ANALYSIS DATE: 08-Dec-2023
In this blog we focus on the Nifty, Bank Nifty, and a crucial component of our analysis – the intersector chart analysis.
3-Minute Timeframe:
Let's start with the Nifty and dissect the three-minute time frame. The recent momentum has been nothing short of phenomenal, propelled by positive cues from the political front. We observed a significant gap up, resulting in a remarkable three and a half percent rally throughout the week. Our keen eye on the three-minute time frame led us to wait for a solid breakout in the RSI above 60, which occurred at the end of November.
However, a mild resistance started appearing on the RSI level as it began resisting 60 and soon enough price consolidated. This was an early hint at a potential mild correction. Although the three-minute time frame might indicate a short-lived correction of two to three days, it's essential to note the subdued market activity observed on Wednesday, Thursday, and Friday.
15-Minute Timeframe:
15-minute time frame reveals a negative divergence between price and RSI, suggesting the small correction foretold by 3 minute may last a tad bit longer than the 3 days it has already been out for. Notably, the volume activity has also shown a dip, signaling a temporary rest period is unfolding which is quite normal after the rally we have witnessed.
75-Minute Timeframe:
Advancing to the 75-minute time frame, the decline in volume becomes more pronounced on the 20day/100day volume MACD we use for volume analysis. Despite appearances, this doesn't indicate the end of the rally. The RSI on 75minute timeframe remains extremely bullish, a positive sign for swing traders indicating that the rally has a lot of juice left.
BankNifty:
In Bank Nifty, where a robust rally has propelled it to achieve the first target of 47,350. The second target of 49,500 seems achievable, given the strength of the ongoing rally. The banking sector, despite external influences like government policies, exhibits positive volume and signals for potential buying opportunities.
Intersector Analysis:
Our intersector chart analysis reveals the energy sector emerging as a clear winner, with a 7.44% rally. Additionally, the PSU sector is back in momentum, up by 7%, presenting attractive opportunities. Notable sectors include finance, IT, consumer, FMCG and consumption sector, with the Pharma and Healthcare sectors showing signs of profit booking.
As for our predictions, the daily timeframe for Nifty looks exceptionally bullish, with a revised target of 22,000 from 21,300. Bank Nifty, too, displays strength, with potential buying opportunities if it finds support around 46,400.
Conclusion:
The market overall presents attractive opportunities, and our analysis indicates promising trends in various sectors. However, cautious optimism is advised, especially in sectors showing signs of profit booking. Successful trading involves disciplined adherence to systems and processes. If you're looking to embark on a profitable trading journey, start by becoming a disciplined trader.
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Thank you for reading!
-Kavita Agrawal CMT CFA
