July 25, 2015

Weekly Technical Report

RETAIL RESEARCH

Nifty

Perspective

Support

Resistance

Volatile

8498 - 8315

8668 - 8700

8521.55

200 Day EMA

8255

Stock Pick
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Bearish Confirmation Awaited

Observations:

[Earlier Indications are in Italics]

Weeks action formed a small bear candle with reasonable volumes which indicates bulls are losing their momentum and
bears may perform in the short term.
Earlier we had indicated that index is heading towards 8670 8700/more which was almost attained; high made was
8655. It seems that index has completed the rising leg and the level of 8655 is slight lower than our projected target due to
truncated wave c. [Overall our short term bullish stance is intact for the targets of 8670 - 8700 and slightly above and
No Alternates are Visible].

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 Index has formed/ has been forming an ending diagonal or rising wedge (Bearish Reversal) [Ref. Page 3] in last rise i.e.
wave c and also it is truncated wave c (Strong bearish sign).
Any truncation in prevailing wave (trend) could lead to larger opposite wave (trend), in the case of Nifty; last rise has
truncated move (so far) which could open up the larger bearish leg.
We may be little early to call the top at 8655 but it is necessary to exit before correction begins, index may revisit 8655 but
Nifty may not close above 8700 mark. If we move below 8450 then the chance of revisiting 8655 would reduce further and
we could slide down initially towards 8000 mark.
Overall the earlier said bullish leg has completed or is likely to complete below 8700 (Close) and index could correct
initially to 8000 and later extend to 7500 or lower.
This view (Wave count) would come under threat if index closes above 8700 mark.
To validate this view we have enough technical confirmations: first of all we have not seen any impulse/five wave advance
in the last rise from 8195 to 8655, second the last rise has formed a diagonal formation, third price is trading below 61.8%
of entire fall from 9118 to 7940 and wave c did not test 100% projection level of wave a & b which is failure c, fourth
index is finding resistance at broken channel (Red line) and broken distribution pattern line (Blue Line)[ref. arrow]. Last
index was in the progress of forming right shoulder of the larger Head & shoulder pattern.
Now all we require for confirmation of larger bearish picture is index should slide with five wave decline (sharp selloff).
For this we need some strong negative news in a week or two which may be US FED announcement or any other
domestic/global news.
As per our wave count: Index has completed a five wave decline from the high of 9119 to 7940 which is marked as major
wave i. The three wave upward rise from 7940 to 8655 is marked as major wave ii. This major wave ii was sub
dividing into a zigzag i.e. a-b-c (5-3-5) in which the rise from 7940 to 8423 is minor wave a of major wave ii and the fall
from 8423 to 8195 was minor wave b of major wave ii. The rise from 8195 to 8655 or up to 8668 is minor wave c of
major wave ii and this completes the entire wave structure. We are waiting for the major wave iii which could be
more dynamic in nature.
Cycle degree wave count follows: The high of 9119 is some larger degree wave end. As per our preferred count Cycle
degree wave iii/C has ended at 238.2% projection level of wave i/A & wave ii/B. The cycle degree wave i/A started
from 4531 level and ended at 6229 and wave ii/B started from 6229 and ended at 5118. The dynamic wave iii/C
started from 5118 and ended at 9119 with a couple of extensions. And now index is in progress of cycle degree wave
iv/X down. We have marked 9119 as cycle degree top in Mar 2015 when index was around 8850.

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S&P CNX Nifty Daily

Observation:
Clearly visible ending diagonal or rising wedge in the last rise i.e. wave c.
Price is exactly at the lower line (red line) of the pattern and could breach immediately or index revisit 8655 once again
and then it may breach.
Wave c has not moved above 61.8% of last major fall and is also below 100% projection level of last two internal legs.

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Technical Research Analyst: Gajendra Prabu (gajendra.prabu@hdfcsec.com)

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East),
Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com
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