NIFTY Index Chart Analysis

We had mentioned in our earlier issue that the Indian stock markets had got into panic selling. Thereby, the benchmark indices have witnessed more than 12% fall from their peaks to the recent lows. The continuing rupee depreciation to its record low level of 74.39, amid rise in Brent oil prices hitting a new high above USD 80 in 2018 at USD 85/barrel. Iranian crude exports declined amid US sanctions, giving the prices an upward jerk. Further, the Fed hiked interest rate by 25 bps and cued one more in December and three more in 2019 amid inflation and robust labour market conditions. The muchexpected rate hike was discounted in the Indian markets. However, though not in the recently held policy review, Fed rate hike could mean rate hike by the RBI before the end of CY2018. The sentiments dragged the markets further southwards. 

On the domestic front, the release of macroeconomic numbers kicked-off with auto sales numbers, which were a mixed bag. The country’s manufacturing PMI strengthened to 52.2, while the service PMI eased to 50.9 in September amid weaker demand and inflationary pressures. Going forward, IIP and inflation numbers would direct the markets. 

The Election Commission has announced election dates for five states and, therefore, election-related news will direct the markets in the near to medium term. The voting in Chhattisgarh will start on Nov 12 and 20, MP and Mizoram on November 28, Rajasthan and Telangana on December 7, followed by counting on December 11. Meanwhile, the September quarter results of the frontliners would drive the benchmark indices in the near term. 

For now, our benchmark index, Nifty is still inclined southwards with no immediate signs of reversal. Nifty has been falling consistently since its peak with just single day breathers in-between. Though the oscillators are lying in the oversold zone, the same would continue to trail for some more time in the same zone before a healthy bounce-back. The volumes have duly supported the fall since the end of September 2018. Nifty prices have also breached 100-day and 200-day EMA support levels. 

Going forward, if we consider that the storm is yet to settle, we hold 10200- 10000 as the crucial support areas, followed by 9950, which will act as a trend reversal level. In the medium term, we may see 9700-9650 as the support areas. Considering the daily time frame, Nifty hit a reversal Doji on September 8, taking support near the 10200 level. It confirmed a swing low, as September 9 could not break the low. Moreover, if the low is not broken on the weekly time frame, Nifty sees Doji in the making there too, which would get confirmed in its move next week. Hence, if Nifty bounces back for short-covering at the moment, we hold 10420-10560 as the immediate resistances, followed by 10670.

STOCK RECOMMENDATIONS 

MERCK LTD............. BUY............ CMP Rs 2882.80 

BSE Code : 500126
Target 1 .... Rs 3085
Target 2 ..... Rs 3150
Stoploss....Rs 2625(CLS) 

The stock of Merck is currently trading at Rs 2882.80. Its 52-week high and low stand at Rs 3549/Rs 1016.75 made on September 3, 2018 and October 17, 2017, respectively. The stock is seen trading with higher tops and higher bottoms, wherein the prices have a tendency of giving sharp upside moves after consolidation. However, the stock recently hit a kind of double top at its 52-week/ all-time high, after a sharp rally and tumbled more than 61.8% retracement of the prior upward rally from 2178 to the peak. Meanwhile, it gave two lower bottoms and lower tops. However, the stock bounced back from a support at 2582, which is higher than its prior low of 2501. The stock seems to have taken a resistanceturned-support at 2550-2500 levels, which is also its 100-day EMA support level. The stock has attempted a bounce with reasonable volumes and the 14-period RSI positive crossover at 46 after bouncing back from above the over-sold zone. We recommend a BUY 

TITAN COMPANY............ SELL........... CMP Rs 787.85 

BSE Code : 500114
Target 1 ..... Rs 740
Target 2 ..... Rs 725
Stoploss....Rs 845 (CLS) 

The stock of Titan Company Ltd is currently trading at Rs 787.85. Its 52-week high/low stand at Rs 1006/ Rs 584, which were made as on April 18 2018 and October 27, 2017, respectively. The stock hit a double top at Rs 999 level on April 17 and 18 and thereby witnessed a fall with lower tops and lower bottoms up to Rs 799 on July 13. The stock attempted a bounceback, but witnessed multiple resistances at Rs 940-945 levels. Thereafter, the stock is seen falling consistently on a weekly basis with just one/two breathers. Meanwhile, considering the daily time frame, the stock breached its 100-day and 200-day EMA supports. Further, the stock breached its multiple support zone of Rs 770 to Rs 800 levels, followed by consolidation. Recently, on September 9, the stock gave a strong body bearish candle, breaching its consolidation on the downside. Huge volumes are supporting the downside move, coupled with 14-period RSI still tilted southwards. We recommend a SELL.