Weekly Technical View - GEPL Capital

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Weekly Technical View
Date : 12 August, 2013
BSE Sensex 18789
NSE Nifty 5565
Bearish Trend further gets confirmed with a Death Cross registered on Nifty daily charts. We
maintain a bearish view and a target of 5445 and lower over the coming few weeks. Any bounce back
seen from present levels may likely be very short-lived. The trend would remain weak till Nifty
trades below 5950.
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Bearish trend on the Nifty aggravated last week as it resumed its decline on Tuesday after remaining very range bound on Monday. It finally
concluded the week with a loss of 2% at 5565. Amongst the sectoral indices the BSE Metal and IT indices were the outperformers whereas
BSE CG and CD indices were hit the most.
In our previous report we had a sell recommendation near 5700 to 5780 range with a stop loss of 5950 for a downside target of 5425 and
below that 5240 was seen as a possibility. Nifty made a high of 5721 last week and succumbed to selling pressure and declined to as low as
5486 to conclude the week at 5565. This week we continue with our last week’s sell recommendation. The overall trend continues to
appear weak despite a possibility of a counter Trend bounce back till 5630. The medium term charts continue to appear bearish with a
breach of key Trend line support (Trend line connecting the swing lows of 4770 and 5477). Nifty has also breached a vital Trend line support
on the monthly chart (Trend line connecting every major swing low since the end of 2008 till date). Additionally there is a confirmation of a
“Death Cross” on the daily charts as the 50 Day MA has triggered a sell by registering a bearish breach of 200 Day MA. The Death Cross
appears relatively later in a trend and acts as a lagging indicator of the trend but its considered to be a reliable indicator with relatively
very few whipsaws, however one instance of a whipsaw of this indicator did occur in the latter half of 2012. In the immediate term the
level of 5630 would act as a stiff resistance for Nifty as it is the resistance offered by a Trend line connecting the recent lows of 5477 and
5566. Till the time Nifty trades below 5630 the bearishness would continue to persist and Nifty may yet again slide down till 5486 to 5445
range. The level of 5445 is the equality of the entire decline from 6229 till 5566 when projected from the recent lower top of 6093. This
level also coincides with a support offered by a Trend line connecting the lows of 4531 and 4770. Traders need to watch the level of 5445
for support. If that level is respected we may expect a possible reversal, else the index may decline to as low as 5240 and below that 5044
is a possibility. We maintain a bearish outlook on Nifty and continue to advice traders as well as investors to protect their capital with strict
risk management mechanisms like limiting their long exposure to minimum and trailing stop losses.
GEPL Capital Pvt. Ltd | Rajesh Manial | +91 22 66142686 | rajesh@geplcapital.com

EQUITY | F&O | DP | COMMODITIES | MUTUAL FUNDS | INSURANCE | DEBT | IPOs | PMS | WMS | LAS | CURRENCY DERIVATIVES
Weekly Technical View
Date : 12 August, 2013
Actionable:
• Nifty appears to be trading at a very important Juncture with the bears having an upper hand. Positional Traders can continue to hold
the bearish bets created last week near 5700 with the same stop loss of 5950 as of now. There is a risk of losing a larger trade if the
stop loss is trailed lower and it gets triggered in a whipsaw, as a favorable reentry for a short trade may or may not come by
depending upon the structure of any bounce back that may be seen. The target for the short positions is now revised to 5050.
• Aggressive traders who trade frequently may however trail their stop loss to cost i.e. 5700 and hold the position for the target of
5450.
• Long only traders are still suggested a wait and watch approach for a few weeks before committing any capital on the long side.
GEPL Capital Pvt. Ltd | Rajesh Manial | +91 22 66142686 | rajesh@geplcapital.com