Nifty 50 - A short analysis

Hello Readers!

Market is a house of mayhem as we know it right now. Even though today was a day to breath easy, I believe the worst is yet to come. 

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 An analysis of Nifty 50

Nifty has corrected nearly 880 points from the top of 11770, that is 7.5% so far and has recently forged a low of 10866 which is below the monumental psychological support of 11000. Yesterday, things got even worse as the index closed below the fatal 100 daily EMA. Today, despite the recovery it failed to cross back above the 100 EMA even on an intraday basis and this shows that the 100EMA is now working as a resistance area.

Nifty Daily- Captured on 25-09-2018. Correction expected to continue. 

Highlighted on the chart, I expect the correction in Nifty to continue for another 500 points or so. The support thereby lies in the range of 10575-10500. There are multiple reasons for drawing this conclusion, along will a few conditions for the success of this analysis.

Purely technical reasons for expecting continued correction:
1) Breach of the 100 day EMA on the daily chart
2) Breach of the level of 40 on daily RSI, which is a support zone for the indicator in a bullish market
3) Breach of 10880 on intraday basis which was a strong potential support zone due to several factors

Some macro reasons for expecting continuation of this correction:
1) Continued weakness of Rupee
2) Bullish crude oil charts (analysis to be presented in a separate post)
3) Increasing tensions of tradewar plus the U.S. sanctions on Iran's oil industry puts India under alot of pressure as the alternatives are costlier (Read more here) 
4) State oil companies may reduce inventory in the face of rising oil price. But because they only hold 7-8 days of oil inventory, reducing that level will only control cost for a very short time period and will instead lead to increased cost in the face of further increasing oil prices (read more here). This will hurt the economy and naturally push up the oil prices and the cost of fuel further, aggravating the pain. 

Condition to this analysis:
A close above the 35 EMA (11350) will be a potential continuation of the uptrend and end of correction as it is an important resistance zone, though very unlikely as per charts, but we have got to keep an open mind when it comes to the stock market.

That's a short and crisp analysis for you. I will be coming up with a more detailed analysis of Nifty soon. 
Here's a teaser: It will include the Elliot Wave count and I believe the correctionary A-B-C wave is underway. So stay tuned! 

I also intend to come up with posts on the following: 

1) Take a look at Britannia because your evening snack just got more attractive!

2) Follow-up on Balrampur Chini which continues to impress! 

Thank you for taking out the time to read my articles.

You can find my detailed  analysis on three stocks- BALRAMPUR CHINI,  FRETAIL and REC.  

As a disclaimer, this isn't a recommendation but a mere observation of a great phenomenon unfolding on the chart.
Another disclaimer: I am long on Balrampur Chini and REC Ltd (bought after the above article was posted).
A warning: Anyone investing in Balrampur Chini, OR ANY OTHER STOCK/INDEX,  based on this article is doing so at their own risk. Please be responsible.

After giving a 25% return in 3 weeks, what lies ahead for Balrampur Chini?

Hello readers!

Here’s another follow-up on the analysis of Balrampur Chini’s stock.

After our initial coverage of this stock on 24^th Aug(link here), it has already given a 25% run-up so far which I feels phenomenal.

But let us not forget that run up is just the beginning. The target lies much further ahead.

After two days of strong upside movement, the stock has dipped. Now, market participants will know it is nothing unnatural because profit taking is eminent after suck a sharp one sided move. But I want to emphasize here profit taking is all it is. The upside should continue going forward. The daily chart doesn’t give up much insight into the move as we can see below. It just shows RSI in the +60 zone which is a positive for the price movement. Another evidence of potential trend continuation comes from the volume on the last two days.

 

BALRAMPUR CHINI- daily chart captured on 18th sept, 2018. 

Let’s analyse the hourly chart to look deeper into the price movement.

The hourly chart below is showing good support present at the 35 hour EMA. I believe this acts a good entry point for those who missed the entry at the start of the trend. As Jesse Livermore has thought us we should always enter the bull trend at dips and this my friend is a good dip of 6% before the stock of Balrampur Chini paves its way to its ultimate target.

BALRAMPUR CHINI- Hourly chart captured on 18th Sept, 2018- Prices showing support at the 35EMA. 

That’s all for today. Please do read the original post here. I would love to hear from you. Please share your feedback via comments. You can also reach out to me directly via the contact me form. 

Thank you for taking out the time to read my articles.

You can find my analysis on two other stocks- FRETAIL and REC.  

As a disclaimer, this isn't a stock recommendation but a mere observation of a great phenomenon unfolding on the chart.

Another disclaimer: I am long on Balrampur Chini.

A warning: Anyone investing in Balrampur Chini based on this article is doing so at their own risk. Please be responsible.

QUICK UPDATE- Balrampur Chini and Future Retail

TICKER: BALRAMCHIN

Since the post on Balrampur Chini  on Aug, 23rd, the stock has been performing well. Things are looking up on the stock's chart. The price action recently gave a pull back after closing above the 100 day EMA for 3 consecutive days. The pull back found support at the 50 day EMA and soon enough bounced back piercing the 100 day EMA level of 77.05 and closing at 77.65. The stock has again open with a strong gap up today morning. 

All the conditions for calling the current trend an Uptrend on this chart are ticking off. 

• The stock is making higher-highs and higher-lows
• The important Moving averages have been breached.
• Volume is picking up on the up-days
• RSI has shown range shift. It has not breached the level of 40 corresponding to the recent price lows which indicates a strong momentum build-up in my opinion.

A snapshot of the chart as on day is presented below and you will be able to observe all of this on this chart. 

For a more detailed analysis of this stock, you can follow this link here to the original post. 

Balrampur Chini (Daily) captured on 6-9-18. Pull back and continuation

 TICKER: FRETAIL

Our next follow up is on Future Retail.

As we mentioned in our post on future retail on Aug 27th, another leg of upside appears to have begun. The breakaway gap has not been filled (yet). Here again, we can observe a pullback and a subsequent bounce on the dachart. The price turned lower after touching a high of 589.50 and took support at the cluster of 35, 50 and 100 day EMA after which it bounced back yesterday and gave a comfortable closing above the previous high. 

It is a great business and promoters are proven entrepreneurs. Not just that, the Indian retail space is a booming sector and Future Retail is one of the strongest players and hence one of the biggest benefitters. For a more details analysis I request you read the original post here.

Future Retail (Daily), captured on 6-9-18. A trend forming

That's all from my end! Please follow my blog and fill in your email ID to get my next post directly in your inbox. I would love to hear from you guys. Use the contact form to reach out to me!

As a disclaimer, this isn't a stock recommendation.

Another disclaimer: I am not long on Future Retail but I am invested in Balrampur Chini.

A warning: Anyone investing in either stocks based on this article will be doing so at their own risk. Please be responsible.

You can reach me at kchamaria1993@gmail.com for the analysis of other stocks (NSE, NYSE, LSE as long as there is a chart), commodities or currencies, I will try my best to respond.

Until next time, Adios! :D