Technical

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : Nifty has lost 257.20 points or 2.22 per cent since last Thursday close. It formed a doji candle and protected the Tuesday’ low. The stock price has filled the gap of 23rd September and also tested the 20th September closing levels. The Nifty retraced and is, currently, taking support at 38.2 per cent level of last week’s huge surge. The RSI is moving in a range that is facing resistance at 65 levels and holding support at 52 levels. 

The Stochastic oscillator is giving bearish indications. In the coming days, a move below the levels of 11,300 will indicate further weakness in the market. It may test the consolidation breakout levels of 11,181. In any case, if it falls below the level of 11,181, then, it can go on to test levels of 11,060 on the downside. However, a closing below the levels of 11,060 and sustains within the previous consolidation range will create some kind of bearish stance on the overall market. The market breadth has been continuously negative and FIIs did not stop selling in the market. On the other hand, if the low of 11,247 is protected and Nifty moves above the 11,418 level on a closing basis, then, the benchmark index may test the level of 11,543, which is 61.8 per cent retracement level of down move which began in the early part of June. RBI policy is due on Friday, and hence, Nifty may witness a high volatile session. So, keep positions light and follow strict money management rules. 

NIFTY DERIVATIVES: Nifty future lost about 208 points or 1.8 per cent since the last weekly expiry. The Open Interest rose by 5.25 per cent that indicates that the shorts were built up in the market. The Open interest wise Put-Call ratio for next week is 0.83 that indicates the market is in a neutral zone. The rollovers were at 4.63 per cent in the first week of derivative series. The total call open interest is at 78,42,225 and the put interest is at 64,72,350. The maximum call open interest is at 11,500 and 11,400 strikes. On the Put side, the highest open interest is seen at 11,200 and 11,000 strikes. The call writing is witnessed in all the strikes, and on the put side, most of the strikes have long build-up. As the RBI policy is scheduled to be announced on Friday, the market may witness high volatility. A day before the monetary policy, the India VIX rose by 5.64 per cent. It may rise further tomorrow. The current derivative data indicates the max pain is placed at 11,350. As expected, a high volatile day applies long straddles and strangles with limited risk and unlimited profit potential.

STOCK STRATEGY
HINDUSTAN PETROLEUM CORP. ............ BUY ................. CMP Rs323.10
BSE Code ...... 500104
Target 1 .... Rs350
Target 2 .... Rs360
Stoploss .... Rs305 (CLS) 

✓ Current Observation: Country’s largest oil market company has entered into an uptrend with recent price action.
✓ After falling from Rs. 494.70 to Rs. 158 during September 2017 to October 2018 period, the stock of Hind Petro recovered 50 per cent. Since October 2018, the stock is making higher highs and higher lows.
✓ Currently, it is trading near the prior pivot level and forming a long ascending triangle kind of pattern. The volumes have been increasing for the last few days.
✓ The stock is also trading above the short and long term moving averages. The RSI is in the super bullish zone and above the prior swing highs. The MACD line is above the zero and signal lines on daily and weekly charts. The momentum is picking up on the upside.
✓ The relative price strength (RS) has climbed up to 89 mark and the buyer's demand suggests that the institutional investors are accumulating the shares.
✓ Buy this stock at Rs. 323.10 with a stop loss of Rs. 305. The target is placed at Rs. 350-360. 

REVIEW OF STOCK STRATEGY 

We had recommended our readers to buy the stock of Reliance Industries Ltd at Rs. 1296.60 in issue no. 49 (dated September 30, 2019). Post our recommendation, the stock moved higher in line with our expectation and went on to touch the level of around Rs. 1342. We had given a ‘Book Profit’ message at the level of Rs. 1322.85 through our SMS service on September 30, 2019. Thus, investors who had taken positions according to this strategy would have made decent profit