Index trend and stocks in action on July 20, 2020

After moving back and forth in a range during the mid-week, the bulls found its mojo back and surged higher. As a result, the index continued its upmove for the fifth straight week.

In the process, it filled two gaps i.e., the downward gap of March 13 and the upward gap of July 10. Nifty gained about 1.2 per cent for the week while, the broader markets underperformed the benchmark index as Nifty Mid-cap and Small-cap ended with a minuscule loss of 0.07 per cent and 0.32 per cent, respectively.

The last day’s buoyancy helped Nifty to close above the 200-DMA and for the first time, it closed above 10,900 since March 6, 2020.

In the last trading session, Nifty formed an opening white body Marubozu, while on the weekly scale, it formed a hanging man candlestick pattern, which is signaling exhaustion of an uptrend. With different candlestick patterns in the daily and weekly chart, as daily has a bullish candle and the weekly candle indicates a pause, the opening of Nifty on Monday and the action thereafter, would be crucial to watch out.

As Nifty trades above the short and long-term moving average, we would recommend the traders to be with a bullish bias. Meanwhile, the sign of exhaustion would be confirmed only if the index manages to close below 10,562 levels. On the upside, the level of 11,000-11,280 is likely to act as a resistance zone.

Nifty registered a new swing high, but the 14-period RSI is much below the swing high of July 7. However, the trend strength indicator ADX is showing strength as on the daily chart, it is 29 and the directional continues in buy mode as +DI continues above -DI.

Overall, the trend remains in favour of the bulls as Nifty has closed above 200-DMA and the recent consolidation range but the formation of hanging man candlestick pattern on the weekly scale is not giving any comfort. Hence, the traders are advised to trail stop losses for long positions.

M&M Financial Services: The board of directors of the company approved 1:1 rights issues at Rs 50.

Glenmark Pharmaceuticals: Glenmark launches the world's first hypertension awareness symbol, endorsed by Association of Physicians of India (API) and Hypertension Society of India (HSI).

Cadila Healthcare: Zydus Cadila receives final approval from USFDA for Butalbital, Acetaminophen and Caffeine tablets.

Vodafone Idea: The company has paid a further sum of Rs 1,000 crore to the DoT towards the AGR dues. The company had earlier deposited Rs 6,854 crore in 3 tranches. The company has thus paid an aggregate amount of 7,854 crore towards the AGR dues.

NLC India: The company has informed that the payment of the principal of commercial paper on account of the maturity has been paid.

Selan Exploration: With a view to mitigate the challenges arising due to COVID-19  and to ensure further oilfield operations, the company has decided to scale down operations. The impact of these actions will be felt in FY 2020-21, with possibly lower production and profitability.