NIFTY Index Chart Analysis

Nifty At Decisive Levels, Stay Stock Specific 

Finally, the Indian benchmark index Nifty succeeded in hitting its major multiple resistance at the 10630-mark. The index bounced back from its decisive support at 9950 level with baby steps northwards to hit its bullish reversal at 10630. Fading geopolitical tensions of trade war and expected benefit for the emerging markets from the US-China trade war boosted Indian stock markets to trade in the positive direction. Another big global anxiety has been the rising crude oil prices. OPEC and Russia’s decision to cut production and the insufficient US shale production to meet the rising demand resulting in declining inventories together led to a rise in crude oil prices, which is expected to lead to a double digit growth in crude import bill in FY19. 

India also felt the heat of the rising crude prices, specifically the oil marketing companies. Moreover, crude's higher weightage in the inflation index was the second biggest worry. However, CPI eased to a five-month low at 4.28% in March as against 4.44% in February. This was because of controlled food prices. Even WPI edged down to 2.47% in March from 2.48% in February. On the contrary, IIP came in at 7.1%, driven by better industrial activity. Despite lower manufacturing PMI, the adjusted Nikkei India composite PMI output rose to 50.8 from 49.7, offset by higher service PMI and job creation hitting 7-year high. The overall recovery in the numbers depict growing macroeconomic stability, which would be reflected in the corporate earnings for both Q4FY18 and FY18. Further, the favourable monsoon expected this year would be an icing on the cake for the markets.

Technically, after consolidating at the higher levels since April 18, Nifty hit the 10630 level twice, but could not sustain on a daily closing basis. However, sector-specific or stock-specific moves have refrained Nifty from a successful breakout, and hence, we expect immediate bounce in the coming sessions. In case Nifty sustains above 10630-10640 levels on a closing basis, we hold 10705 as the immediate resistance. If 10705 is easily hit after 10630, we hold 10850-10950 as the next immediate resistances. While giving a 10630-level resistance breakout, Nifty also broke out of its rounding bottom pattern, which holds 11175 followed by 11310 as the targets for the Nifty. The chances of Nifty correcting heavily from the current levels look remote. However, considering the comparatively lower volumes at the decisive level and the flattish RSI, Nifty may take some profit-booking at the current levels. We hold 10515-10455 as the supports, followed by 10355. The level of 10280, followed by 10200, would act as medium term supports. However, such a correction would be majorly for a better jerk on the upside. 

STOCK RECOMMENDATIONS 

GRANULES LTD.......... BUY............... CMP Rs 111.05 

BSE Code : 532482
Target 1 .. Rs 120.50
Target 2 ..... Rs 131.50
Stoploss....Rs 102.50(CLS) 

The stock of Granules India is currently trading at Rs 111.05. Its 52-week high and low stand at Rs 157/Rs 101 made on May 18, 2017 and March 26, 2018, respectively. Considering a weekly time frame, the stock has been trading in a kind of horizontal channel pattern with higher price band ranging from Rs 150-160 while the lower price band is near Rs 101 level. The Rs 101 level also acts as its resistance-turned-support level. The stock consolidated for a while at the support level and also its 200-day EMA level and has bounced back. Considering the daily time frame, the stock is seen falling with lower tops and lower bottoms since January 15, 2018. After hitting a bottom at Rs 101, it bounced back and broke its consolidation since April 4. The stock also gave immediate resistance breakout at Rs 110.50. This was supported with volume spurt and the 14-period RSI crossing 55, which suggest momentum going forward. 

HINDOIL EXPLORATION LTD.......... BUY.......... CMP Rs 127.10 

BSE Code : 500186
Target 1 ..... Rs 138
Target 2 ..... Rs 143
Stoploss....Rs 117 (CLS) 

The stock of Hindoil Exploration is currently trading at Rs 127.10. Its 52-week high/low stand at Rs 153.75/ Rs 66.65 which were made on January 12, 2018 and August 11, 2017, respectively. The stock corrected from its 52-week high up to Rs 97.50 level on March 8, when it hit a hammer pattern. The Rs 97.50 level is near to the 61.8% retracement of its monthly previous upward rally. It surged thereafter with slightly higher tops and higher bottoms, where the bottoms took support at an upward sloping trendline. The stock hit above its two major resistances at Rs 123.40 and Rs 126.35 and consolidated for 9 trading sessions. On April 24, the stock broke out of the consolidation and hit the Rs 129-mark. The volumes are justifiable and the 14-period RSI is trailing at 62, which depicts momentum. On broadening the daily chart, the formation from its provisional low at Rs 97.50 also forms a kind of inverse head & shoulders with breakout at Rs 127-128 levels