Weekly Stock Market Update- Technical View

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October 03, 2016

Nifty close 8831 points:The Nifty opened flat but sold off after a dull sideways move for a couple of days. The news of surgical strikes on terrorists launch in pok proved to be trigger for the sharp selloff. Those who exited long as we have been warning for the past few weeks were saved the jitters.

The weekly trendline support (connecting the lows of 6825-7927 points) has been decisively broken and the Nifty came very close to the support area between 8517-8543 points range (it hit a low of 8555 points). Strong weekly support is pegged at 8496 points (in close). As long as this holds the medium term Bulls are safe. There is an expectation that the RBI might announce a rate cut in its policy tomorrow. If this materialises we have to see how far the recovery comes up to. However it the Nifty is unable to sustain above the 8713 level it will be a sign of extreme weakness. The strong resistance area where one should exit long positions is the 8756-8783 points range. Unless and until the Bulls are able to push and hold the Nifty above 8783 points in close the Bears will have the edge in the short term.

From a weekly perspective the Nifty has immediate resistance at 8762 points and the 8809-8832 points range. As long as the Nifty moves and sustains above 8659 points the Bulls stand a chance of regrouping. Support for this week is pegged at 8508 and 8404 points. In short, rallies should be sold into near the above mentioned resistance area and unless and until the weekly resistance zone is crossed in a weekly close the short term bias of the market will be down. If the crucial support level of 8496 is broken in weekly close the Nifty will decline to the 8200-8300 range where strong support is pegged. We expect a bounce till the 4th-6th Oct after which another sell off is likely. If the above supports are broken in it the market could see a low being formed in the 3rd week of this month.

No new stock this week because we expect one more round of selling this month where one can buy..

Update: Wipro Ltd. Cmp Rs.478.95

Wipro did hit the minimum target of 471.25 (actual low 470) thus giving an opportunity to book profits for the shorts by covering their positions.

Update: Bajaj Corp Ltd. Cmp Rs.386.60

This stock hit the SL of 390 and hence long positions were stopped out.

Update: Reliance Comm. Cmp Rs.46.35

This stock made a high of 48.80 and a low of 42.10 and finally settled at 46.35 (-3.13%) thus hitting the short term SL of 47. The medium term SL of 45.25 is still intact but it would be prudent to exit in any rise and wait for the next panic to buy this stock.

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