Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : Before the event risk of the Union budget, markets traded in a narrow range for the last two days. Volumes have also declined as traders adopt a cautious approach. Nifty finally closed above the 61.8 per cent level of the prior downswing. The indicators are giving some positive signals before the major trigger point. The MACD is above the signal line and the positive momentum is picking up. The RSI (58.13) is near to the bullish level of 60. But, interestingly, the last hour profit-booking is clearly indicating traders' cautious approach. After Wednesday's 'hanging man' formation, it formed a shooting star candle on Thursday. These back-toback bearish patterns are a matter of concern, for now. On the hourly chart, it is crawling around the channel resistance. The last hour volumes have also increased on a price decline, which indicates the distribution. The key is how it will react to the budget and where it closes. Friday's close will give a clear picture of the future direction. As long as it is above 11920, the targets are open towards 12200. However, a close below 11765 or any kind of negative close will lead to the level below 11600. One thing is certain that the market will experience higher volatility on the budget day. So, be careful while trading. 

NIFTY DERIVATIVES: Nifty futures gained 134.4 points or 1.14 per cent since last expiry. As an event risk of the budget is around the corner, the volumes have declined drastically. The prices have moved in a narrow band and the volatility is lower than normal for the last two days. The India VIX has declined to 13.58. The rollovers are quite normal at 7.24 per cent in the first week of July series. The Open Interest (OI) has increased by 1.11 per cent. The OI-wise Put-Call Ratio (PCR) is near to the bearish zone with 1.24. The leading sectoral index Bank Nifty formed a shooting star Doji, which is a worry point for tomorrow. The highest Call open interest was seen at 12000 strike with 1273200 OI. 12100 strike also witnessed 560550 OI. On the Put side, the highest open interest is at 11800 strike with 457725 open interest. 11900 strike also has 398750 open interest. For the next week, 11800 and 12100 will act as support and resistance. Breaking below or above these levels will lead to a huge move in the near future. 11750 - 11900 strike Calls witnessed short covering and 11950 witnessed long liquidation. 12000-12150 strikes have short build-up. On the Put side, 11800 -11950 strikes witnessed short build-up and 12000 above strikes witnessed long liquidation. As per the current derivative data, the max pain is at 11900. 

STOCK STRATEGY 

MULTI COMMODITY EXCHANGE ................... BUY ................ CMP Rs861.20
BSE Code ...... 534091 Target 1 .... Rs930 Target 2 .... Rs1050 Stoploss ....... Rs830 (CLS) 

✓ Current Observation: MCX is ready to breakout of the 47-week stage-1 cup and handle pattern. The cup had formed with 30 per cent depth. The stock is trading above the short and long term moving averages. 

✓ After forming a base at Rs. 650 and consolidating between Rs. 650-830 for 73 weeks, it has broken out of the range. It has also broken out of the sloping trendline resistance. It has also come out of the 44-day consolidation range. 

✓ The RSI (65.05) is in bullish range and out of the downward channel on the daily chart. MACD is above the zero line and signal line for the last six days and the histogram is showing bullish momentum. Its price strength (RS) is as high as 86 and EPS strength is also at 82, with greater buyers' demand. 

✓ The institutional holding increased by 1.68 per cent in the last quarter. The stock is meeting majority of the CANSLIM characteristics. It is also trading just less than one per cent to the pivot. 

✓ Buy this stock at Rs. 861.20 with a stop loss at Rs. 830. The target is open towards Rs. 930 in the short term and towards Rs 1050 in the the medium to long term 

REVIEW OF STOCK STRATEGY 

We had recommended our readers to buy the stock of Avenue Supermarts at Rs 1390.95 in issue no. 36 (dated July 1, 2019). Post our recommendation, the stock moved higher in line with our expectation and went on to touch the level of around Rs 1475. We had given a 'Book Profit' message at the level of Rs 1439 through our SMS service on July 1, 2019. Thus, investors who had taken positions according to this strategy would have made decent profit.