Market Outlook & Diwali Wishes

Mr Faisal Humayun has posted a query in the Comments Section, on my suggestion regarding prevailing Nifty Trend and Technicals. He was of the view of expecting some correction around Nifty 5000 levels which seems to be getting delayed. His Comment was as follows:

Hi Viral,
It would be great if you can provide some insights on the markets at present. I personally expected correction at 4950-5000 levels. But that does not seem to be happening.What do Nifty technicals suggest?

Charts Courtesy: www.icharts.in

Nifty Outlook & View

From what I can pick-up from the Nifty charts attached above, the markets seems to be in a broad tapering range which is slowly but steadily closing out as markets move forward. This tapering range is marked by Pink-coloured trend lines 1 and 2 in the above charts.

At some stage, I presume that these trend lines which are tapering in nature will eventually close-out and markets will make a decisive and an expanded move from the current levels. The up side could be as high as 5250-5450, a rally which could be fuelled on the back of Panic Buying among investors. At that point of time, the Analyst fraternity could well be predicting about Nifty 6000 level to be on cards. This could be the time of excesses, if such a situation gets played out. At such times of euphoric rallies, if all the remaining laggard stocks and sectors which have not yet participated in the rally by substantial means, starts rallying; it could be a warning of sorts that we're getting nearer to have topped-out over medium term horizon.

However, the above is based on the assumption that the up side break out could be the order of the day in the times to come. But, it is not necessary that market will oblige this view of mine. The break out could as well be on the downside. In that case, my first levels to fall-0n for support would be Nifty 4900 levels where the markets has sought support for 3-4 times in last 20-25 sessions. Below Nifty 4900, the next big support lies around 4780-4800 zone, which is also coincided by its 50 EMA support zone. As of now, as the trend remains up, traders should remain long until initial support of Nifty 4900 stays-on. Investors on the sidelines will have to go through a painful waiting period. If they lose patience, a trap could be well-laid in 5250-5450 zone, which will act as Panic buying zone with tons of optimism.

The recent downward move from Nifty 5080 to 4920 & finding a support over there is ample evidence that markets have again sought a support at its Lower trend line (Pink trend Line 1). This trend line will slowly move higher with time as market advances in upward direction.


Mr Vikas has posted a query on Diwali Shopping List

To start with, for Diwali shopping list, I would happily recommend sweets, crackers and new costumes as of now rather than stocks from equity markets. Markets has more than doubled from the trough levels witnessed before 7 months. However, the fact that markets have doubled is not a concern, but the compressed time horizon in which this sharp rally has occurred is concerning and hair-raising fact.

Anyways, to address to your specific query, I have a small list of stocks for readers who wish to truly invest during this Diwali based on fundamentals and valuations in specific stocks. However, they should remember that if markets meltdown to some extent or shifts into an intermediate downtrend, these stocks could be further dragged down by some more bit in sync with the downward market momentum. The readers need to be aware that the valuations are sound to buy the below mentioned stocks even at this point, but it comes with the risk that they're indulging in it at peak market levels. The list is as follows:

1) Bharti Airtel
2) Alok Industries
3) Kalindee Rail
4) Time Technoplast
5) Everest Kanto
6) Praj Industries
7) ONGC

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