July 31, 2015

Weekly Technical Report

RETAIL RESEARCH

Nifty

Perspective

8532.85

Bearish

Support
8321 - 8260

Resistance
8655 - 8700

200 Day EMA

8260

Stock Pick
-----------

The uprun is over for now; fall towards 8,000 eyed...

Observations:

[Last weeks Indications are in Italics]

Weeks action formed a hammer candle pattern but the placement of the candle is not encouraging for the bulls; if the
bulls want to perform then they have to clear 8655 levels.
Last week we said that the level of 8655 would be the lower top or we could top out below 8700 which has happened
now. [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 the earlier said bullish leg (Projected from 7950 to8650/8700) has completed or is likely to
complete below 8700 (Close) and index could correct initially to 8000 and later extend to 7500 or lower].

RETAIL RESEARCH

1|P ag e

 Now the level of 8655 is confirmed lower top and exactly in line with our expectations; index had fallen last week with a
five wave decline which is worse for the market.
In our daily Technical Corner (Internal Mailer) we had clearly mentioned that 8655 to 8321 is the first leg of selloff
(Clear five wave decline) and before breaching below 8300 mark index could attempt to cover the Gap of 8492 8520
(witnessed on last Monday) then the next selloff could begin.
Now its over and next falling leg could begin anytime from the CMP or below 8655. This could be iii which is expected
to be very dynamic hence disastrous in a down move. Our initial target is 8,000 mark before August expiry.
Actually last weeks truncated wave c has provided a clear picture of lower top; any truncation in prevailing wave (trend)
could lead to larger opposite wave (trend). In the case of Nifty the rise from 8195 to 8655 was a truncated move which has
opened up the larger bearish leg. As an effect of this, index has lost 333 points in the 1st leg itself - 8655 to 8322. Dont be
greedy driven by the current recovery as it was anticipated as a counter trend move.
Overall the earlier expected bearish leg has started and index could correct initially to 8000 and later extend to 7500 or
lower. Both price and time clearly indicate the same picture.
This view (Wave count) would come under threat if Nifty closes above 8655 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 has formed a right shoulder of the larger Head & shoulder pattern.
Now all we require for second confirmation of larger bearish picture is index should slide with one more five wave decline
(sharp selloff) before violating 8655. If one more five wave decline happens then dont expect zigzag a-b-c correction
because index has already moved above 61.8% of 1st leg (8655 to 8321) which is not allowed in zigzag. For this we need
some strong negative news in a week or two which may be RBI Policy 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 is minor wave c of major wave
ii and this completes the entire wave structure. Nifty has already started major wave iii which could be more dynamic
in nature in which the fall from 8655 to 8322 is internal wave i of minor wave i of major wave iii and the rise from
8322 to present level is internal wave ii of minor wave ii of major wave iii.
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.

RETAIL RESEARCH

2|P ag e

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
Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not
to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information
contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from
time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other
services for, any company mentioned in this document. This report is intended for non-Institutional Clients
This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other
parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams (Institutional, PCG) of HDFC Securities
Ltd.
Disclosure by Research Analyst: Research Analyst or his relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also
Research Analyst or his relative or HDFC Securities Ltd. or its Associate does not have beneficial ownership of 1% or more in the subject company at the end of the
month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does
not have any material conflict of interest. Any holding in stock - No
Disclosure by Research Entity: HDFC Securities Ltd. may have received any compensation/benefits from the subject company, may have managed public
offering of securities for the subject company in the past 12 months. Further, Associates of the Company may have financial interest from the subject company in
the normal course of Business. The subject company may have been our client during twelve months preceding the date of distribution of the Research report.
Research analyst has not served as an officer, director or employee of the subject company. Research entity has not been engaged in market making activity for
the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report.

RETAIL RESEARCH

3|P ag e