8,800 is likely to act as support for Nifty this week

Nifty closed the day with half a percentage profit. The major contribution has come from Banking stocks after HDFC bank’s FDI limit is enhanced. As per our analysis, Coal India & Asian Paints have reversed the trend. Hindustan Unilever and Idea are showing sign of weakness. These stocks are likely to crack down if the down trend continues.

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Nifty forms Morning Doji Star in the weekly Candlestick Chart

On Friday Nifty 50 Manage to close well above the 7500 mark though the most part of the week was in the high volatile days. Last week Nifty has formed Doji pattern in the candlestick. Dojo was one of the indecisive pattern, this week’s close with big candle body gives clear direction and confidence in the market. With this positive close, Nifty 50 creates Morning Doji Start pattern in the weekly candlestick chart. The Morning Doji Star in one the reliable pattern when it forms in the down trend.

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Finally small and Midcap companies are also giving up

In the year 2015, it was Small & Midcap companies who outperformed the Blue chip companies from Nifty 50 shares. The same happened even with mutual fund companies, where the return from Small & Midcap based funds have outperformed Index based funds.

The Nifty 50 index has closed the year 2015 with negative return of -3.10%. However for the same period Nifty Next 50 and the Nifty Midcap 50 index have given positive return of 9.72% and 3.72% respectively.

Things have changed over the last two weeks trading in 2016. The Small and Midcap companies are going down more than blue chip companies. Year to date, Nifty has given the negative return of 7.69% where as the Small and Midcap index have given negative return of 10.50% & 14.96% respectively. There is a shift in sentiment where the sellers are trying to take money out from profitable trades.

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Nifty buy above 7630 and sell below 7576

On Friday Nifty 50 have formed indecisive pattern in the Candlestick chart. The entire candle was within the previous day’s candle body. It had very small lower and upper shadow. Nifty is still trading below the Island created on Jan 7. The Island level of 7706 may act like a resistance for short term.

Nifty also breaks the multi-year trend line in the logarithmic chart. The trend line from 2008 bottom is current at 7595. Nifty is just closed above that level. It is also crucial to watch for those levels.

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