Friday, 30 March 2018

Use Sell on Rise strategy for medium term as Nifty seen falling up to 9,600-9,450

US has increased import duty on steel and aluminum which is likely to put less impact on India given the low exports of these metals. However, if the trade war escalates to others items such as medicines and chemicals, it would impact India adversely going forward.

While, FPIs sold Rs 11,037 crore of equity in February, they remained net buyer to the tune of Rs 8,440 crore till March 26, 2018. We think that further increase in yield and possibilities of escalating trade war can weighed on FPI’s sentiments and check their investment in domestic equity.

Recently, the Nifty has given a ladder type correction along with all heavy counters and sentiment has changed to negative because of the ongoing war on trade and banking fraud which has shaken the PSU Banking. Moreover, technically as well the Nifty look weak as on a monthly chart, the Index has formed a Bearish Engulfing candlestick which suggests an upper hand of the Bear over the Bulls and we had witnessed a Heavy correction whenever this type of structure took place on the chart in past.

Since RSI is trending near to its oversold zone, we are not seeing any further correction for the time being and it suggests a bounce back move in the Index. However, the overall trend is weak as the Nifty has been trading with a negative crossover of 21*50 Days Moving Averages, so any upside movement in the Index would become the best-selling opportunity for short to medium term.

If we talk about all the Technical indication, then we will get an answer for sell-side movement. As the Quarterly chart is forming a Shooting star candlestick and which might get confirm as we are heading towards the quarter end.

Moreover, a Monthly chart has witnessed a Bearish Engulfing candlestick along with a Negative divergence on a Monthly RSI. Furthermore, a 21 Weeks Moving Average is also shouting for the bearish move as the Nifty has breached its most devoted moving averages which helped out a lot during the weak time of Market. Even on a daily chart, the Index has given a breakout of its so-called Great Wall of China and has been trading below it which confirms the medium term southward trend.