Cairn India Ltd - May Drill Good Returns !!!

After hitting the 2 years high at 386, stock price of CAIRN INDIA is moving in downtrend from last 6 months. The current downtrend seems exhausted as stock has reached to the strong demand zone of 255 – 265 levels and Momentum Oscillator RSI is also approaching oversold territory on the weekly chart. A series of ‘positive divergence’ of RSI can be clearly seen in daily chart. If we meticulously observe the prices, we are witnessing emergence of a harmonic pattern named as ‘Bullish AB=CD Pattern’. Here, after the fall from 386 (A point) to 304.10 (B point), price has made the high of 344.40 (C point), which is 50% retracement level of the fall (AB). After that stock is falling and reached to 266 levels (D point), which is near 200% retracement of BC, thus fulfilling all the criteria of ‘Bullish AB=CD pattern’. Apart from that, 100% projection of ‘AB’ from ‘Point C’ is also placed at 263 levels, which shows the symmetry of the pattern is perfect. Since ‘CD’ wave is slower than ‘AB’ wave, chances of trend reversal is high. Thus, one can buy this stock at current levels (262) and on dips to Rs 258 for a target price of Rs 302 - 318. Stoploss for the trade should be placed below 253 levels on closing basis.

Divis Lab Ltd - Striving for Leadership through Chemistry !!!

After making the all-time high of 1888.05, stock price of Divis Lab Ltd has corrected by merely 10% in last week. The trend and momentum is still bullish in the stock as ‘Higher Top Higher Bottom’ formation is still intact and Momentum Oscillator RSI is taking support at 60 levels in weekly chart. At current juncture, we are observing ‘positive reversal’ of RSI in both daily and weekly chart, suggesting a sharp rally on cards.

Yesterday, we have witnessed ‘inside bar’ in daily chart and the narrowest candle in last seven trading sessions (which is known as NR7). The NR7 is a reversal pattern on either side, depending on the following price action. Since Momentum Oscillators and Averages are positively placed, we are expecting upward rally in upcoming days. One can buy this stock on confirmation above Rs 1747 for a target price of Rs 1875 - 1930. Stoploss for the trade should be placed below 1699 levels.

IDFC Ltd

The stock price of IDFC Ltd is trading in a strong uptrend in weekly chart by preserving ‘Higher Highs Higher Lows’ formation. The ongoing upmove seems to be a copy book ‘Impulse and Corrective Rally’ which led the stock to bounce back sharply from some or the other Fibonacci retracement levels.  The best part of this rally is that it is not a vertical rally, which always tends to fizzle out on profit booking (generally a “V” shape rally is followed by a sharp sell-off too). We are also observing the formation of ‘Inverse Head and Shoulder’ pattern in weekly chart, whose neckline is placed at 166 levels. 

Looking at the daily chart, stock price is moving in sideways direction after hitting the 52 weeks high of 166.65. Recently, Stock has given very strong buy signal by sustaining above the ‘rounding formation’ which is made in past seven weeks. On Monday, stock has retested the neckline of the rounding pattern, which also coincides with ’10 Days EMA’, and bounced back piercingly; thus completed three days corrective pattern. Momentum Oscillator RSI is positively placed and has taken support of the breakout trendline in daily chart.  One can buy this stock at current market price of Rs 155 and on dips to Rs 153 for a target price of Rs 176 – 187. Stoploss for the trade should be placed below 149 levels.

Biocon Ltd - Injected for a Short Term Rally !!!

We are witnessing emergence of two harmonic patterns in the daily chart of Biocon Ltd viz Bullish Shark Pattern and Bullish Deep Crab Pattern. Potential Reversal Zone (PRZ) of both the patterns coincides at same levels i.e. 440-444. Thus going forward, 440 levels will going to act as strong support for the counter. A close below 436 will negate the Bullish view on the stock.

Bullish Shark Pattern

Bullish Deep Crab Pattern

Godrej Industries - A Stock for 'Brighter Living' !!!

Bullish Bat Pattern in Weekly Chart of Godrej Industries

Buy Godrej Industries on dips to 285 (CMP : 290) with SL of 280 on closing basis.

Apollo Tyre - Tough Road Ahead

Apollo Tyre (Daily Chart) - Strong Resistance (224 - 227) of Multiple Harmonic Patterns

Bearish view will negate above the close of 230 levels. 

HPCL - Reversal on Cards

HPCL - Bearish Shark Pattern

GMR Infra - Smooth Roads Ahead...!!!

GMR Infra - Retesting of Breakout levels in weekly chart

GMR Infra - Pre-emptive Shark Pattern in daily chart

Stock price of GMR INFRA was moving in sideways direction for two years ending March 2014. The consolidation phase has resulted into formation of ‘Inverse Head and Shoulder’ in weekly chart. Stock has given breakout from the same in the month of April 2014. Before achieving the full target of the mentioned pattern; stock has corrected and reached back to the breakout levels, which is the natural tendency of the pattern. Last week counter has retested breakout neckline, which also coincides with 89-week EMA and started bouncing back after formation of ‘Hammer’ in daily chart. 

On Momentum Indicator front, RSI is moving well above the trendline in weekly chart, whereas we are observing series of positive divergence by RSI in daily chart; indicating reversal on cards.

If we meticulously observe the prices in daily chart, we are witnessing emergence of a beautiful harmonic pattern in daily chart, named as ‘Shark Pattern’. Here, we are projecting the completion of ‘Bearish Shark Pattern’ in daily chart of GMR Infra, the completion of this pattern will be around 36.50 - 37 levels.

As all other indicators and oscillators are moving resiliently in favour of buy side on the counter along with the harmonic pattern, I'm advising traders to go long in the stock at current market price and on dips to 23.75 for the upside targets of 33/36/42. Stop loss for the trade should be placed below 22.85 on closing basis. 

Glenmark Pharma - Reversal on Cards

Bearish Deep Crab Pattern in weekly chart of Glenmark Pharma

Zee Entertainment - Ready for Blockbuster sessions

Bullish Shark Pattern in Daily chart of Zee Entertainment 

Dr Reddys Lab - Need a pill to break 2200

Bullish Butterfly Pattern

Buy at CMP : 2310 and on dips to 2240 for target of 2480-2545 with stoploss of 2200 on closing basis. 

Is Modi Wave over ??

“Hum Modiji ko lane wale hai.. Acche Din aane wale hai..”  - the most popular words in India from last three months. Everything has been saffronied by the Modi Wave.

As anticipated by market, Modi led BJP came into power with full majority. We have witnessed a sharp rally actoss the market. After the election results, we are hearing the targets of 8000, 8400 in Nifty from large foreign as well as domestic institutions. But there are couple of saying which is so common in the stock market.

1.  “Buy on rumors, Sell on news”  

2. “Sell May and go away”

Both the above sayings are contradicting to the bullish view of the institutions, which creates lot of confusion among retail traders. I respect the views and analysis of institutions, but the question is “Will market continues the upmove with same pace or we are heading towards a correction ??” These institutions never tells us about this, and when Nifty comes to 8000 (even after a healthy correction upto 6000) they will speak on air about their mentioned targets.

As per my analysis, the strident rally in Nifty and BankNifty can halt here for a while before the next rally. Here at current juncture, I’m expecting a correction of around 5-7% in Nifty and Bank Nifty. It will be a tough hurdle for Nifty to close above 7550 levels. A close above 7575 will negate the bearish move in the index and a rally towards 8000 cannot be ruled out. In contrary, in this correction, Midcap and Smallcap counters can rally and outperform the broader market.

Now you must be thinking that - on what basis I’m saying all this ??

So, here is the answer – I’m observing Bearish Harmonic Pattern in many Stocks along with Indices.

Before looking at charts, lets discuss what is harmonic pattern ? and how it works ?

Harmonic Patterns are one of the most reliable patterns, if plotted correctly. They are completely centered on Fibonacci numbers. The real beauty of this pattern is that when properly identified, it enables you to enter with the trend in a high probability reversal zone with minimal risk. There are few Fibonacci ratios which are commonly used while identifying harmonic pattern. These are 38.20, 61.80, 78.60, 88.60, 50, 113, 127, 141, 161.80, 200, 224, 261.80, 314 and 361.80. There are many types of harmonic patterns viz BAT, BUTTERFLY, GARTLEY, CRAB AND SHARK.

Below are the self-explanatory chart of Nifty, BankNifty and best shorting candidates : 

CNX NIFTY - WEEKLY CHART : 

BANK NIFTY - WEEKLY CHART :  

KOTAK BANK - WEEKLY CHART : 

ORIENTAL BANK  OF COMMERCE - WEEKLY CHART : 

ACC LTD - WEEKLY CHART :