices such as Nifty, Sensex and Bank Nifty. It looks like some price-wise correction for lower level targets till lower end of channel in short-term before further extension for higher levels targets in medium term.

The short-term outlook for the market remains negative till Nifty trades below 12,103 and the expected target is in the range of 11,500-11,300 levels in short term. Medium-term outlook for the market remains positive till Nifty trades above 9,951 levels and the expected target is in the range of 12,800-13,200 levels in medium term.

Broader market such as midcap and small-cap indices are still underperforming while main indices Nifty, Sensex and Bank Nifty is hitting all-time high levels. It’s not a good sign at current levels of market. It is now almost one and half years, we are seeing these divergences between main indices and broader market. I am anticipating these divergences to end soon. It is a warning sign at current levels of market. It has to catch up and participate now for my overall medium-to-long term bullish trend of market. One should closely watch out broader market behavior at current levels of market. 

Bank Nifty closed the week in positive territory. It is showing loss of momentum after achieving my short term target levels. It made a high of 31,816 levels. It seems market will correct first before heading towards higher levels targets in medium term till short term reverses. One can expect Bank Nifty to correct till 29,100-29,000 levels first till these recent high surpasses. 23,600 level is the strong support for medium-term perspective. Till it holds that, one can expect higher level targets in the range of 34,000 on medium term. Any kind of decline or consolidation is buying opportunity till short-term reverses. On the other hand, it can consolidate between 29,000-31,000 levels in short term as time-wise consolidation before heading towards higher level targets in medium term.

11,500 and 12,000 levels are the strong support and resistance levels, respectively based on option open interest data for expiry perspectives for current month series. Any kind of such short term correction or consolidation is buying opportunity in specific stocks 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 of the market. One should be stock specific and follow the trend with trail stop loss levels till it reverses. A close above short term reversal levels will finally confirm trend towards further higher levels targets in medium term.

Stock Picks:

As the market is still trading in range for short term, I would like to observe market behavior in this phase. Therefore, I would avoid any trading stock picks ideas for this week till we get further clarity.

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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.