Based on 'time analysis' the market has completed an important price action during the period of 54 and 89 days, which has resulted in a quick round of profit taking at new highs
It was the shortest week for the market in the last several months. However, it was interesting for investors as well as for traders.
During the week, as per expectations, Nifty broke out of the previous lifetime high of 11,760 and registered a fresh record high above 11,800 at 11,856.
Since 2013, the market has made record highs every year barring 2016. It is the longest streak in the past several decades, which implies that domestic developments are taking place consistently. Policy makers and big corporates are putting their efforts to keep the economy on track.
Technically, Nifty made a climatic top at 11,856 but quickly reversed back to 11,750-11,760 on April 18. Although on a daily basis, Nifty failed to close above the lifetime high level, which was 11760, it managed to close higher on weekly charts, which is equally positive for the market.
Based on 'time analysis' the market has completed an important price action during the period of 54 and 89 days, which has resulted in a quick round of profit taking at new highs.
However, in my opinion, it is loss taking from fund managers and market experts at the euphoric stage of the market.
At 11,856 (Nifty), we saw heavy liquidation in fundamentally weak companies or especially in those companies which are debt-ridden.
It reminds me of saying: Always ‘sell’ what shows you a ‘loss’ and ‘keep’ what shows you a profit. Such steps would help to minimise the downside of the market.
For the week, Nifty would face hurdle at 11,856 as it is a climatic top for the market. In case, Nifty manages to cross 11,856 on April 22 then it would change the sentiment heavily on the upward side and could pull the market towards 11,950-12,000 in a very short span of time (few days).
On the other side, if Nifty fails to do so, which is more likely then we could see a lower top between 11,800 and 11,850. It would drag the sentiment in the short term and could push indices to 11,700-11,690, where the market had left an exhaustion gap.
For positional and medium-term traders (1 to 3 months), investors strategy should be to buy at each major support viz. 11,700 and 11,650 with a final stop loss at 11,600 on a closing basis.
For short-term traders (5 to 20 days), keep a close watch on 11,820 and 11,680. Based on reversal formation around given levels, traders should look for selling or buying opportunity with a final stop loss at 11,860 and 11,630, respectively.
In the current week, we are expecting stock specific activity rather than sector specific in the market. However, the moves in Nifty energy stocks were encouraging and we should also keep a close watch on them.
The author is a senior VP (Technical Research), Kotak Securities.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions
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