Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : Even after the RBI’s rate cut announcement, the wow feeling was missing in the markets as the markets changed its course of action from bullish to the corrective phase. The markets corrected for the fifth consecutive day, despite India’s retail inflation coming in at 2.05 per cent in January. On Wall Street, the scenario was just the opposite as the US stock indices closed at their highest levels for 2019 after lawmakers reached a tentative deal to prevent a government shutdown and hopes of potential trade deal between the two super powers added further to buoyancy. After registering high of 11,118, the Nifty entered into a corrective phase and at an initial stage it was seen as a throwback, but as the correction extended, it gave a clear indication that the index had actually witnessed a failed breakout and over the last five trading sessions, it corrected more than 3 per cent. Nifty also slipped below its crucial long term moving average, i.e. 200-day moving average. In the coming sessions, all eyes will be on the key support zone of 10,690-10,700 as it is the confluence of 78.6 per cent retracement of the recent upmove and also the 100-day moving average is placed around this region. Currently, the stochastic oscillator is placed in the oversold territory, hence, a pullback cannot be ruled out, but it is essential for the index to hold on to the support zone of 10,690-10,700, as any failure to hold this support would drag the index towards the level of 10,550 in the short term. On the upside, the 200-day moving average may act as a resistance for the index, which is currently placed at 10,860, followed by 10,950. 

NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged by 0.25 per cent to end at 15.77. Nifty February 2019 future last price stood at 10,794.40 at a premium of 48.35 points over the spot closing of 10,746.05. Nifty March 2019 future last price stood at 10,836.40 at a premium of 90.35 point over the spot closing of 10,746.05. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 1.09 for the February month contract. Among Nifty Calls, 10,800 strike price from the February month expiry was the most active Call. Among Nifty Puts, 10,700 strike price for the February month expiry was the most active Put. For the February series, the maximum OI outstanding for Puts was at 10,700 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 BHARAT FINANCIAL .......................... BUY ..................... CMP Rs 949.60 BSE Code ...... 533228 Target 1 .... Rs 1020 Target 2 .... Rs 1040 Stoploss ...Rs 900 (CLS)

 ✓ Current Observation: Considering the weekly time frame, the stock is oscillating in a rising channel since July 2016. After touching upper trendline in the month of August 2018, the stock entered into a corrective phase and, during this fall, the stock took support at the lower end of the rising channel. 

✓ At present, on the weekly time frame, the stock took support around lower end of the rising channel formed by joining swing lows from December 30, 2016. Recently, the stock has managed to close above its short-term moving average, i.e. 21-day EMA. 

✓ The 14-period RSI on the daily time frame has also recorded breakout from falling trendline and currently quoting around 50.10 and has recently given positive crossover. Moreover, the fast stochastic is trading above slow stochastic, which suggests bullish bias.The level of Rs 900 is likely to act as a strong support for the stock and this can be maintained as a stop loss, while on the upside, the stock is likely to touch the level of Rs 1020, followed by Rs 1040. 

✓ Conclusion: Considering that the stock took support around the lower end of the rising channel and it is trading above its 21-day EMA, we recommend buying this stock for the target price of Rs 1020, followed by Rs 1040, with stop loss at Rs 900 level on a closing basis. 

STOCK STRATEGY BSE Code ...... 533228 Target 1 .... Rs 1020 | Target 2 .... Rs 1040 | Stoploss ...Rs 900 (CLS) BHARAT FINANCIAL .......................... BUY ..................... CMP Rs 949.60  

NIFTY We had recommended our readers to buy the stock of Pidilite Industries at Rs 1161.80 in issue no. 16 (dated February 11, 2019). Post our recommendation, the stock did not sustain at higher levels as selling pressured emerged in the market. However, the stock is still trading above its 100-day SMA level. The technical parameters of the stock still look promising. We would advise our readers to hold this stock with a stop loss of Rs 1095, as the stock is likely to move higher from the current levels.