Index trend and stocks in action on June 01, 2020
The first three weeks of the month of May was completely dominated by the bears as every rise was met with selling. Even the news of the stimulus package-Atma Nirbhar Bharat Abhiyan failed to lift the sentiments of the bulls on D-Street. However, the third week of May turned out to be a hammer like pattern but it was not a perfect text book pattern as the lower shadow was lesser in comparison to the text book specification.
The formation of hammer like pattern on the weekly chart provided the foot in the door to the bulls and the bulls came back with a vengeance in the last week of May as Nifty registered a gain of six per cent.
The weekly price action formed a bullish closing Marubozu candlestick pattern. A bullish closing Marubozu candlestick pattern is a single tall bullish candle with no upper wick as the prices closed at the high of the day but has a lower wick.
Nifty has now closed above 62 per cent retracement level of the downswing, which started from April 30-May 18. Further, on the daily timeframe, the index has moved above 20 and 50-DMA, which is giving a positive outlook for the near term. However, both the moving averages mentioned are still flat to down trending. These two moving averages need to turn to the upside for trend confirmation.
Talking about the indicators, the MACD line is above the signal line. The 14-period RSI on the daily timeframe has marked a fresh 14-period high and also, the RSI is almost at the prior swing high but the price is 3 per cent away to the swing high. Going ahead, it is important to see whether the RSI moves above 60-mark or not. A move above 60-mark would further induces a bullish momentum in the index.
On Monday, in any case, if Nifty moves above Friday’s high of 9,598.85 mark, it would attempt to fill the gap of May 4. While on the downside, an immediate support is seen around 9,330-9,300 mark.
Since Nifty has jumped over 550 points in the last three trading days, it would be prudent for the traders to avoid aggressive buying at higher levels since there are chances that we might see a phase of consolidation before the next leap forward. On the other hand, short sellers should wait for creating a fresh short position as only a close below 9,300 mark, would give us the first sign of reversal.
Lemon Tree: The board of directors of the company has given an in-principle approval to raise funds up to Rs 150 crore, either through right issue, preferential allotment or qualified institutional placement (QIP). The management will evaluate the proposal to raise funds and present the same before the board of directors to consider and approve the timings, quantum and the mode of raising the funds.
NLC India: NLC India Ltd has issued and allotted 10,000 no. of commercial paper of a face value of Rs 5,00,000 each, aggregating to Rs 500 crore. The fund will be utilised to meet the standalone KK business operation requirements of the company.
Dr Reddy’s Laboratories: The company has informed the exchanges that they have received an EIR from USFDA for API Srikakulam Plant (SEZ), Andhra Pradesh, indicating that the inspection is ‘closed’.
Yes Bank: Yes Bank acquires approx. 24.19 per cent in Dish TV through invocation of pledged shares.
Kalpataru Power Transmission: The company has entered into a definitive agreement with India Grid Trust, an infrastructure investment trust, acting through its trustee and investment manager, to sell its stake in Jhajjar KT Transco Private Limited (JKTPL).