Index trend and stocks in action on June 18, 2020

The 50-share index, Nifty, ended the wobbly day with miniscule loss. Throughout the day, there was a strong tussle between bulls and bears but the index settled the day near its opening level.

The price action of the day formed an indecisive doji candle. A doji is formed when the index open and closes approximately around the same level. Also, if we compare Wednesday’s bar with Tuesday’s bar, Wednesday’s bar had a lower high and a higher low than its previous bar. This resulted into a formation of an inside bar and the daily range was confined to 170 points and this was the narrowest range, out of the last four bars.

Thus, there is a formation of ID/NR4 pattern and US commodity trader, Toby Crabel identified that this pattern is an objective criterion for determining the day of decreased range and volatility. Once an ID/NR4 is found, we trade the breakout as volatility resumes. The formation of this pattern just ahead of the current derivative series is a clear sign that we are likely to see a volatility expansion phase on the expiry day.

On the hourly time frame, the index is trading within the rising channel and a break below 9,835 level would result into the breakdown of the rising channel. On the downside, Nifty may test its 20-DMA while, on the upside, the zone of 9,990-10,045 is likely to act as a resistance level.

The daily 14-period RSI is below 60-mark and it’s below the nine-period average and on the hourly timeframe, the RSI has witnessed breakdown of rising channel. The MACD line is below the signal line. This resulted in the histogram entering into a negative zone and this condition is not good for the bulls.

All-in-all, Nifty is set for an eventful weekly expiry and the 20-DMA on the downside is likely to act as a support for the index.

BEML: Mining company, BEML Limited, flags off last train set for Kolkata Metro (East-West) Project.

UPL: Jai Shroff, Global Chief Executive Officer of UPL Limited says, “We are pleased that the government has considered the representations made by the stakeholders and welcome the decision of allowing the exports of 27 proposed products. We remain confident that the government will take a pragmatic approach and permit the sale of these products in domestic markets too as these provide cost-effective solutions to the farmers thereby, ensuring stability of the food supply chain.”

Karnataka Bank: Karnataka Bank launches health insurance to cover COVID-19 pandemic.