Time to Go Long on Breakouts & Dips

Gold Silver Reports — Time to Go Long on Breakouts & Dips — The Nifty, after making low of 8543, rallied above 8728, breaking 2016 high and made 8824 as high with +2.77% rally for week which ended; which opens next level of 8900-8980 in the Nifty and now 9119, which is the all-time high, is very near.If 9120 is crossed, then rally would see more upside. Nifty till 8530 is not breached market is bullish and levels are least important. The Bank Nifty also is near all-time high 20907 and outperformance is in Bank Nifty with Yes Bank, Indusind Bank , HDFC Bank, HDFC, Kotak Bank, Axis Bank all showing strength. If the Bank Nifty holds 19,400, then all time-high looks possible in next 1-2weeks.Stocks like M&M, Mahindra Holidays and Resorts, AIA Engineering, Sundram Fasteners, Century Plyboards, Bank of Baroda, Cholamandalam, Bajaj Finserv, Shirpur Gold Refinery, Motilal Oswal Financial Services, City Union Bank; most of these stocks are at all-time highs or showing lot of strength, so 8-15% rally could be possible.Telecom, pharma & IT stocks are still looking weak but pull-back rally could be on the cards where traders can reduce position. It is always safe to be with stocks which are showing strength, rather than buying and averaging weakness.


What Is In Store? The larger sideways consolidation movement of around 85508700 levels has been broken decisively on the upside last week and Nifty closed above it.This could also be considered as an upside breakout of the key hurdle of around 8650-8700 levels, which was an important lower top of July 2015.The larger positive structure of higher tops and bottoms is still intact and last week’s low of 8543 levels could be considered as a new higher bottom of the sequence. The current upmove could lead to the new formation of higher top, which is not yet confirmed.The formation of long range bull candles at the higher bottoms and the minor consolidations subsequently after such sharp upmoves continues on the larger timeframe chart. Hence, this could possibly mean the possibility of yet another consolidation movement in Nifty at higher levels for this week. The overall chart and momentum pattern is positive for the market and upside targets to be watched for Nifty are around 8950 and then 9150, which could be achieved in the next 3-4 weeks.

What Could Investors Do?

The underlying intermediate trend of the market remains up and this pattern is offering ample opportunities for positional buying in large and mid-cap segments of the market. The present structure of the market is also suggesting a strategy to going long on both breakouts as well as on dips.


The Nifty managed to hold its immediate support of 8540 zones and surpassed its multiple hurdles of 8700-8728 zones after the consolidation of last five weeks. It made a fresh 52-week high and given a weekly close above 8800 zones which is cheering the bullish sentiment.Overall, the index has been making higher top higher bottom formation and recent consolidation breakout may continue to attract fresh buying interest towards 8888 then psychological 9000 zones.

We have seen a strong upmove in the last week and now require follow up buying interest with the hold above previous hurdle of 8700 zones to continue the strength in the market. While on the downside, it has multiple supports at 8728, 8665 and 8540 zones which have favored the index to prepare the ground to start the next leg of rally to head towards new-high territory. Shifting base and rising support levels are clearly indicating about the overall sentiment and bullish market scenario.

Bank Nifty has been outperforming the broader market and all set to head towards its new life-time high territory. It has managed to cross its immediate hurdles of 19500 and holding the same may take it towards 20500 and new life-time high of 20907 marks while on the downside it has strong support at 1900018888 zones.

India VIX (volatility index) has been falling down and now it is near to the lowest closing of last 17 months since December 2014. Lower volatility across the globe is supporting the bulls and sustained buying interest on every meaningful decline may continue in the market.

Selective auto and auto ancillaries stocks like Maruti, TVS Motor and Bharat Forge are likely to perform while in the financial pack LIC Housing Finance, DHFL, Reliance Capital, Bharat Finance may lead the gains. Battery stocks Amar Raja and Exide have give fresh breakout, while falling rubber price have caused a price volume breakout with rising volumes and open interest activities in tyre stocks. In the banking space, YES Bank, HDFC Bank, Kotak Bank, SBIN and Axis Bank may continue their upmove to take the rate sensitive banking index towards new higher zones.

Even after a strong rally in the broader market, we have cautious view on telecom stocks, Kaveri Seed, and few IT companies which may remain in bear grip for next coming sessions. — Neal Bhai Reports

Time to Go Long on Breakouts & Dips 


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