Index trend and stocks in action on February 17, 2020

In the last week, Nifty consolidated in 256 points range and finally closed the week with miniscule gains of 0.12 per cent or 15 points. The price action of the week resulted into a formation of long-legged doji at multiple resistance points and it failed to close above the previous week’s high.  Prior to the last week, there were two very high trading range week where Nifty traded in a range of 583 and 546 points. After the high range weeks, Nifty mostly consolidated with almost half of the prior week’s range and formed an indecisive candle.

Even though Nifty managed to close with gains of almost 15 points in the last week yet during the week, majority of the candle formation were bearish in nature with an only exception being on Wednesday, where Nifty formed a long bull candle. Further, major and highest weightage sector in Nifty, Banking and Financial services were weaker than the benchmark index Nifty. This indicates divergence between these two indices.

During the last week, one common occurrence was that at every rise; profit booking or long unwinding was witnessed. On Friday, Nifty closed below 50-DMA and furthermore, the 50-DMA has tiled down, which means the short to medium-term trend is in a downward momentum.

The RSI on the daily chart is quoting around 51, however, it is still moving in a downward channel. The stochastic oscillator is in extreme overbought condition. The daily MACD is bullish and trades above its signal line. But, it is reflecting some deceleration in the current momentum. ADX is down at 14.34, which indicates the strength of the trend is not clear.

Going ahead, the range of 12,000-12,250 is a very crucial range and we expect Nifty to trade in this range before taking any directional move.

RITES: RITES Limited has emerged as a successful bidder for the supply of locomotives, coaches and Diesel Electric Multiple Units (DEMUs) to Cape Gauge country. RITES has submitted price bid for the contract amount of around Rs 680 crore and discussion on contract documents are expected to conclude soon.

Dr Reddy’s Laboratories: USFDA determines the formulations of Duvvada (Andhra Pradesh) manufacturing unit as Voluntary Action Initiated (VAI).

Hero Motocorp: The ongoing issue of Coronavirus (Covid-19) in China has affected the supply of some components to the company's manufacturing facilities in India. This is likely to impact their planned production by around 10 per cent in the month of February. However, the wholesale dispatches of their vehicles to the dealers during the month remain unaffected. Any further impact on the production will depend on the developing situation in China.

Cadila Healthcare: Zydus Cadila launches a fast-tracked programme to develop vaccine for the novel coronavirus, 2019-nCoV (COVID-19).

Granules India: USFDA completes inspection at Granules India’s Hyderabad facility.