Monthly Technical Outlook

Monthly Technical Outlook

30th October 2021

A Chart Book On

Benchmark, Sectors, Global and Inter Market Analysis

Nifty: Trend is negative, but placed at the crucial support of 17550. Any upside bounce from here could be a sell on rise opportunity.

Nifty Daily ChartNifty Weekly Chart

10W EMA at the support

Nifty Monthly ChartLong upper

shadow

Follow through declines in Midcap & Smallcap segments post Bearish Engulfing. Buying is likely to emerge from the lower supports.

Bearish Engulfing

Nifty Midcap Weekly Chart Nifty Small Cap Weekly Chart

Bearish Engulfing

Number of Stocks Making 52 Week Highs Reaches Near Oversold ZonePullback in Market Breadth on Cards.

MSCI World Index: At An All Time HighWorld Index has been Rising for last Four Weeks.

MSCI World Index Weekly Chart

Technical Observations

The sharp weakness continued in the Nifty for second consecutive session on Friday and the market closed the day lowerby 185 points. After opening on a negative note, Nifty slipped into quick decline soon after the opening. The intradayupside recovery has emerged in the early-mid part of the session, but the market failed to sustain recovery attempt andclosed near the lows. A reasonable negative candle was formed on the daily chart on Friday, which indicate sharp follow-through weakness in

the market. The last two sessions decline seems to have changed the positive sentiment of the market. The recent alltime high of 18604 of 19th Oct could now be considered a near term top reversal for the market and that is not going tobe challenged in a hurry. The immediate supports of 10day EMA and 20 day EMA have been broken on the downside and those broken supports are

now acting as a crucial overhead resistances. The positive chart pattern like higher tops and bottoms of the previous 32-35 sessions has been negated and the market shifted the gear strongly on the downside. Nifty on the weekly chart, completed the week with 2.45% decline as per w-o-w basis. The formation of negative candle

back to back in the last two weeks signal a possible trend reversal on the downside as per smaller to larger timeframecharts. Though, Nifty now placed at the 10day EMA support, there is a higher chances of market moving below this support in

coming weeks and that could open more weakness in the near term. Broad market indices like NSE mid cap 100 and small cap 100 have continued their weakness in this week, post formation

of bearish engulfing pattern in last week. This is negative indication. The midcap and small cap sectors are now placed at the edge of the support of 10w EMA around 30219 and 10830 levels

respectively. But, these sectors are likely to be broken on the lower side in coming weeks. Weekly 14 period RSI of both midcap and small cap sectors are nearing crucial 60 levels. Uptick from 60-58 is expected. The positive chart pattern like higher tops and bottoms is intact on the weekly chart and the buying is expected to emerge

from the lower levels (from around 28900 and 10400 levels respectively). Hence, one may look to create long positions inthe sector participants on dips.

Technical Observations

Market Outlook

• The underlying trend of Nifty has turned down as per smaller and larger timeframe charts. Having reached near theimmediate support of 20week EMA around 17560-17600 levels, there is a possibility of minor upside bounce from thelows by next week, which could be a sell on rise opportunity. A decisive move below 17500 levels could open next lowerlevels of 17000 before showing any meaningful upside bounce.

• The overall chart pattern of broad market indices like midcap and small cap indicate further weakness and there is apossibility of sustainable upside bounce from the lows of around 28500 and 10200 levels respectively. We advise staggerbuying or buy on dips in the market for near term.

Trend and Key levels to watch

Nifty (CMP 17671 ) Bank Nifty (CMP 39115 )

Trend Bearish Bearish

Immediate Support 17550 38425

Further Support 17280 38050

Immediate Resistance 17860 39775

Further Resistance 18020 40150

Global Market TrendDow Jones, Nasdaq, FTSE & Strait Times

Dow Jones Daily ChartExpected Trend : Bullish

Nasdaq Daily ChartRecords Fresh All Time High

FTSE Daily ChartExpected Trend : Bullish

Strait Times Weekly Chart

Hits Fresh All Time Highs

Triangle BreakoutExpect Move: Bullish

Throwback

Expected Trend: Bullish

Sectoral View: IT, Auto and Realty

Disclaimer: Please Check with your RM/Analyst beforehand for Entry, Target and Stoploss levels in case you wish to act on any of the above recommendations.

Nifty IT: Traders need to remain cautious

Nifty IT Index made a double top formation andfrom that level, it has corrected by making lower toplower bottom formation. Index also on daily basisbreached its earlier supports and closed below it.

Index also formed and head and shoulder patternwhich is bearish in nature. The index also filled theup gap and also trading below 21 EMA suggestingweakness in the Index. If the Index sustains below34700 level then traders may create short positionsfor lower Targets.

Stocks with negative bias are TCS, HCL Tech & Infy.

Nifty Auto: Upside breakout of crucial resistance

The NSE Automobile sector has witnessed a sharpupside breakout of the strong resistance at 10850levels in Oct month and closed higher as per m-o-mbasis. Though, retraced down from the highs in laterpart of the month, the upside breakout is still intact.

As per this pattern, the auto sector could find strongsupport at breakout point and one may expect upsidepossibilities from the lower levels. Monthly 14 periodRSI and monthly DMI/ADX are showing positiveindication as per long term basis.Following Auto stocks can be looked to buy on dips incoming weeks; Tata Motors, Ashok Leyland, TVSMotors, Bharat Forge and Bosch.

Nifty Realty: Long upper shadow

The Realty index has taken resistance at upper lineof the pitchfork setup.

It has also formed long upper shadow at theresistance zone.

Any fall below the key support of 480 levels wouldreverse the trend.

Index supports are placed at 480 and 458 andresistances are placed at 550 and 580 levels.

Stocks with mixed bias are DLF, BrigadeEnterprises, Prestige Estates and Oberoi Realty

Nifty Realty Monthly ChartNifty IT Daily Chart Nifty Auto Monthly Chart

Sectoral View: Pharma, Oil & Gas and Metal


Nifty Pharma: Change of polarity support

The Pharma index has placed at change of polaritysupport on weekly chart.

It has formed some sort of double bottom aroundprevious swing low.

Any weakness would emerge only on fall below13580 levels.

Index Key supports are placed at 13580 and 13400while resistances are placed at 14200 and 14400.

Stocks with positive bias are Lupin. Biocon, andAlembic.

Nifty Pharma Weekly Chart

BSE Oil & Gas: Buy on Dips

Index is making lower top lower bottom formationand now trading below 138.20% extension level.

In coming sessions traders may see some dips andthe dips can be use to create long positions.

RSI is giving bearish signal after trading in theoverbought level. Traders can accumulate longpositions on dips by keeping stop loss at 17700 level.

We expect BPCL, Reliance may outperform and canbe accumulated on dips.

Nifty Metal: Profit booking from the highs

After showing upside bounce from the lows in thelast two months, the Nifty Metal index haswitnessed sharp profit booking from the highs inOct month. The formation of long upper shadowon monthly chart signal key resistance at thehighs and this pattern could indicate some moreweakness in the coming month.At the same time the lower area of 5200-5300 areoffering crucial supports for the sector so far andthat area is likely to be a buy on dips opportunityfor Metal participants in coming months.

We advise buy on dips in following Metal stocks:Tata Steel, JSW Steel, JSPL, Hindalco and VEDL.

BSE Oil & Gas Weekly Chart Nifty Metal Monthly Chart

Sectoral View: Bank Nifty, Capital Goods and FMCG


Bank Nifty: Near to its crucial support

Bank Nifty is currently trading near its importantsupport level.

Higher tops and higher bottom formation is still intactsuggests uptrend is still valid

Any weakness would emerge only on fall below38400 levels.

Index Key supports are placed at 38600 and 38500while resistances are placed at 40200 and 40800.

Stocks with positive bias are AUBANK, ICICIBANKand CANARABANK

Bank Nifty Daily Chart

BSE Capital Goods: Bullish Hammer on Dailychart

Capital goods index has bounced strongly aftertesting the important support.

Higher tops and higher bottom formation is stillintact suggests uptrend is still valid

Any weakness would emerge only on fall below25500 levels.Index Key supports are placed at 26085 and 25590while resistances are placed at 27500 and 28000.

Stocks with positive bias are ABB, HAVELS andVOLTAS

BSE Capital Goods Daily Chart

Nifty FMCG: At Weekly Trend-Line Support;Pullback on Cards

Index has corrected almost 10% from its recentswing high of 42021. Recent correction was seen inthe span of just 10 trading session, which ismassive.

Post Correction, Index has reached strong supportprovided by upward sloping trend-line on theweekly charts.We can expect strong pullback in the Index fromcurrent levels for next couple of weeks.

Stocks with positive bias are ITC, HUL, Marico, TataConsumers and McDowell.

Nifty FMCG Weekly Chart

Disclaimer

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Monthly Technical Outlook

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