Technical Analysis
WHAT LIES AHEAD : NEAR-TERM PICTURE
SPOT NIFTY :
Nifty witnessed higher intraday ranges during the last five trading sessions. During the last week, it traded in the range of 445 points. Finally, it gained just 99.05 points or 0.63 per cent and settled at 15,790.45.
Two massive bars of bullish & bearish moves were witnessed in the last five trading sessions. An attempt to make a new lifetime high was missed by just 6 points. Nifty formed an inside bar on the monthly expiry day. Even on the weekly timeframe, the index traded within the last week's range. Nifty needs to move above 15,863 for a bullish continuation move. In any case, if it fails to move upside and declines below 15,673, it will be a bearish confirmation for an inside bar.
On a weekly basis, a close below 15,450-431 zone support is a big negative for the index. Nifty witnessed some of the decent pullbacks from the lower levels and has shown an inherent strength. While every pullback is short-lived, the premonitions about the upmoves are growing. For the last four weeks, Nifty traded in the 450-point range. Some of the volatile intraday moves hit the stop-losses on both sides. As India VIX is at the lower levels, short-term trading has become unfavourable. Only a decisive close above 15,895-903 can give a fresh buying opportunity. As mentioned above, a move below 15,673 is negative. Avoid trading in this zone.
NIFTY DERIVATIVES:
Nifty Futures gained 456.45 points or 2.97 per cent in June series. On most of the days during this month, the volumes recorded were below average. During the last five days, it gained 97.85 points or 0.62 per cent and settled at 15,790.
For July series, the put-call ratio (PCR) is at 1.39. The PCR is a little lower side compared to the beginning of June series (1.52). For the next weekly expiry, the PCR is at 0.89. The rollovers were seen at 73.22 per cent, which is below the three and six-month average. The three-month average is 75.08 while the six-month average is 76.12. At the beginning of the new series, July Futures contract shows a 59.5 per cent increase in the open interest. The VIX is down by 1.74 per cent today and closed at 15.10. Besides, on the last expiry day (June 17), it was at 15.29.
The total call open interest is at 2,67,718 for the next weekly expiry while the total put open interest is at 2,37,044. The maximum call open interest is at ATM strike of 15,800 with 27,366 OI while 16,000 strikes have an OI of 26,928, followed by 16,100 strikes with 26,330 OI. On the put side, the maximum open interest is at 15,700 strikes with 21,382 OI. The 15,600 strikes and 15,800 ATM strikes puts have 18,839 and 16,836 OI, respectively. The 16,100 and 16,150 strike calls have seen short built-up as OI has increased by 148.5 per cent and 279 per cent, respectively and the prices declined. From 15,450 to 16,150 strikes of puts have seen short build-up. Max Pain for the next weekly expiry is at 15,800 while the VWAP is at 15,790.
TECHNICAL RECOMMENDATION
STOCK STRATEGY
DIXON TECHNOLOGIES (INDIA) LTD..................BUY ................... CMP Rs 4,547.20
BSE Code : 540699
Target 1 : Rs 4,950
Target 2 : Rs 5,100
Stoploss : Rs 4,320 (CLS)
Current Observation:
✓Dixon Technologies is a leading electronic manufacturing services (EMS) company in India. The company manufactures televisions and sub-segments of the electronic industry. It provides focussed solutions to consumer durables, home appliances, lighting, mobile phones, as well as security devices to domestic & global clients. It also provides refurbishment and repair services for a wide range of products, including set-top boxes and mobile phones.
✓Technically, the stock has broken out of a 10-week cup & handle pattern. For the last two weeks, it recorded above-average volumes. The stock meets the majority of CANSLIM characteristics, as its relative price strength (RS) is at 84 while EPS strength is at 97. The higher volume confirms the accumulation in the stock. The institutional investors have increased their stake in the company while the number of institutions invested in the company rose to 283.
✓William's A&D indicator shows an increased accumulation. After taking support at 50-DMA, the stock has bounced, trading at a new lifetime high. As a result, all the short and long-term moving averages are trending ups. ✓On a daily chart, after breaking out of an ascending triangle, it retested and moved higher. The weekly MACD is about to give a buy signal. The ADX (52.30) shows very strong trend strength. Buy this stock in the zone of Rs 4,455-Rs 4,555, with a stop-loss of Rs 4,320 on a closing basis. Besides, its short-term target is placed at Rs 4,950 - Rs 5,100.
REVIEW OF STOCK STRATEGY
We had recommended our readers to buy the stock of Berger Paints Ltd at Rs 820.40 in issue no. 35 (dated June 21, 2021). Post our recommendation, the stock has witnessed a minor correction along with low volume. The correction is halted near the 20-day EMA level. Currently, it is hovering around our recommended price. However, we can expect to see some smart upmoves if it closes above the level of Rs 835. We would advise our readers to hold this stock with a stop-loss of Rs 770 on a closing basis, as the stock is likely to move higher from the current levels.