Technical Analysis
WHAT LIES AHEAD : NEAR-TERM PICTURE
SPOT NIFTY :
On the expiry day, the stock of Reliance Industries gained over 6 per cent, which helped Nifty to close in the positive territory. Nifty went up by 121.20 points or 0.70 per cent today. Banks, financial services, and the auto indi-ces were the only losers in today's market. On the other hand, Nifty Realty emerged as the top gainer with 1.95 per cent. Media, infra and pharma indices inched higher by 1 to 1.5 per cent. All other sectoral indices were able to register moderate gains.
The equity market has clearly given bearish signals. On the monthly chart, the benchmark index closed below the prior month's low and formed a bearish engulfing pat-tern. It formed a lower high lower low candle after April. This is the third such candle since the rally of April 2020. On the weekly chart, Nifty closed below the prior swing low. Though it breached the rising channel support, on Monday, it managed to move above the support level. The benchmark index is trading below all the key moving averages. The 5-EMA acted as resistance for the second successive day. The index failed to close above the prior day high after a short-covering bounce on Tuesday. The 38.2 retracement level (17,595) and the prior day high of 17,600 are important resistance zones. A close above 17,600 will be a positive technical factor for the day, and it can test the levels of 50 per cent retracement (17,713) as well as 61.8 per cent retracement (17,830), which are the next targets. Nifty already made two lower tops and lower bottoms, which is a bearish sign. Unless it closes above the prior swing high of 18,210, we cannot be bullish for the short to medium term. At least it should be out of the downward channel with the highest volume. The FIIs sold Rs 23,037.98 crore this month. Last month also, they sold Rs 25,572.19 crore, which indicates a huge profit booking. If Nifty fails to close above 17,672 in the remaining trading sessions of the month, we can assume the level of 18,604 as the intermediate top.
NIFTY DERIVATIVES:
Nifty Futures declined 379.05 points in November series. During the six-day fall, the volumes increased. The rollovers are very low this month i.e. at 69.49 per cent. Last month, rollovers were at 82.31 per cent. The three-month average rollovers are at 80.42, while the six-month average rollovers are at 80.99. The lower rollover indicates the lack of conviction on the trend. December series PCR is at 1.39, which shows neutral to the negative zone. Next week's PCR is at 1.02. The at-the-money implied volatility for the next month is at 13.15. Because of the low IV, the options’ premiums are not attractive. In the last week of the month, India VIX once again touched the zone of 20 and collapsed at the expiry. In any case, if it closes above 20 in the near term, it will be negative for the market. It is forming higher lows, which is an indication of a rise in volatility.
The total call open interest for the next weekly options expiry is at 4,15,515 and the total put open interest stood at 4,22,675. The 18,000 strikes have the highest open interest of 36,164, followed by 17,600 strikes with 31,850 OI. The deep-out-of-the-money strike 18,500 also has a significant open interest of 28,447. On the put side, the 17,500 and 17,400 strikes have an open interest of 45,583 & 45,343, respec-tively, followed by the deep-out-of-the-money strike 17,000, which has an open interest of 36,691. Interestingly, the long build-up was seen on the call side, and shorts were built up on the put side. Max Pain for the next week is at 17,500 while VWAP is at 17,534.
TECHNICAL RECOMMENDATION
TRIVENI ENGINEERING & INDUSTRIES LTD. CMP 225.90
BSE Code 532356
Target 1 Rs245
Target 2 Rs255
Stoploss Rs205 (CLS)
Current Observation:
•Triveni Engineering & Industries is one of the largest integrated sugar manufacturers in India. It has a market leadership position in the engineering businesses like power transmission, water & wastewater treatment solutions. It is the second-largest sugar manufacturer in India with seven plants. It also has six co-generation plants with a 100 MW grid capacity. The company has established two alcohol plants with 320 KLPD capacity along with two new plants with 160 & 60 KLPD capacities.
• Technically, the stock has broken out of 21-week consolidation with a massive volume. The stock is trading 15.54 per cent above the 50-DMA and 46.55 per cent above the 200-DMA. All the key short and long-term moving averages are trending upside. The relative price strength (RS) is as high as 83. Mansfield’s relative strength is at 3, indicating that the stock outperforms the broader market index Nifty 500. The weekly Elder impulse system has given a fresh bullish signal. It is also above the anchored VWAP resistance. The RSI (68.35) is in a strong bullish zone. The weekly MACD has given a fresh buy signal. The ADX (36.05) shows a solid strength in the trend. Also, it is above the +DMI and –DMI, which is a bullish sign. In short, the stock has registered a bullish breakout with a strong volume.
• A move above Rs 225 is positive, and it can test Rs 245 in the short term. Meanwhile, the medium-term target is Rs 255. Maintain a stop-loss at Rs 205.
REVIEW OF STOCK STRATEGY
We had recommended buying the stock of Lux Industries Ltd at Rs 4,436.45 in issue no. 05 (dated November 22, 2021). Post our recommendation, the stock did not sustain at higher levels and on an intraday basis, it slipped below the stop-loss level but on a closing basis, it has man-aged to close above the stop-loss level. Currently, the stock is hovering around the 13-day EMA level. However, we can expect to see smart upmoves if it closes above its weekly pivot, which is currently placed at Rs 4,401.10. We would advise our readers to hold this stock with a stop-loss of Rs 4,145 on a closing basis as the stock is likely to move higher from the current levels.