Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : 

Indian benchmark indices witnessed recovery after the RBI policy review which was anticipated and fairly discounted. The macroeconomic numbers supported the relief rally, which was initiated at 10550. Meanwhile, the drop in crude oil prices and rupee appreciation too cushioned the stock prices. However, the mixed macroeconomic numbers of IIP and inflation left the investors bewildered. Further, the meet between Donald Trump and Kim and the UD Fed rate hike weakened the indices across the globe as well as Indian indices. The lack of momentum pick-up in the midcap and small-cap indices has kept the bias negative in the broader markets, though both showed outperformance in the last five sessions. Among the sectors, metal and power remained weak, while IT remained strong. Technically, Nifty is trading in a kind of symmetric triangle pattern since its fall from the all-time high. Recently, Nifty gave a downward sloping trendline breakout at 10860 but witnessed a pullback in between 38.2% and 50% retracement. In case the correction sustains for some more time, we hold, 10760-10720 followed by 10680 as the supports. However, in case Nifty bounces back from the current levels, we hold 10850-10895 followed by 10930, as the resistances. 

NIFTY DERIVATIVES: 

The Indian Volatility Index (VIX), a gauge for market’s short term expectation of volatility, dropped 4.35 per cent and settled around 12.09. Nifty June 2018 futures closed at 10813.55 at a premium of 5.5 points over spot closing of 10808.05. Nifty July 2018 futures closed at 10825 at a premium of 16.95 points over spot closing of 10808.05. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 1.32 for June month contract. 

Among Nifty calls, 10,900 Strike Price from the June month expiry was the most active Call. Among Nifty Puts, 10,800 Strike Price from the June month expiry was the most active Put. For the June series, the maximum OI outstanding for Calls was at 11,000 strike price and that for Puts, it was at 10,600 strike price. 

LEGEND : 

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

STOCK STRATEGY 

TORRENT PHARMACEUTICALS.......... BUY............ CMP Rs 1446 

BSE Code ...... 500420
Target 1 .... Rs 1550
Target 2 .... Rs 1580
Stoploss ... Rs 1360(CLS) 

✓ Current Observation: On the weekly time scale, the stock had witness breakout of downward sloping trendline as on week ended June 1, 2018, which was supported with robust volumes. After registering high of Rs 1487.70, the stock retreated and traded near the breakout price. At present, the stock offers a good entry point. 

✓ The RSI on the daily chart is in a rising trajectory and trading in the bullish zone. 

✓ The stock is trading above its important short term moving average, i.e. 21-day simple moving average, which is a bullish signal. 

✓ The stock has strong support around the level of Rs 1360 and this could be maintained as a stop loss level. 

✓ On the upside, the level of Rs 1550, followed by Rs 1580, could be the target for the stock. 

✓ Conclusion: Considering that the stock is trading above its important short term moving average and the RSI is in bullish zone, we recommend buying this stock for a target price of Rs 1550-1580, with a stop loss at the level of Rs 1360. 

REVIEW OF STOCK STRATEGY 

We had recommended our readers to buy the stock of Steel Authority of India (SAIL) at Rs 82.45 in issue no. 34 (dated June 11, 2018). The stock moved in line with our expectation and went on to achieve our mentioned target level of Rs 89. We had recommended our readers to book profit in the stock through our SMS service on June 13, 2018, at Rs 89.10. We hope all our readers benefited from this recommendation.