Index trend and stocks in action on September 02, 2020

Given the strong sell-off that was witnessed on Monday, Tuesday’s session was a litmus test of 21-day EMA, which has acted as a Laxman rekha for the bulls in the recent past.  

With the bears having an upper hand going into Tuesday’s, it was nothing short of a miracle that the bulls managed to defend the 21-day EMA and the 21-day EMA lived up to its reputation. Now the million-dollar question is does it mean, Nifty is out of the woods? Let’s find out more by analysing the price action of Tuesday’s session.

After opening the session with a gap, the movement thereafter was like a roller coaster ride. However, the price closed near to its open level and this led to the formation of a ‘long-legged Doji’, which clearly indicates that there is indecision between the buyers and the sellers. Further, this ‘long-legged Doji’ formed within the high-low range of the prior gigantic bearish bar, was an inside bar in pure price action terms.

Looking at the price action, one would argue that there was no follow-up action by the bears after a massive sell-off that as even the prior day low was not even tested once throughout the day. However, like every coin has two sides, each price action bar has a two side story from a buyer and seller’s perspective. So, if we view it from the perspective of a seller, despite a strong gap-up, the sellers never gave away their dominance, which they had gained in the prior session as the price was not able to pierce above the 50 per cent level of the gigantic bearish bar. And, on the lower time frame i.e. 60-minute chart, Nifty stayed below the 20-hourly moving average throughout the day and the trajectory of the 20-hourly moving average is downward.  Further, we spotted a bearish flag pattern on the 60-minute charts. So, this clearly reflects that even though we have not seen any kind of follow-up selling by bears but the bears haven’t yet called it a day and they still stand a good chance to strengthen their dominance once the level of 11,330 is breached.

Going ahead, we are heading into an interesting day of trade where both the bulls and the bears are sensing that they have a chance. The bulls stand to regain their lost strength if they move above the 11,550 levels and stay above this level throughout the day. While on the other hand, it would mean curtains for the bulls if the bears pierce and close below the 11,330 level. There is going to a tough fight between the bulls and bears between the zone of 11,330 and 11,550, and a breach on either side would pronounce the dominance of one party. Hence, keep a close watch on these levels and trade accordingly.

Cosmo Films: The board of directors has approved resuming further investment into the new line for specialised BOPET film at Aurangabad (Maharashtra), which was on hold since November 2018. The revised project cost will be Rs 300 crore and will be financed through a mix of internal accruals and loans. The commercial production will commence by Q2 FY2022-23.

Embassy Office Parks REIT: The board of directors has approved the issuance of debt for an aggregate amount of Rs 2,000 crore at such terms and for such quantum as determined by the designated Debenture Committee.

Adani Green Energy: The company ranked as the largest solar power generation owner in the world.

Atul Auto: The company has announced the sales figures for the month of August 2020. The company has sold 1,311 vehicles during August 2020, 64.38 per cent lower as compared to 3,681 vehicles sold during August 2019.

Hero MotoCorp: The company sold 5,84,456 units of motorcycles and scooters in the month of August 2020, a growth of 7.55 per cent over the corresponding month of the previous year (August 2019) when it sold 5,43,406 units.