BY JAY THAKKAR
AVP- TECHNICAL AND DERIVATIVES RESEARCH, ANAND RATHI SHARE AND STOCK BROKERS
Where Are We? The Nifty is all set to close in the positive territory for the month of December and with that it is likely to post a positive monthly close for the fourth consecutive month. With this positive close there is a high probability that the monthly momentum indicators will provide a bullish crossover almost after six months and this may bring the good sustainable move for months to come. Nifty is right now near a breakout/resistance level of 12400 levels.
What Is In Store? Nifty on the monthly charts has formed a rising wedge kind of pattern which indicates that the index has a resistance in the near term at 12400 levels. This also indicates that the Index will once attempt to touch the upper end of the range. Hence, 12400 is the near term target for the Index. The index has been forming higher tops and higher bottoms on the daily charts and the immediate support is pegged at 12100 levels. So, the range for the first weekly expiry of 2020 is 12100-12400 levels.
As per Elliott wave theory, Nifty is trading in its fifth wave up which has a short term target of 12400. There will be further extension of the fifth wave only if Nifty manages to close above 12400 levels else post that there can be multimonth correction to consolidation in markets. Above 12400, there will be a big breakout in the index which can take it above 13000 levels as well however failing to move beyond 12400 will lead to a correction.
The momentum indicator MACD is well in the buy mode on the daily and weekly charts and in this month it is likely to provide a buy crossover on the monthly charts as well which can be a game-changer for the bulls. It may lead to a major breakout. It is the monthly MACD that is indicating that there will be a breakout above 12400 levels; however, one has to wait for the price to confirm the same.
What Could Investors Do? Based on the above observations, the traders and investors should closely watch whether the Nifty is able to take off 12400 levels or not as above those levels there will a huge rally i.e. multi-month rally but on the flip side if Nifty is unable to surpass 12400 levels then there can be a decent correction in markets, hence the traders or investors should trail their stop losses to 12100 for any long positions on Nifty. Jubilant FoodWorks and PVR are looking good on charts for the short term for an upside of 4-5% in the near term. Kansai Nerolac and VIP Inds are looking good for the Investment in 2020 for the target of 50%-60% in 2020.
Source: Economic Times