TECHNICALS
WHAT LIES AHEAD : NEAR-TERM PICTURE
After reacting positively to the robust macroeconomic numbers, Indian stock markets witnessed consolidation at record high levels. This was in the wake of investors’ provisional transition to major commodities from equities. Crude oil prices surged ahead of their three-year high levels amid flat production at 32.41mbpd by OPEC in December, apart from protests in Iran. Gold hit new highs with demand pick-up from domestic jewellers, supported by overall strong global trend, amid weak US dollar. Further, the markets remained cautious ahead of the Q3 corporate earnings season kicking-off. In the near-term, corporate earnings, inflation numbers are estimated to hit 5 per cent plus which would drive the markets. While in the medium-term, Union Budget followed by State elections would drive the markets. Apart from the benchmark indices which surged 1.5 per cent from December 4, the broader markets too ended in green. Mid-cap closed 1.2 per cent up, while Small-cap index outperformed with 2.4 per cent gains. Barring Power and Auto which closed flat, all other sectoral indices ended in the green zone, where Realty was at the forefront with 7.9 per cent gains. From the start of January 2018, FIIs have been net buyers, while DIIs have sold some positions. Market bias for now remains positive. Technically, Nifty has kind of consolidated at the peak level, creating a kind of triple top pattern in the daily time frame, where Nifty could not sustain the peak on a closing basis. However, justifiable volumes and 14-period RSI downward sloping trend line breakout at 67 levels portrays some room for the Nifty to grow in the future. With this, we hold our major near-term supports at 10600-10590 followed by 10500. Markets rose for three consecutive sessions, followed by three-day consolidation, which can be treated as a prolonged breather. Achieving 10660 on a closing basis, we hold 10750-10800 as our major resistance. Considering a broader view, Nifty is in its sixth consecutive weekly upbeat zone with no signs of reversal for now. We hold 10950-11000 as our major resistances. On the contrary, if Nifty falls for its most-awaited correction, we hold 10400, followed by 10240 as supports.
LEGEND : EMA – Exponential Moving Average. MACD – Moving Average Convergence Divergence RSI – Relative Strength Index
STOCK STRATEGY CG POWER .................................. BUY ................................. CMP Rs. 97
BSE Code ......500093 Target 1 .... Rs.109 Target 2 .... Rs.115 Stoploss ... Rs.89.50(CLS)
Current Observation: On the weekly time scale, after registering a low of Rs 39.25 in the month of February, 2016, the stock has entered into a sequence of higher high and higher low. The stock hit high of Rs. 97.40 in the month of May, 2017 and entered into a corrective phase. The stock retraced about 50 per cent of the up-move.
✓ At present, the stock is nearing breakout of rounding structure and a sustained move above Rs. 97.50-98 would confirm the pattern.
✓ On the daily time frame, the stock is trading above its important short-term moving average i.e. 21-day EMA.
✓ The level of Rs. 89.50 is likely to act as a strong support and this could be maintained as a stop loss for the long positions.
✓ On the upside, the stock is likely to touch levels of Rs. 109-115.
✓ Conclusion: Considering that the stock is nearing a major breakout and is trading above its important short-term moving average, we recommend buying this stock for target price of Rs. 109-115, with stop loss at Rs 89.50 level.
REVIEW OF STOCK STRATEGY
We had recommended our readers to buy the stock of VIP Industries Ltd at Rs 360.75 in issue no. 12 (dated January 08, 2018). The stock moved higher post the breakout and went on touch the level of Rs 373. We had given a ‘Book Profit’ message at the level of Rs 371.65 through our SMS service on January 11, 2018. Thus, investors who had taken positions according to this strategy would have made decent profit.
Your Technical Portfolio Guide
IDFC BANK CMP: Rs. 68.55 BSE Code:539437
I bought IDFC Bank at Rs 65. Does it have any potential upside? - Krishna Mundada
HOLD IDFC BANK WITH A STOP LOSS OF RS 60.50
IDFC Bank is currently trading at Rs 68.55. Its 52-week high/low stand at Rs 68.90/ Rs 51.10 made on July 10, 2017 and December 18, 2017, respectively. Considering the daily time frame, the stock has been trading in a slightly downward tilted channel pattern since December 2016. On December 18, the stock formed a hammer-like pattern, depicting temporary bottom-fishing. Since January 5, 2018, the stock gave three consecutive upbeats breaching the upper trendline, while January 10 witnessed a pullback of up to 38.2% retracement level of the prior upward rally. The stock price recovered intra-day on January 10 and is likely to rally again post Rs 64 level. We suggest a hold for now.
LUPIN CMP: Rs.928.25 BSE Code:500257
Shall I enter Lupin to average at CMP to recover my earlier losses? - Alok Malhotra
AVOID LUPIN FOR NOW
Lupin is currently trading at Rs 928.25. Its 52-week high/low stand at Rs 1572.25/ Rs80 made on February 6, 2017 and December 6, 2017, respectively, showing a steep downfall. The stock is consistently trading in the lower top lower bottom pattern since October 2015. Recently the stock witnessed nearly 22.5% sharp fall in 5 consecutive trading sessions till November 9, 2017. After hitting the 52-week low, the stock witnessed a gradual upbeat and now the stock is trailing at 50% retracement level of the prior sharp downfall. The volumes are low and the 14-period RSI is sitting in the overbought zone, which does not suggest immediate upside for now. Hence we suggest you to avoid the stock for now.
NCL INDUSTRIES CMP: `275.45 BSE Code:502168
Can I enter NCL Industries at the moment? - Sreenivas Rao