Nifty report from Rohit Gadia, CapitalVia Global Research

Nifty Future is showing sign of reversal from its short term correction after it found support around well expected level of 7700. Momentum too on the upside has picked up significantly. The level of 7700 being a cluster of few key technical evidence, like 40 day moving average is placed around there and being the origin of a gap in daily chart is likely to act as a pivotal level going forward.

The signal of a potential trend reversal was evident during the last two trading session of previous week when market failed to move lower in its multiple attempt after breaking below the intraday low. Today’s price action validates the same. Today’s strong and large real body of the candle stick pattern in its daily chart is enough reason to brings cheers amongst the traders with bullish view. However, a move above 8000 will be the deciding factor to view the current leg up is the resumption of its medium term up trend.

In today's trading session Nifty opened with gap up after a brief consolidation during closing session of last trading session. A gap being the imbalance of demand and supply offers important clue regarding support and resistance. We expect the level around 7770-80 being the origin of the gap in intraday chart to offer good support in future if market revisits the level in case of short term correction. Traders who missed the rally today is likely to be active around this level too.

On the upside the short term supply is expected to come around 7940-50, positional trader should look for partial profit booking around this level. As multiple supply is visible in quick succession starting from 7940 till 8000 fresh long is advisable only above this key resistance level of 8000 mark. Multiple technical evidence is supporting to the view that the chance of breaking 8000 mark is extremely high.

Fourth quarter earnings that have come in so far look positive to in line. The Nifty fifty companies growth on year on year basis comes something around 11-12 per cent. And one can expect to earning downgrade cycle to put an end. Once more numbers will come this view is likely to confirm further. And if this happen to be case, would be a key positive for the market. Stock specific as market seems picking up its momentum staying with large cap will be prudent. TCS in its daily chart is in strong uptrend. If it manages to move above the level of 2530 the stock is likely to move till 2580. Traders are advised to maintain a stop below 2495 to control risk in adverse situation.

By Rohit Gadia, Founder & CEO, CapitalVia Global Research