Index trend and stocks in action on September 07, 2020

After making a rhythm of closing above the previous week’s low for almost 14 weeks, in the last week, the bears landed its first major blow after Nifty formed a bearish engulfing pattern on the weekly time scale and also, closed below its prior week low.

Nifty ended the week down with a net loss of 2.69 per cent while Bank Nifty index lost a staggering 6.17 per cent for the week. Bank Nifty had formed a ‘dark cloud cover’ on the weekly time scale. So, both the indices had formed a bearish reversal candlestick on the weekly time scale.

On the daily chart of Nifty, clear pieces of evidence of the bearish sentiments are visible as Nifty closed below the 21-EMA for the first time after almost three months. This moving average acted as a line of support for the bulls during this upward journey. Further, Nifty has breached the lower end of the rising channel, and now, it has reached a very important level, which is the zone of 11,300-11,330.

If we recall, since July last week, there was a tough fight between the bulls and bear around the zone of 11,300-11,380 wherein the bears were not letting the bulls to conquer this zone but at last, the bulls pierced the territory with a decent upmove that was seen thereafter. Now, the bulls will give it all to save this zone. Hence, the level of 11,300 would be crucial to watch out on a closing basis.

As a close below this would clearly mean that the weakened bulls have surrendered to the bears and the gate for further correction would be opened. The correction may extend towards the level of 11,086 as the 50-DMA is placed at this level.

On the upside, immediate resistance is placed in the region of 11,400-11,430, followed by a major hurdle at 11,560.

An interesting observation is witnessed on the RSI. On the 14-period daily RSI after a loud move on the downside, the range shift is being witnessed as the RSI turned down from the level of around 60. Also, it has moved below the prior swing low. Directional indicators have seen a bearish crossover as –DI has crossed over +DI. Further, with two distribution days added during the week, the total count of distribution days now stands at five, which is a cause of serious concern.

The bear’s which looked extinct at the onset of the last week are now on the forefront with the formation of a bearish reversal pattern on the weekly time scale and breakdown of the channel support. Now, all eyes would be on the level of 11,300 as this is a make or break level for the index.

Ratnamani Metals: The company has received two domestic orders, aggregating to Rs 190.00 crore in the carbon steel division of the company for the supply of coated CS pipes for the oil & gas sector to be completed between December 2020 and June 2021.

Bharti Airtel: Airtel changes entertainment forever; launches Airtel Xstream Bundle.

HDFC: HDFC disburses subsidy to over 2,00,000 first-time homebuyers under PMAY-Credit Linked Subsidy Scheme.

Endurance Technologies: Based on the eligibility certificate from the Maharashtra Government, the company is entitled to a cumulative incentive of Rs 466.39 crore under the Package Scheme of Incentive (PSI). Out of the eligible incentive, the company already accounted for Rs 128.93 crore until the quarter ended in June 2020.

Dilip Buildcon: The company has been declared as an L-1 bidder for the new HAM project in Bihar.