It is advisable to short this market by making use of rallies with a stop of 11,000
What a turnaround of events! After showing strong resilience to the sell-off in global markets, Indian equities witnessed intense selling pressure. The Nifty breached levels of 10,800, while the Sensex fell nearly 700 points.
Global markets took a beating amid fears of a slowdown in developed economies such as US and China.
Apart from global cues, index heavyweights were under pressure, which dragged the indices lower too.
Technical experts believe that Friday's fall appears to have set the tone for a short term downswing with a top in place at a recent high of 10,985 levels. Hence, it is advisable to short this market by making use of rallies with a stop of 11,000.
Big News:
Over the course of weekend, the goods and services tax (GST) council met and announced some tweaking of rates for a few products.
The GST Council, headed by Finance Minister Arun Jaitley, on Saturday slashed rates on 17 goods and six services, such as televisions, movie tickets, video games, among others, restricting only 27 items in the highest tax slab of 28 percent. New rates will be applicable from January 1, 2019.
Apart from reducing rates, the Council also rationalized and made clarifications related to certain goods, a move that is expected to boost consumption. Essentially, the 28 percent slab will mainly consist of demerit goods such as aerated drinks, tobacco products and automobile and auto parts, generally considered as luxury goods.
“The 28 percent (tax) bracket is moving towards a sunset,” Jaitley said.
Apart from demerit and luxury goods,the Council, the highest decision-making body under the new indirect tax regime, kept rates on cement, dishwashers and air conditioners unchanged.
Technical View:
The Nifty lost half a percent during the week due to sharp correction on Friday and formed Inverted Hammer kind of pattern on the weekly scale.
This single day’s fall changed the picture on weekly charts which depicted a Shooting Star kind of formation with a long upper shadow. Hence, if the index trades below 10,738 in next session for atleast one hour then it shall again resume its downtrend.
Hence, it is advised that traders short this market by making use of rallies with a stop of 11,000.
On the downsides, selling shall get further accentuated if Nifty decisively breaches 10,700 levels with an initial target of 10,463.
Max Call OI: 11,000, 10,900, 11,200
Max Put OI: 10,500, 10,700, 10,600
Technical Recommendations:
We spoke to 5nance.com and here’s what they have to recommend:
Gruh Finance | Recommendation: Buy | TP: Rs 347| Stop-loss: Rs 305 | Upside: 5%
Zee Entertainment | Recommendation: Sell | TP: Rs. 430 | Stop-loss: Rs. 470 | Downside: 4%
Graphite India | Recommendation: Sell | TP: Rs. 770 | Stop-loss: Rs. 830 | Downside: 3%
The author is the Founder and CEO of 5nance.com
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.
