Technicals

SPOT NIFTY : After witnessing correction last week, the stock markets made notable progress during the current week and have gained about 3.32 per cent. Nifty began the week with a strong rally and extended its upmove for the fourth day in a row, surpassing its important moving average, i.e. 200-day moving average with a gap-up. The domestic markets got a major lift from the dovish comments on interest rates by the Federal Reserve Chairman Jerome Powell. Looking ahead, a large number of events are likely to unfold in the coming days like the much-awaited meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping and, on the domestic front, GDP for the September quarter will be announced, automobiles companies will declare their monthly sales data and RBI will hold its policy review meeting. 

The Nifty, after taking support around its 38.2 per cent retracement level and the 20-day moving average, resumed its uptrend, registering fourth consecutive gains in a row. Nifty surpassed its crucial 200-day moving average with a gap-up opening and extended its upmove to fill the bearish gap created on October 4. Going ahead, Nifty is likely to move towards the levels of 10,980 and 11,090, as this level is 61.8 per cent retracement level of entire corrective phase which began in August 2018. On the downside, the upside gap which has been created on November 29 is likely to offer good support in the short term. Overall, the structure looks positive as the index clawed above its important 200-day moving average and as long as Nifty holds above 10,710-10,770, the strategy of buying on dips should be adopted. 

NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged by 4.06 per cent to end at 18.69. Nifty December 2018 future last price stood at 10908.95 at a premium of 50.25 points over the spot closing of 10,858.70. Nifty January 2019 future last price stood at 10,949.10 at a premium of 90.40 point over the spot closing of 10,858.70. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 1.32 for the December month contract. Among Nifty calls, 11,000 strike price from the December month expiry was the most active Call. Among Nifty Puts, 10,700 strike price for the December month expiry was the most active Put. For the December series, the maximum OI outstanding for Puts was at 10,000 strike price, and that for Calls, it was at 11,000 strike price. 

STOCK STRATEGY

SRF .................. BUY .......... CMP Rs 2154

BSE Code .. 503806
Target 1 .... Rs 2280 
Target 2 .... Rs 2320 
Stoploss ... Rs 2050 (CLS) 

Current Observation: On the hourly time frame, the stock was seen oscillating in the range of Rs 2053 to Rs 2140 since November 20, 2018, but recently the stock witnessed breakout of this consolidation range along with robust volumes. 

✓ The stock has been trading above its crucial short term moving average, i.e. 20-day exponential moving average and it is in a rising mode, which is positive for the stock.
✓ The daily 14-period RSI is trading in bullish zone, which augurs well for the uptrend. \
✓ The stock has strong support around the level of Rs 2050 and the same can be maintained as a stop loss level.
✓ On the upside, the stock has the potential to test the level of Rs 2280, followed by Rs 2320.
✓ Conclusion: Considering that the stock has witnessed a breakout of the consolidation range along with robust volumes and the RSI is in the bullish zone, we would recommend buying this stock for a short-medium term period with a stop loss of Rs 2050 on a closing basis, with an upside target of Rs 2280, followed by Rs 2320. 

REVIEW OF STOCK STRATEGY 

We had recommended our readers to buy the stock of Rashtriya Chemicals and Fertilizers Ltd at Rs 60.55 in issue no. 05 (dated Nov 26, 2018). Post our recommendation; the stock made an initial advance and touched the level of Rs 61.70. However, it failed to hold at higher levels and declined. The stock touched its stop loss level on November 29, 2018, and we recommended our readers to exit the stock as the stock has breached its crucial support level as defined by the channel.