Index trend and stocks in action on January 31, 2020

Nifty opened the session in the green only to witness a fresh round of selling at higher levels. Thereafter, it stayed under pressure for the entire session and it ended the session near the low. At the end, Nifty lost 0.86 per cent to close below 12,050.

The price action formed a sizable bearish candle and we anticipated that we had a trending day, which is usually seen post the formation of NR4 pattern. The range of the day was almost of 140 points which was greater than the ten-day average range. Out of the two up trending channels, Nifty has already broken one and currently, the index is on the verge of breaking the second one as well. For the last week or so, we have been cautioning our readers about the mistrust rally as Nifty was unable to move above the lifetime highs and oscillating in the range.

Nifty decisively closed below 50-DMA and now, six distribution days in the past six weeks means the ongoing uptrend is clearly in danger. The leading sectoral index-Nifty Bank has already broken down the head and shoulder pattern with a sloping neckline, which is a very bad sign to the market. The out-performance of the mid and small-caps have once again turned negative. The market breadth is negative. And most importantly, the selling from FIIs again picked up the momentum. These developments before the Budget are not desired.

Even though, technically, Nifty did not make an intermediate lower low, the current down swing is the highest retracement among the recent down swings. Nifty retraced more than 78.6 per cent of the prior upswing. The leading indicator RSI has broken down the descending triangle and confirmed the negative divergence. MACD reached below the zero line and the histogram is suggesting that the pickup is in bearish momentum. In any case, if it closes below 12,000, it is likely to be a nightmare for the bulls. The meaningful support is placed at 11,929. If it breaks on the eve of Budget, the market will experience a bigger fall. On the positive side, if it is only above 12,270 then, we can hope for the bullish trend to continue further.

Kotak Mahindra Bank: Reserve Bank of India (RBI) accepted promoters' voting rights in the company to be capped to 20 per cent of paid-up voting equity share capital until March 31, 2020.

Majesco: The company's US subsidiary Majesco has entered into a merger agreement, with InsPro Technologies Corporation (Inspro), a US-based software leader in the life and annuity insurance market. In consideration for the merger, Majesco shall pay the sellers USD 12 million, subject to adjustments (including cash and certain debt of InsPro), upon the closing of the transaction.

PNC Infratech: PNC Infratech said that its bid for the EPC contract in Haryana worth Rs 639 crore stands cancelled, as NHAI has re-invited bids for the said project from eligible contractors. The company was the lowest bidder when it received the contract.

TVS Motor: The company is set to launch TVS Apache RR310 BS-VI 2020 motorcycle with Next Generation Technology (NGT).

NOCIL: The board of directors has approved a scheme of amalgamation of Suremi Trading Private Limited and Sushripada Investments Private Limited with National Organic Chemical Industries Limited (NOCIL).