NIFTY Had An Indecisive Week (14 Sep 2014)

NIFTY Weekly Market Index Chart Analysis

The market fell a minor 0.33% this week, and sustained the support line.  However, it is too close to the support line for us to be relaxed.

The weekly candlestick is not a perfect Doji, but it does resemble a Doji.  This is a signal of confusion in an upward trending market.  Volume has risen during the week but range of market movement was relatively small.  The market seems to be gearing up for a bigger move.

Notably, over the past 17 weeks (4 months), the 14-week RSI is forming a bearish divergence to the NIFTY.  This needs to be watched closely, as either the RSI will rise and match NIFTY; or NIFTY will fall and match the RSI.  The divergence has sustained for quite a while now!

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NIFTY Weekly Market Index Chart Analysis

Biocon: Finally Inching Back to Where It Started 9 Years Ago (Sep2014)

Biocon Ltd. Monthly Chart (Each Candlestick represents one month)

Biocon Stock Chart Technical Analysis

Let's look at the long term trend of Biocon prior to charting its current situation.  

Above is the monthly chart since its IPO in 2004.  We can see that if someone invested in the IPO and held on to the share, unfortunately they have not made any profit in 9+ years.  

The current trend has been positive.  The moving 20 & 50 SMA (monthly) (not on this chart) are moving upwards. The 50 monthly SMA has recently crossed the 100 SMA upwards.  Overall the share price has moved upwards since the big fall during 2008 global markets meltdown.

Let's see the dominant trendlines on the monthly chart below.  The current months are where the long term trendlines converge, making it an important time to watch this share.

The stochastics indicator on the monthly chart is oversold (not visible on the chart) and %D has just fallen below the 80% level.  The RSI (not visible on the chart) has also formed a bearish divergence.  This is indicating a correction zone for Biocon, and so we will keenly watch the current rise, and not invest before we can see a clear indication for further rise.

A notable viewpoint is that inspite of uptrending Indian markets and the NIFTY reaching its all-time high, Biocon is still sluggish.  Biocon is zigzag in a fast-rising market, and it gives us a reason to be wary of the further movement of this share.

August made a Doji candlestick, a powerful signal on a monthly chart.  This indicates that the market is largely confused about Biocon's share price.  In September, Biocon has made a good comeback with good volumes.  Let's see if this can sustain.

Biocon has good product lines, including futuristic markets such as manufacturing injectable insulin for diabetics.  This is an ever-growing market and in the long run this share should do well if the company follows solid business practices.

Now let's see what a trader should be doing.

Currently, the entry point is around Rs. 540-550.  Tight Stoploss would be at 510, other Stoploss is at Rs. 460.  Short Target would be Rs. 590-600.  Mid-term target would be 650-680.

Unless price achieves the 540+ level, this share should be watched and not invested.  

On the lower side, Rs. 460 is a point of Resistance-turned-Support. 

The market resisted Rs. 460 for 6 consecutive months (from Dec 13 to May 14), making it s a strong holding point... and now that it has become support we can expect it will hold.

If 460 is broken, then next support is at 410 and then at 375 (Fibonacci Retracements).

Biocon Stock Chart Technical Analysis

Charted on request of Rakesh, New Delhi.