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Are We Going To See Blip Before Huge Budget Rally? (A Different Technical Perspective)

27 January 2020

By Mandar Chapekar
  • India Equity
  • What We Are Writing
chart graphic

Ever since corporate tax rate cut announcement by Government on 20th September 2019, NIFTY has been in uptrend with higher tops and higher bottoms.  NIFTY Consolidated in the broader range of 11,800- 12,300 from November 2019 till off late i.e. Mid Jan 2020 and broke out above 12,300.  But it could not sustain at higher levels and declined from 12,430 to 12,087 during the current week and closed around 12,250 levels.

Next week, when majority of market participants are expecting pre-budget rally, are we going to see blip before huge expected budget rally?  Let’s try to analyze based on some technical parameters

  • Gaps partially unfilled
  • On 11th December 2019, NIFTY made high of approx.11, 923. On 12th December, 2019, NIFTY opened at 11,944 and its low on that day was 11,934   e. gap of 13 points between previous day’s high and next day’s low   .  Subsequently it went on to reach high of 12,289 on 2nd January 2020. But thereafter it declined and went again into unfilled gap between 11,923 and 11,934 to 11,930 on 8th January 2020. Thus there is partial unfilled gap between 11,923 to 11,930
  • Again On 8thJanuary 2020, NIFTY made high of 12, 045.  On 9th January 2020, NIFTY opened at 12,153 and its low on that day was 12,132 i.e. gap of 87 points between previous day’s high and next day’slow.  Subsequently it went on to reach high of 12,430 on 20th January 2020. But thereafter it declined and went again into unfilled gap between 12,045 and 12,132 to 12,087 on 22nd January 2020. Thus there is partial unfilled gap between 12,045 to 12,087

 

Thus if both the abovementioned gaps are to be filled, then NIFTY needs to retrace back to 11,923 i.e. approx.11,900 levels

Source : www.investing.com

  • Probable ABCD down pattern panning out

In Current Week (20th Jan 2020- 24th Jan 2020), NIFTY declined from 12,430 ( point A)   to 12,087  ( point B)  i.e. down move of 343 points . From 12,087, NIFTY retraced back to today’s i.e. 24th January 2020 high of 12,272 (point c) i.e. 185 points and closed near 12,250. Thus there is approximate retracement of 50% (185/343 =54 % to be precise) If NIFTY completes its AB=CD down move then probable D point would be 11,929 (12,272-343) which is again in the gap of 11,923-11,930

Technical Analysis

NIFTY Daily Chart dated 25th January 2020

Source: www.investing.com

Conclusion:

Thus based on both the above technical parameters i.e. Gaps unfilled and ABCD down pattern, the projected NIFTY target in next week before the budget is approx. 11,900 levels

Happy Investing!!!

 

Statutory Details: Multi-Act Equity Consultancy Private Limited
(SEBI Registered Portfolio Manager – Registration No. INP000002965)

Disclaimer and Disclosure:

The views expressed in this article are for educational and reading purpose only. Multi-Act Equity Consultancy Private Limited (MAECL) does not solicit any course of action based on these views and the reader is advised to exercise independent judgment and act upon the same based on its/his/her sole discretion, their own investigations and risk-reward preferences. This article and the information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities mentioned in this Document or an attempt to influence the opinion or behaviour of the Investors/Recipients.

The article is prepared on the basis of publicly available information, internally developed data and from sources believed to be reliable. Due care has been taken to ensure that the facts are accurate and the views are fair.

MAECL, its associates or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such views and consequently are not liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way for decisions taken based on the said article.

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