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The year 2014 has seen a 6‐year breakout in equities, an ideal setting for what could possibly be a multi‐
year bull run in the making. The trend this year has been buying on every dip and the same is likely to
continue for a long time to come. Index in 2014 has seen a breakout from an ascending triangle pattern
and also from a cup & handle pattern. The implications of breakouts on monthly charts are not only going
to continue for many months, but many years as well.
All signs point towards a perfect trait of a bull market. Set up of higher tops and higher bottoms and
sectoral rotation post the 6‐year breakout has helped the index sustain at new tops.
Nifty was in a declining curve for most part of 2013 with rallies faltering near long‐term bearish resistance
line on monthly charts. Even successful breakouts on weekly charts proved to be whipsaws. But the
spectacular rally from March 2014 (low of 6,216) has been one sided with no meaningful correction.
From March 2014, Nifty has witnessed short time corrections and shallow price corrections thus depicting
the underlying strength in the current movement.
Historically, October has been a negative month for the Indian market, but this time was noticeably
different. The rising trendline since March 2014 on the daily chart provided strong support, reinforcing
solidity in the index. There was lot of pessimism when Nifty touched 7,723 in October 2014 during the
down thrust but a spectacular pull back above 8,180 has brought the bullish bias back.
Events of the last nine months, especially the broad based participation post the breakout of 6,300 at the
top and thereafter base building activity between 7,450‐7,850 has changed the overall structure of the
market. As long as the index sustains above 7,450 levels, the positive bias will prevail. Moreover, the index
is moving within the context of rising channel on the daily chart and within that channel it is consolidating
within a bullish Inverted Head & Shoulders pattern.
The amplitude of the triangle breakout mentioned earlier and the breakout projection corresponds to
target of 10,300 within 18 months. Based on the above mentioned observations, the bullish structure
has more legs on the upside. Bull markets tend to go through period of corrections and consolidation,
but the larger trend will continue to remain on the upside.
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