Technicals

WHAT LIES AHEAD: NEAR-TERM PICTURE



SPOT NIFTY: Indian stock markets are at their provisional decisive levels where the benchmark index Nifty is trailing at its multiple resistance and temporary trend reversal level of 10,630. Apart from the April F&O expiry, the corporate earnings which kicked off with the IT majors have kept the markets going in otherwise lull conditions. Better than expected results from Infy, TCS pulled up the IT sector which counterbalanced the subdued banks and weak metals during the period. All-in-all, Nifty remained range bound with intraday volatility. Broader markets remained lethargic to negative during the session.

Technically, after reversing from its major support at 9,950 levels, Nifty bounced back with gradual steps and steadily broke its first major resistance at 10,478 during mid-April. Meanwhile, apart from 200-day EMA, Nifty surpassed 100, 50 and 21-day EMA level too with the resistance breakout. However, since April 17, the index is seen consolidating at 10,630 levels with relatively lower volumes and 14-period RSI trailing in the zone of 60-65.

Going forward, above 10,630-10,640 on a daily closing basis, we hold 10,705-10,735 as immediate resistances followed by 10,800-10,850. On the contrary, if Nifty retreats from the current levels, we hold 10,535-10,475 as the immediate supports, followed by 10,400-10,375. The level of 10,295 will act as the next support.

NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge of market's short-term expectation of volatility, decreased by 2.98 per cent and reached 12.03. Nifty May 2018 Futures closed at 10,622.85 at a premium of 5.05 points over spot closing of 10,617.80. Nifty June 2018 Futures closed at 10,629.10 at a premium of 11.3 points over spot closing of 10,617.80. The Nifty Put Call Ratio (PCR) Open Interest wise stood at 1.14 for May month contract. 

LEGEND : 
EMA - Exponential Moving Average
MACD - Moving Average Convergence Divergence
RSI - Relative Strength Index

STOCK STRATEGY

TATA GLOBAL BEVERAGES ................ BUY ............CMP Rs.291

BSE Code: 500800
Target 1: Rs.315 Target 2: Rs.330
Stoploss: Rs.277(CLS)



Current Observation: The stock has witnessed a spectacular rally from the lows of Rs 114.25 per share and has went on to touch a high of Rs 328.75. After registering a high of Rs 328.75 in the month of January 2018, it entered into a corrective phase.

The stock has formed a strong base around the levels of Rs 250-252 on a weekly time scale which is 61.8 per cent retracement level of the down move.

At present, the stock has moved above the recent swing high, which is neckline of double bottom pattern. The stock is trading above its 50-day and 100-day EMAs.

The 14-period RSI on the daily time frame is on a rising trajectory and above the 60-mark which is positive for the stock. The level of Rs 277 is likely to act as a strong support and this could be maintained as a stop loss for long positions. On the upside, the stock is likely to touch the levels of Rs 315-330.

Conclusion: Considering that the stock has moved above the neckline of the double bottom like pattern and that it is trading above 50-day and 100-day EMAs, we recommend buying this stock for the target price of Rs 315-330, with a stop loss at the level of Rs 277. 

REVIEW OF STOCK STRATEGY

We had recommended our readers to buy the stock of Coffee Day Enterprise Ltd at Rs 311.80 in issue no. 27 (dated April 23, 2018). Post our recommendation, the stock moved in-line with our expectation along with robust volumes.

We had advised our readers to book profit at Rs 326 through our SMS service. We hope all our readers have benefited from this recommendation.