Index trend and stocks in action on May 26, 2020
Nifty extended its losing streak for the third week in a row. It started the week with sharp losses and formed a bearish belt hold pattern on the first trading session of the last week. However, thereafter, Nifty recorded three consecutive positive close but it failed to sustain above Monday’s high. Hopes were high by the bull’s camp to extend their winning streak for the fourth straight day on the final trading as a surprise video conference meeting was scheduled by RBI.
RBI announced a rate cut of 40 bps to its lowest level of four per cent. However, as usual, the rate cut did not enthuse the market participants and the markets reacted negatively as the overall tone of RBI on the economy was pessimistic. Bank Nifty ended the week with a staggering loss of 8.26 per cent.
The weekly price action formed a small red body candle with a longer lower shadow and no upper shadow. It fails to qualify as a hammer as the lower shadow does not fit in the criteria of hammer. Technically, the effort to move above Monday's high (9,158) on Thursday failed. The range for Nifty has now shifted in the range of 8,806-9,178. As the range is shifting down and three consecutive lower closing on weekly bars, clearly suggest that the bulls are lacking strength but at the same time, Nifty holding above 8,800 mark indicates that the bulls may be weak but are not completely out of the picture.
An interesting observation is seen on the charts, the 50-DMA has acted as a resistance as since April 30. Nifty has attempted multiple times to move above the 50-DMA but it failed to pierce this level and turned lower. Further, the 50-DMA is in a downward trajectory.
Going ahead, Nifty is placed right at the edge of the trendline support and breach of this trendline support could lead to the test of recent swing low of 8,800. Failure to hold the important support of 8,800 could open gates for further correction. In that case, Nifty could move down towards 8,500 level, which is the lower end of the channel support.
On the upside, Monday’s candle high of 9,158 is a crucial resistance level and moving above this level could lead to test of 20-DMA, which is placed at 9,223 levels.
Overall, Nifty has a strong support placed around 8,800 mark and on the upside, an immediate resistance is placed at 9,158 level.
Aarti Industries: The board of directors of the company approved a premature repayment/early redemption of Rs 40 crore NCDs that were issued and allotted on a private placement basis.
RITES: The company has signed shareholders agreement for acquiring 24 per cent stake in Indian Railway Stations Development Corporation (IRSDC) for Rs 48 crore, with Rail Land Development Authority and IRCON International being the other equity partners.
JSW Steel: Fitch has downgraded the company’s rating. The revision in ratings assigned mainly takes into account Fitch’s expectations of a decline in steel demand in India for the year ending March 2021 (FY21), compared to their earlier assumption of a mid-single digit volume increase, due to the economic impact of Coronavirus pandemic.
ITC: The company has entered into a share purchase agreement (SPA) to acquire 100 per cent of the equity share capital of Sunrise Foods Private Limited, an Indian company, primarily engaged in the business of spices under the trademark ‘Sunrise’.
Birla Corporation: The manufacturing operations at the company’s unit in Birla Jute Mills, Birlapur (South 24 Parganas, West Bengal) have been disrupted on the account of Super Cyclone Amphan, which struck West Bengal on May 20, 2020. The production shed of the jute mills has been severely damaged due to the above cyclone.
HFCL: The company has received a purchase order worth Rs 174.43 crore from a private leading integrator of data networks for the supply of optical fibre cables (OFC) for the construction of Telangana Fibre Grid (T-Fibre) under Bharat Net Phase-II Programme of Government of India.