Index trend and stocks in action on January 20, 2020
Nifty started the last week on a positive note and it continued to rise as the week progressed. During this process, the index registered a new life high. However, throughout the week, Nifty traded in a narrow range of about 110 points. With this narrow range trading, Nifty formed a small body bull candle. The entire week saw Nifty ending up by 0.78 per cent on a weekly basis. Meanwhile, the broader markets were altogether in a different orbit as the Nifty mid-cap rose for the ninth consecutive day and Nifty small-cap rose for the seventh consecutive day and jumped 3.95 and 3.82 per cent, respectively, thereby, outperforming the benchmark index.
As we expected earlier, our near term targets of 12,350-12,400 have reached now. And we have seen the momentum waning and this has resulted in the formation of indecisive bearish candles at an all-time high levels in almost two trading sessions out of the last three sessions of the week. This clearly reflects that the momentum on upside, is coming down every day and the market participants are hesitant at the higher levels.
On Friday, Nifty formed an inside day as the price traded in high-low range of Thursday’s trading sessions, further, it was a NR4 bar which means a narrowest range out of the last 4 bars. Thus, Friday session had an ID/NR4 pattern. This pattern indicates a day with low volatility and small range. And according to Toby Crabel, low level of volatility is often followed by a sudden increase in volatility and a directional move. Hence, the high-low of Friday’s session will be closely monitored by the traders.
The gap which was formed on January 9 is still pen and the area of 12,132-12,045 would act as a key short-term support for the current upmove. While on the upside, the level of 12,400 is a stiff resistance and Nifty will have to move past this level convincingly, in order to attempt a sustainable breakout going ahead.
Overall, the trend is upward but the momentum is waning and as long as Nifty trades above 12,270, it will continue with positive bias. Any close below 12,270, may lead to a reasonable correction initially to the gap area of January 9. The Q3 earning will continue to be a highlight in the coming week and can trigger stock specific movements.
Lupin: Lupin said that it has received five observations from the US health regulator after inspection of its Visakhapatnam facility in Andhra Pradesh.
PNC Infratech: The Company bagged order worth Rs 639 crore from National Highways Authority of India (NHAI).
ITI: board meeting on January 22 to consider and approve price band for FPO.
Mercator: The Company has sold its Floating Storage and Offloading Unit (FSO) Ship - Prem Pride, built in 1999, for a total consideration of Rs 49.54 Crore and the proceeds of which is used to reduce the debt of the company.
Godawari Power & Ispat: Chhattisgarh Environment Conservation Board granted its consent to operate the rolling mill with a capacity of 4,00,000 tonne per annum and iron ore beneficiation plant with a capacity of 10,00,000 tonne per annum.