Technicals Analysis

WHAT LIES AHEAD : NEAR-TERM PICTURE

SPOT NIFTY : In a truncated week, Nifty has lost about 292 points or 1.96 per cent in the last four trading sessions. The COVID-19 tremors have affected the market sentiment, with around 2 lakh cases registered while the partial lockdowns in major metros are the main culprit for the market fall. On Monday, the markets opened with a very big gap down and lost 524 points, which is the biggest fall after February 26. Nifty took support at 100-DMA, and it has been holding it for the last three days. The last two days of price action are within Monday's range.

Nifty opened with a modest uptick on Thursday; however, it did not sustain at the higher levels in the first half, but somehow bounced in the afternoon, and closed above the previous day’s high. For the last two days, it has been forming a higher high and higher low candle, which is a positive sign. Nifty has also retraced almost 50 per cent of Friday-Monday fall. On the weekly chart, last week, it had formed a Doji candle, and to negate the bearish implications, it needs to close above Doji’s close of 14,834 by Friday. It has also broken the upward channel on Monday but moved into the channel with the last two days of positive moves.

The immediate resistance is placed at 14,638 (50-EMA) and Monday's high of 14,665. Above this zone, Nifty may fill Monday's gap by moving above 14,785. The 50-DMA is also placed at 14,856, which is very near to the multiple resistance area of 14,880. The 100-DMA is placed at 14,299 levels and Monday's low of 14,248. Both these levels are likely to act as strong support on the downside. As long as it is protected, the market may consolidate further within the support and resistance zones. The weekly close will give an important signal for the near future. 

NIFTY DERIVATIVES:
Nifty Futures declined by 327.80 points or 2.19 per cent in the last four trading sessions. The open interest increased by 5.34 per cent and shows a long build-up. The rollovers stood at 7.09 per cent. For the next weekly expiry, the put-call ratio (PCR) is a little higher at 0.93. In the recent past, the weekly PCR did not exceed 0.85 levels. This is a sign of slight bearishness. The monthly PCR at 1.36, declined sig-nificantly from 1.68 last Thursday. It shows that the 14,880 is a minor swing high, where the PCR also formed a swing high. The derivative volume recorded higher than the previous day after Monday's decline.

The total call open interest is at 2,37,904, while the total put open interest is at 2,21,184. Interestingly, for the next week, the maximum open interest is not at-the-money (ATM) options). Deep-out-of-the-money options have the higher open interest. The 15,000 strike call options have 25,342 open interest, followed by 14,700 strikes, which is slightly out-of-the-money that have an OI of 14,618. The in-the-mon-ey call strike of 14,500, also has a significantly higher open interest of 12,662. On the put side, the deep-out-of-the-money strike 14,000 has the highest open interest of 24,869, followed by 14,500 strikes with 15,723 OI. The 14,550 strikes call OI increased by 625.60 per cent while the 14,600 strikes put OI increased by 675 per cent.

Interestingly, on monthly series, the 14,550 strikes call open inter-est declined by 4.77 per cent. At the same time, the 14,750-14,650 strikes witnessed a short covering. On the put side, 14,750 and 14,700 strikes have seen long unwinding. The current derivative data shows that the monthly Max Pain is at 14,700 and the next week Max Pain is at 14,500. 

TECHNICAL RECOMMENDATION

STOCK STRATEGY

GLENMARK PHARMACEUTICALS​ ......... BUY ............ CMP Rs 536.80

BSE Code : 532296
Target 1 : Rs 585
Target 2 : Rs600
Stoploss : Rs 500 (CLS)

✓Current Observation:Glenmark Pharmaceuticals is a research-driven, integrated pharmaceutical company that has a global presence. It is ranked among the world's top 75 pharma and biotech companies. Its product line includes oncology, respiratory, and dermatology. The company has a significant presence in branded generics across emerging countries worldwide. It has a solid presence in over 80 countries with manufacturing facilities in almost five countries.
✓In Q3FY21, the company's performance met the market expectations. The revenue went up by 1.9 per cent to Rs 2,786.77 crore. The EBITDA margin improved to 20.9 per cent. Its net profit increased by 25 per cent to Rs 240 crore. India's business grew by 11.8 per cent. The EPS is up by 28 per cent to Rs 15.68.
✓Technically, the stock is trading in a range of Rs 442-Rs 549 for the past 42 weeks. Currently, it has reached near to its pivot level of Rs 548. It is trading above the long and short-term averages. For the last two weeks, the volumes are higher than the average, showing a demand for the stock from the institutions. Thursday’s volume is also very high. On the weekly chart, MACD has given a buy signal while the histogram is showing bullish momentum. The RSI (65.20) is in a bullish zone. On the daily chart, the +DMI moved above the ADX and is much above the -DMI. The Elder impulse system has given a buy signal with today's move. As the price moved a little above the upper Bollinger band, it consolidates with a positive bias.
✓Considering the above factors, we recommend buying this stock for a short to a medium-term target of Rs 585-Rs 600 level. The more extended consolidation breakout will result in a fast move. Maintain a stop-loss at Rs 500.

REVIEW OF STOCK STRATEGY

We had recommended our readers to buy the stock of Sequent Scientific Ltd at Rs 268.95 in issue no. 25 (dated April 12, 2021). Post our recommendation, the stock witnessed a consol-idation along with low volume. Currently, it is hovering around the 20-day SMA level. However, we can expect to see smart upmoves if it closes above the Rs 260 level. We would advise our readers to hold this stock with a stop-loss of Rs 235 on a closing basis, as the stock is likely to move higher from the current levels.