The Nifty is in a triangular pattern on the hourly chart, which is nearing its maturity. Once the swing high of 12,025 is crossed, the pattern will be considered to have broken out on the upside.
The overall structure shows that small and midcap indices are set to catch up on the upside. So, the broader market is likely to outperform the benchmark index in the run-up to Diwali, Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, says in an interview to Moneycontrol’s Kshitij Anand.
Q) The week was controlled by the bulls as the Nifty managed to climb above 11,900. What led to the price action on D-Street?
A) The Nifty50 posted a positive weekly close for the week gone by. However, it traded in a narrow range and formed an ‘Inside Bar’ pattern on the weekly chart.
After the sharp run-up seen in the last week of September and the first week of October, the index entered a consolidation mode for the last few sessions.
In terms of the price patterns, the price action has taken the form of a Triangular pattern on a lower time frame. The index is witnessing oscillations within this pattern for the last couple of sessions.
Q) As we approach the last week of October, also the expiry week, which are the important levels that one should be tracking? Any important event to watch out for?
A) As we are entering the expiry week for the October series and also since the US elections are around the corner, volatility is likely to be high.
Currently, the Nifty is in a Triangular pattern on the hourly chart, which is nearing its maturity. Once the swing high of 12,025 is crossed, the pattern will be considered to have broken out on the upside.
In that case, 12,200, and 12,430 will be the targets to watch out for. The supports for Nifty are placed at 11800 & 11660.
Q) Even though benchmark indices moved in a range, we saw bigger price action in small and midcaps. What are your views on the broader market? Small and midcaps have usually performed better in the run-up to Diwali and in the December quarter.
A) The Nifty witnessed a sharp rally towards the end of September and in the beginning of October. The broader market indices, however, remained sluggish during the period.
So, the broader market has been in a prolonged consolidation as compared to the Nifty. Also, the Nifty has surpassed its August-September swing high, which was placed at 11,794, but the midcap and smallcap indices are still below their respective swing highs.
The overall structure, however, shows that these indices are now set to catch up on the upside. So the broader market indices are indeed likely to outperform the benchmark index in the run-up to Diwali
Q) Top technical trading ideas for the next three-four weeks?
A) Here is a list of trading ideas for the next three-four weeks:
The stock had a short-term correction in the last few sessions and found support near the key daily moving averages.
After taking the support, the stock started a fresh move on the upside in the last session. The price action in the last session was supported by strong volumes, which is a bullish sign.
Dabur India is moving up in a medium-term rising channel. The recent dip found support near the lower end of the channel. The stock is now trading closer to its support and is expected to resume the larger uptrend.
The stock is on an upward trajectory. After a brief consolidation in the last few session, the stock is set for an extension and that too on the upside. The short-term & medium-term momentum indicators are in a bullish mode
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