Index trend and stocks in action on August 31, 2020

On the last trading day of the week, Nifty opened gap-up in line with strong global cues and it extended its upmove for the sixth straight day.

At the closing bell, Nifty surged 88 points to end at 11,647.60 levels. The price action of the day formed a bullish candle with a gap-up opening.

During the last week, Nifty performed well and also, hit a fresh six-month high. It rose 276 points or 2.42 per cent and its range for the entire week was of about 275.40 points. On the weekly chart, Nifty formed a bullish candle, carrying a higher high and higher low as compared to the prior bar.

During the last six trading sessions, Nifty has gained almost 335 points and in these six trading sessions, every day, the index has opened with gap-ups. However, if we look at the range of the daily bar size i.e. high to low, its spread has been narrow.

Hence, it can be seen that in the last six trading sessions, five candles have a spread of below 10-day average spread. The trend of the index remains in an upward trajectory as we have seen the formation of a higher high and higher low. The upward march of the index is more due to the gap-ups.

With the recent rise and narrowing range bars, we would advise the traders to follow a strict trailing stop-loss for the long position as there is no signal for short-selling unless the index closes below the prior bar and forms a lower high.

Among the momentum indicators, the daily 14-period RSI has entered into an overbought territory for the first time after July 28, 2020. The stochastic oscillator is also trading in the overbought zone.

For the day, the gap area of August 28 (11,603-11,574) is likely to act as immediate support and on the upside, the level of 11,740-11,800 is likely to act as a resistance.

CG Power & Industrial Solutions Ltd: The board of directors to consider fundraising as well as securities' trough issues on a preferential basis up to Rs 100 crore, in accordance with the applicable laws.

Reliance Industries Ltd: Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries Limited, has announced that it is acquiring the retail and wholesale business as well as the logistics and the warehousing business from Future Group amid going concerns on a slump sale basis for the lumpsum aggregate consideration of Rs 24,713 crore, subject to adjustments as set-out in the composite scheme of arrangement. 

Cyient Ltd: The company has signed a definitive agreement to acquire a 100 per cent stake in the integrated Global Partners Pty Limited (IG), an Australia-based technology consultancy company.