Newsletter

March 28, 2017

ABSTRACT

FIVE DAYS OF NARROW RANGES INSIDE A TRADING RANGE SUGGESTS BIG

MOVE AHEAD; NIFTY, NIFTY BANK AT THE VERGE OF A BREAKOUT;
CONTRACTION IN MARKET FOR PAST FEW DAYS IS LIKELY TO END SOON;
FINANCIAL STOCKS LIKELY TO OUPERFORM;

BANK NIFTY continues trading choppy and narrow. The index is at the verge of breakout. We
will discuss a possible trade in the index and SBI. We will do a SWOT analysis on
COMMODITY and FMCG Sector. We will discuss IBULHSGFIN and TATACHEM stocks
with trade. For each of these stocks, we analyse their technical picture; identify trades with stop
loss and target. At the end we will discuss TRADES UNDER CONSTRUCTION in our last
segment REVIEW.

NIFTY WATCH

Narrow range movements continue in the Nifty. Within this narrow range, the markets are
crafting a bullish bias. But, the elephant in the room is the very narrow range movement in the
Nifty.

This narrowing of the range represents contraction. On the daily charts, index is trading within
the range of just 120 points. Such narrow ranges cannot last therefore; we can expect a fairly
large move in the Index which would be expansion.

When markets are in contraction, there is always a possibility that the expansion can be on any of
the two sides – up or down. However, for the fact that prices started the session with a gap up
and closed it on a day’s high, index may favors the expansion on upside.
Financial stocks continue to outperform with Bank Nifty is also at the verge of a breakout from a
narrow trading range. Traders can look for a buying opportunity in Banking and Financial stocks
only on dips and consolidation breakouts.

STOCK MARKET – SPOT PRICE (NIFTY: 9108.30, SENSEX: 29,409.52)

SHORT TERM

Short term trend remains sideways in Nifty but now with mildly bullish bias. We may continue
to see influence of last hour’s rally on tomorrow’s morning session as well. Traders should look
for a buying opportunity.

Potential trade in NIFTY: Buy above today’s high 9111. Or, if opens above this high then apply
15 minutes rule.

The idea is to wait for first 15 minutes to be over. Your entry point will be the high made
between 09:15 to 09:30 AM. If prices cross 15-minutes high, then take a long trade.
Place your stop below today’s low at 9060 in either of above two cases.

INTERMEDIATE TERM

For Intermediate term traders, we do not have a trading view currently therefore, we advise our
readers to wait for the next trading opportunity in the index.

TOMORROW: FOR INTRADAY TRADERS

Intraday price action was narrow in the Nifty but with a bullish bias as prices opened with a gap
up and closed at the highs.

Index may continue to witness this upside surge in tomorrow’s trade too due to last hour rally.
Therefore, traders can look for a buying opportunity above 15-minutes high and put a tight stop
loss to it.

Intraday traders are not advised to trade on the short side; hence do not look for a shorting
opportunity.

NIFTY BANK

Bank Nifty had a narrow range day in the markets; index opened with a gap up and traded
choppy throughout the day. Index made a high just above 21250 and at the end of the day, prices
closed near the highs at 21230.10 with a gain of nearly 200 points. However, index managed to
sustain the gap up which may lead to an up move in Bank Nifty.

On the daily charts, the index is trading inside a range 20450 – 21300 from last month but now at
the verge of a breakout. We are giving a long trade in the anticipation of a breakout in the Bank
Nifty.

Trade in BANK NIFTY: Look for a buying opportunity above 21350.

Or, if opens above 21350 then apply 15 minutes rule.

The idea is to wait for first 15 minutes to be over. Your entry point will be the high made
between 09:15 to 09:30 AM. If prices cross 15-minutes high, then take a long trade.

If that trade executes, place your stop below 21100 in either of above two cases.
TRADES

SBI – [Close (Spot Price): 282.30] – BUY

Intermediate and short term trend is up in SBI. The stock has seen an upside rally and then
started a process of consolidation. Prices have seen a breakout and closed higher. Buy this stock
above 283. If this trade executes then place your stop just below 280 and a target near 290.
 TRADING OPPORTUNITIES

[Strengths: Strong UP relative to Sector Index, Opportunities: emerged out of corrections,

moving towards strength, Threats: Strong down relative to Sector Index, Weakness: Distributing,
moving towards threats]

SWOT ANALYSIS – FOR COMMODITY STOCKS – RELATIVE TO COMMODITY

SECTOR
SWOT ANALYSIS – FOR FMCG STOCKS – RELATIVE TO FMCG SECTOR
TRADES

IBULHSGFIN – [Close (Spot Price): 963.70] – BUY

Intermediate and short term trend is up in IBULHSGFIN. The stock has seen an upside rally and
then started trading narrow. Prices are now at the verge of breakout from its resistance. Buy this
stock above 965. If this trade executes then place your stop just below 950 and a target near 995.
TATACHEM – [Close (Spot Price): 594] – BUY

Intermediate and short term trend is up in TATACHEM. The stock has seen an upside rally and
then started a process of consolidation. Prices have seen a breakout and closed higher. Buy this
stock above 595. If this trade executes then place your stop just below 588 and a target near 610.
 REVIEW

‘Dates mentioned are in DD/MM/YYYY format.’

FINAL WORDS

NIFTY and BANK NIFTY both the indices are trading very narrow and at the verge of breakout.
We may see a big move here. Look for a buying opportunity only.