NIFTY Index Chart Analysis

Indian stock markets seemed to have halted at the lower levels with the effect of the Union Budget 2018-19 petering out by now, followed by the overall weakness in the global markets.  Following the broader markets, the benchmark indices too had gone off their all-time highs after the Union budget rooted for the farmers and the poor, while ignoring the equity investors and leaving them in the lurch. The pessimistic sentiments might last to some extent for some more time as the LTCG tax at 10% is applicable only on the sale of equities after March 31 on only on gains exceeding Rs1 lakh. Moreover, the sell-of at higher levels from the country’s biggest equity contributors—MFs and SIPs—on introduction of 10% DDT on equity was expected. Further, the mixed macroeconomic numbers with simultaneous expansion in services PMI and decline in manufacturing PMI to 51.7 and 52.4, respectively, refrained quicker relief to the markets. The auto sales numbers were relatively higher, but the sudden price hikes after the huge discounts cast a doubt on further sales growth in the short term. The CPI for January eased to 5.07% from 5.21% in December, amid lower food prices. However, the RBI took a wise decision to maintain status quo on interest rates as inflation is expected to remain above 5% in the near future. All said and done, Indian markets needed one significant profit-booking and the aforesaid reasons acted as the triggers. However, the reasonably better corporate earnings have held the markets, for now.

Technically, the monthly time frame on the Nifty, with tremendous profitbooking in February, witnessed oscillators’ negative crossover in the oversold zone. Currently, Nifty has halted at the 23.6% retracement level of the prior upward rally and it is likely to continue till the month-end for some further reversal. Considering the weekly time frame, Nifty should sustain above the 10470 level at least on a closing basis, and above that, 10830 would act as the major resistance level. However, the rising volumes in the falling markets may give some correction, where we hold 10075-10030 levels as the major supports, as below these levels, Nifty would witness a provisional trend reversal to bearish. The daily time frame shows that the current low at 10276 is the upward sloping trendline support level and, thereby, Nifty has bounced back from there. However, the falling volumes and oscillators lying between 30-40 levels do not indicate a bounce back. Moreover, the index has resisted at the 38.2% retracement level for now, which suggests that 10640-10720 is necessary for the Nifty for fresh buying. In this indecisive market, wait and watch and go stock-specific, majorly in mid-cap and small-cap stocks.

STOCK RECOMMENDATIONS

BSE Code : 523261
Target 1 ..... Rs3080
Target 2 ..... Rs3272
Stoploss....Rs2665(CLS)

The stock of Venky’s India is currently trading at Rs2848.05. Its 52-week high/low stand at Rs3046/Rs688.65 which were made on November 22, 2017, and February 10, 2017, respectively. The stock has been trading with higher tops and higher bottoms up to the 52-week high level, which is also its all-time high level. Thereafter, the stock continued with higher bottoms, but it has been witnessing consolidation just below the peak level creating a slightly downward tilted trendline. Even the bottoms have taken support at the upward sloping trendline, making a kind of symmetric triangle pattern on the daily time frame. Recently, the stock attempted a trendline breakout on February 7 at Rs2925, but witnessed a pull back near to the 50% retracement of the prior rally. The stock has bounced back in the recent candle, which depicts a reversal. Once the stock breaches Rs2920, it has a long way to go. We recommend a BUY on the stock.

The stock of L&T Tech is currently trading at Rs1840.65. Its 52-week high and low stand at Rs1547/ Rs671 made on February 12, 2018 and June 13, 2017 respectively, which depicts an uptrend with recent candle trailing at all-time high levels. The stock has formed a pennant pattern on the daily time frame and gave a breakout of the pattern on February 8. The stock witnessed a pullback where the prices entered the pennant. On February 12, the stock immediately bounced back retesting the pennant breakout. The breakout was supported by volume spurt and the 14-period RSI positive crossover above 60 level suggesting momentum. On the weekly time frame too, the stock witnessed a correction in the weeks of Feb 2 and Feb 9, after a huge upside in the week of January 25. However, the correction was up to 50% retracement level. The current week has witnessed a bounce-back. We thereby recommend a BUY in the stock.