Nifty Range Breakout
Nifty - our great index and the life line for a lot of traders and investors is sparked yesterday with a lightening spell in the market. The index runs a wonderful rally in the intraday trading session. Beyond imagination, without any prior intimation, the index went high above 8700 level. This is also without any specific positive trigger or news. The trader community was desparetely looking towards such move of the index as the market was in the fatal grip of consolidation between the range of 8500 to 8700. Neither it was breaking it on the upside nor on the downside. Atlast, we get some result. The consolidation started with the Index crossing 8500 mark in the mid of July.
Since then, day traders might have made some good amount of money if traded with the discipline. Consolidation also seen in lot of top line stocks including the bullish banking and cement sector stocks. Auto stocks like Maruti and Heromoto also shown the retracement or consolidation. But at the end, almost all get back the there bullish position with a single stroke of Nifty in the northward direction.
Now, What is the significance ot this upmove and what is so exciting about this breakout? Why it is different from regular breakouts?
Well, the index as we all know, had a year long consolidation or retracement from March 2015 to February 2016. The Union Budget triggers the bull run in the market bringing back the hope amongst the investors. The low hit was of 6825 on 29th February. Since then it rose breathlessly and hit the 8500 mark in not more than 6 months. Rally of almost 1700 points - simply tremendous. But, after that it has taken a pause and tends to trade between a specific range of 8500 to 8700 points. It tried to break on either side on more than one occasions but failed to trigger any of the sides. There was a great dilemma amongst the tarders that where the index would go? Some were bearish and some were bullish - as it always be.
But, As I had always believed, after February 2016, that there is no immidiate downside in the Indian Stock Market. The Market has sensed the growth of ecnomy in the country. Market has digested Great NPA issue of major banks in the country. This was the biggest ever jolt for the country. But ultimately it was transparency that had mattered. People forget the losses and NPA phobia and as a result, most of the banking stocks boomed from their respected bottoms. Other major factors like Chinese recession and currency devaluation, Euro crisis, Terrorism and War like scenario on the world level, BREXIT, Negative Domestic IIP data, Inflation etc etc also had not made any major impact on the upmove of the market. The market digested all the jolts it had faced.
Means, Come what may... I am going to rise from here. Nothing can stop me. And in the series of these speedbreakers, the Index has shown another very strong move. Breaking 16 months high yesterday and registered the high of 8750 in cash segment. Nifty Futures also recorded 8800 mark on the board.
Talking techincally, the index has created a very good bullish price pattern on the daily chart. Convincing Flag pattern has been formed on the chart and the nifty has recorded a decisive breakout. From here, the index may consolidate or retrace, but untill it breaks 8700 level closing basis on the downside, there is no need to think about selling at all. The index tends to remain on upside with consolidations, if any. On the other hand, on monthly charts, again the index has given a bullish candle towards the closing of the month. Nifty is forming green candles on monthly charts since March 2016 and this is going to be the sixth consecutive green candle on the charts. Nifty opens monthly at 8654, closed at 8744 yesterday, above 90 points from the month's open. If closing above 8654, which is likely to occure, the index, and so the stocks too, will continue the journey in northward direction.
So, It's Bull everywhere, stay bullish and trade cautiously keeping strict stop losses in mind.
Happy Trading...Trend is Friend...
- Anand Singh Gaur
- Sunil Kothari