Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : 

The week began on a dismal note as investors remained cautious on consistently rising crude prices. However, the session on Tuesday was a decent one for the markets as the market snapped its losing streak. But in the very next trading session, the stock market came under selling pressure as Indian rupee weakened to 18-month low against the US dollar, which pushed the country’s 10-year bond yield to 7.87%. The benchmark indices have for now halted near their provisional support levels, while the broader markets are at their crucial support levels. The broader markets continued to underperform the benchmarks and maintained a negative bias. Sectorwise, realty and metal tumbled the most, shedding more than 5%, while IT was the top gainer, surging by over 2%. Technically, our benchmark index Nifty took support at 50% retracement of the prior relief rally from 9951.90 on March 23 to 10929 on May 15. If the bounce was due to short covering, we hold 10415, followed by 10325 (61.8% retracement level) as the immediate supports. The levels of 10180-10000 are the crucial support levels. Nifty has taken a double support just above 10415 level, and hence, if the bounce sustains, we may see Nifty hitting the resistance levels at 10615-10630, followed by 10735. 

NIFTY DERIVATIVES: 

The Indian Volatility Index (VIX),a gauge for the market’s short term expectation of volatility, plunged 7.20 per cent and settled around 13.14. Nifty May 2018 futures closed at 10522 at a premium of 8.15 points over spot closing of 10513.85. Nifty June 2018 futures closed at 10533 at a premium of 19.15 points over spot closing of 10513.85. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 1.02 for May month contract. 

Among Nifty Calls, 10,500 Strike Price from the May month expiry was the most active Call. Among Nifty Puts, 10,400 Strike Price from the May month expiry was the most active Put. The maximum OI outstanding for Calls was at 10,800 strike price and for Puts, it was at 10,500 strike price.

LEGEND : 

EMA – Exponential Moving Average.
MACD – Moving Average Convergence Divergence
RSI – Relative Strength Index 

STOCK STRATEGY 

INFOSYS................. BUY ................ CMP Rs 1222 

BSE Code ...... 500209
Target 1 .... Rs 1280
Target 2 .... Rs 1300
Stoploss ... Rs 1170(CLS) 

✓ Current Observation: The stock, after registering a swing high of Rs 1214.40 on April 23, 2018, entered into a corrective phase. The correction halted near about its 34-day EMA. 

✓ At present, the stock has witnessed breakout resembling the ‘ascending triangle' pattern. Along with the sizeable bullish candle, it adds further strength to the set-up. 

✓ The stock is trading above its 21-day and 50-day EMAs, which is positive for the stock. 

✓ The 14-period RSI on the daily time frame is trading above the 60-mark and is on a rising trajectory. 

✓ The level of Rs 1170 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 1280-1300. 

✓ Conclusion: Considering the breakout of ascending triangle-like pattern and the stock trading above its important short term moving averages, we recommend buying this stock for a target price of Rs 1280-1300, with a stop loss at the level of Rs 1170. 

REVIEW OF STOCK STRATEGY 

We had recommended our readers to buy the stock of Bajaj Finserv Ltd at Rs 5566.40 in issue no. 31 (dated May 21, 2018). The stock delivered healthy performance on the topline as well as profitability fronts, which led to the upmove in the stock price. We had recommended our readers to book profit in the stock at Rs 5755 on May 22, 2018, through our SMS service. We hope all our readers have profited from this recommendation.