NIFTY Index Chart Analysis Nifty short term direction sideways till close above 10,880

The fierce sell-off in crude oil prices from the high of 2018 leading to some bounce in the rupee offered some relief to investors’ concerns over inflation and fiscal deficit. The benchmark Brent crude oil price fell below $65/barrel, which is nearly 25 per cent from the early October high. Crude and rupee are the key factors for the India economy as it imports more than 80 per cent of its oil requirement. So any rise or fall in crude oil prices has direct impact on the fiscal deficit, growth and rupee. After hitting a life-time low, the rupee appreciated by more than 5 per cent in November 2018. The global indices have witnessed some volatility in the last couple of weeks, while the Indian stock market is trading in a capped range since the beginning of November. Some selective stock picking/dumping is underway. Investors are looking for some triggers for a decisive upside momentum. The upcoming state elections will be a major trigger, which will direct the markets in the short term. 

The consistent outflows by foreign institutional investors (FIIs) from April 2018 seem to have taken a pause. The FIIs bought shares worth Rs.3812.10 crore, while the domestic institutional investors sold shares worth Rs.2017.45 crore till November 16, 2018, as per provisional data available on the NSE. On the sectoral front, the Nifty PSU Banks has been outperforming, while on the flip side the Nifty Media and Nifty Pharma have under performed the benchmark index Nifty since October 16, 2018.

The NSE benchmark index Nifty has been fluctuating in a narrow range since last couple of weeks, suggesting pause in the trend. A narrow range repetitively gives buying opportunity at the support levels and profit-booking or selling opportunity at the resistance levels, until it breaks out from the price range.

On November 16, 2018, Nifty decisively breached our mentioned hurdle level of 10,650 and managed to close above it. After breaking its first hurdle level, there are still series of resistance levels ahead to break. For the coming weeks, the zone of 10,710-10,880 will act as a major resistance zone for Nifty as there are multiple resistances in this area, beginning with the swing high of 10,710, followed by the opening downside gap created on October 4, 2018, and finally, the 200-day exponential moving average. All the three factors mentioned above may build selling pressure or profit-booking may emerge near this zone.

Considering the weekly time frame chart as on weekend of November 16 , 2018, the index has formed a small body bullish candle carrying long lower shadow highlighting the emergence of buying demand at the bullish gap area created on November 2 . The 14-period RSI of the daily time frame is currently quoting at 53.96, while it is not able to cross the 60 mark from early September 

For the medium term, the zone of 10,710-10,880 will act as a major resistance zone as multiple resistances are placed in the region, while the crucial support is placed in the zone of 10,400- 10,440. A close above the levels of 10,710-10,760 would extend the pull-back towards the level of 10,880 in the medium term, which is 50 per cent level of the major down move from the all-time highs level to the low registered in the month of October.

STOCK RECOMMENDATIONS

AJANTA PHARMA ............................ BUY ..................... CMP Rs.1099

BSE Code : 532331
Target 1 .... Rs.1200
Target 2 ..... Rs.1240
Stoploss....Rs.1051(CLS)

The stock of Ajanta Pharma Ltd is currently trading at Rs.1099.Its 52-week high and low stand at Rs.1592/ Rs.897.60 made on January 22, 2018 and June 5, 2018. Considering the daily time frame, after touching multi-touch point downward slopping trendline, the stock witnessed a fierce sell-off. After making longlegged Doji candlestick pattern on the daily time frame chart near its trendline support, the stock has witnessed a decent bounce-back. During the last couple of weeks, the stock traded in a narrow contracting consolidation which resulted in the formation of pennant-like pattern. The stock has witnessed a breakout of pennant-like pattern along with higher 20-day average volume. The 14-period RSI on the daily time frame is quoting at the 57.89 mark, which is bullish for the stock. For the short-term, the 21-day exponential moving average will act as a major support zone. On the upside, the stock is likely to test the level of Rs.1200, followed by Rs.1240. We recommend a BUY.

TITAN COMPANY ........................ BUY ............................ CMP Rs.915.45

BSE Code : 500114
Target 1 ..... Rs.995
Target 2 ..... Rs.1030
Stoploss....Rs. 840 (CLS)

The stock of Titan is currently trading at Rs.915.45. Its 52-week high and low stand at Rs.1006/Rs.731.70 made on April 18, 2018 and October 9, 2018 respectively. After hitting 52-week high, the stock witnessed profitbooking, which halted near its 38.2 per cent Fibonacci retracement level of the entire upmove that started in November 2016 taking it to its all-time high.

Considering the weekly and daily time frames, the stock has recently given a breakout of downward slopping trendline, which is supported by volumes as well. Indicators and oscillators are signalling positive biases, which suggest further upside in the stock. The recent swing low of Rs.840, which is near about 200-day exponential moving average, is likely to act as the support zone for the short term.

We expect the stock to touch the level of Rs.995, followed by Rs.1030, and a stop loss is suggested at the level of Rs.840. We recommend a BUY.