Finance minister Nirmala Sitharman presented her maiden budget on Friday, 5 July 2019. The economic survey 2018-19 revealed that to become a $5 trillion economy by 2025, India needs to sustain a GDP growth rate of 8%. Chief Economic Advisor K V Subramanian expects FY20 GDP growth at 7%.
Nifty Long Term
Last seven weeks has been broadly sideways. Election results day to Budget day, NIfty not able to make any net progress on the upside. As I have articulated ( here & here ) it will be difficult going ahead and the possibility of correction is much higher.
- The weekly candle is a “Shooting Star”. A reversal pattern found at the top of an uptrend.
- Even though this week Nifty closed higher in the last three weeks, the RSI is still under negative crossover.
- PPO negative crossover is slowly accelerating. Negative for prices.
Nifty Intermediate Term
Markets have taken the Budget day negatively and responded with a 1%+ correction on Friday.
- The Nifty Friday daily candle has formed a “Bearish Engulfing” pattern. Price has engulfed the last four days advance in a single day. Bearish at the top.
- RSI is reversing below the 50 mark and STO negative crossover from the overbought zone.
- PPO negative crossover just above the zero line.
- The nifty retest of 11650 possible next week.
Nifty Short Term
Budget day selloff violated the uptrend channel and also closed below the 11840 support/resistance zone.
- Nifty correction to 11650 +/- zone likely next week.
- Again a range play between 11650 to 11850 possible but given the lack of any fresh trigger for the market to take cue after the Budget, a breakdown has a high probability.
Nifty and AD line breaking down simultaneously is a negative omen for the whole market. As I have repeatedly pointed out in the last one month, Nifty is being held up by a handful of large-cap stocks while everything else is falling apart.