Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE




SPOT NIFTY : 

Indian equity benchmarks greeted the new year 2019 on an optimistic note with the Nifty reclaiming its important psychological level of 10,900. However, the celebration for the bulls was short-lived as the markets fell like a pack of cards in the following sessions, i.e. Wednesday and Thursday session as negative global cues came to haunt the markets. The dose of disappointing manufacturing data from China and Eurozone appeared to keep the concerns on slowdown in global growth intact. Also, some disappointment from the GST collection for the month of December and the core sector growth for the month of November 2018 that came in at 16-month low of 3.5 per cent added to the woes. On the sectoral front, auto stocks came under hammering as the auto index plunged about 5 per cent.

Nifty, after registering a low of 10534.55, entered into an upmove and registered gains for five days in a row. However, after flirting around the 100-day moving average for a couple of days, Nifty once again witnessed a sharp sell-off from the 100- day moving average and, on the downside, it breached its crucial long term average, i.e. 200-day moving average. Going ahead, Nifty is now critically placed on the charts as it is near to the rising trendline support formed by connecting lows of December 11 and 26, 2018. In the coming session, holding above the 10,660-10,650 levels would keep the pullback options open. However, failure to do so would result in continuance of the lacklustre move amid stock-specific action as we are about to enter the Q3 FY19 earnings season. The zone of 10,660-10,650 is likely to act as immediate support level, followed by 10,534.

On the upside, 10,785 is likely to act as immediate resistance, as the 200-day moving average is placed around this level.

NIFTY DERIVATIVES: 

The Indian Volatility Index (VIX), a gauge for the market’s short term expectation of volatility, surged by 2.44 per cent to end at 16.79. Nifty January 2019 future last price stood at 10,715.55 at a premium of 43.30 points over the spot closing of 10,672.25. Nifty February 2019 future last price stood at 10745.05 at a premium of 72.80 points over the spot closing of 10,672.25. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 1.07 for the January month contract. Among Nifty Calls, 11,000 strike price from the January month expiry was the most active Call. Among Nifty Puts, 10,500 strike price for the January month expiry was the most active Put. For the January series, the maximum OI outstanding for Puts was at 10,500 strike price, and that for Calls, it was at 11,000 strike price.

LEGEND :

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

STOCK STRATEGY 

BALRAMPUR CHINI ............... BUY ............. CMP Rs. 107.15

BSE Code: 500038
Target 1: Rs.113
Target 2: Rs.118
Stoploss: Rs.99 (CLS)



Current Observation: 

On the daily time frame, the stock, after registering a swing high of Rs 119.60 on November 12, 2018, entered into corrective phase and the correction was arrested near its short term moving average, i.e. 50-day EMA.

At present, the stock has witnessed breakout of the triangle-like pattern on the daily time frame, accompanied with decent volumes. ✓ The stock is trading above its 21-day EMA, which is a positive signal for the stock.

The RSI on the daily chart is in a rising trajectory and trading above its 9-day average.

The recent swing low of Rs 99 is likely to act as a strong support for the stock and this can be maintained as a stop loss on a closing basis, while on the upside, the stock is likely to touch the level of Rs 113, followed by Rs 118.

Conclusion: 

Considering the breakout of triangle-like pattern and the stock trading above its 21-day EMA, we recommend buying this stock for the target price of Rs 113, followed by Rs 118, with a stop loss at Rs 99 level on a closing basis.

REVIEW OF STOCK STRATEGY

We had recommended buying the stock of NIIT Technologies Ltd at Rs 1149.40 in issue no. 10 (dated December 31, 2018). After our recommendation, the stock touched a high of around Rs 1177.70. However, the stock failed to sustain at the higher levels and retraced back. At present, the technical pattern looks good and hence we recommended investors to hold the stock with a stop loss of Rs 1095 on a closing basis.