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 :