Nifty Collapses, Struggles To Bottom Out

The 50-share Nifty index crashed from its high and fell by over 400 points in the week of August 12. The market took a significant drop after it broke the vital technical support of its 200-day EMA level at 5780. The index was surrounded with lots of negative cues including higher-than-expected WPI numbers and NSEL disappointing investor regarding payouts. On the other hand, despite the RBI’s fresh set of measures to support the INR, the currency has continued to lose strength and made a new low around 64 on August 20. As a result, the Nifty index tumbled and broke all the technical levels to make a new low in the current year.

Taking a sectoral view, most of the indices were hammered in this bearish scenario. Bankex witnessed an overwhelming selloff, as most of the PSU banks made their 52-week lows after international ratings agency Moody’s downgraded their financial strength ratings. Auto, Capital Goods, Oil & Gas and Heath Care also dragged the index down by five to 10 per cent. Most of the Mid-Cap and Small-Cap stocks also registered new lows, and both the indices dipped by more than by eight per cent.

The market has had it very rough over the past few trading sessions. Going ahead, one can expect some short covering up-moves at every low, though there may not be a major pullback rally to recover all the recent losses. This indicates a weak outlook at least until the point that the index manages to sustain above 5500, which is a major technical resistance seen on the charts. If it remains below this level, the index may fall further to the 5300 level.
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ACC | CMP – Rs 1125 | Sell

ACC peaked at an intraday high of Rs 1545 as on October 4, 2012, and these levels have been rarely seen since. The stock launched into intermediate downtrend and declined to post an intraday low of Rs 1365 as on October 31, 2012. It went into a consolidation phase for some time, and then resumed its uptrend and went on to hit a high of Rs 1453 as on January 3, 2013, marked as a lower top. The stock went into a major downtrend and posted a bottom of Rs 1107 as on April 5, 2013. It then saw a relief rally, entered a short-term uptrend, and made a high of Rs 1293 as on July 18, 2013, taking resistance on a sloping trendline. After a decent consolidation, the stock has broken a support trendline as on August 19, 2013, along with higher-than-average volumes, which suggests that it has entered into a corrective phase.

We feel that the stock may touch lower levels going ahead. One can initiate short positions for a downside target of Rs 1050-1000, with a stoploss of Rs 1200.

Trading Pointers:

Indicators: MACD-Sell | RMI-Sell | Stochastic-Sell | ROC-Sell | RSI-Buy
Support: 1107, 1075 | Resistance: 1150, 1196
Targets: 1st Target: 1050 (4-6 weeks) | 2nd Target: 1000 (12-14 weeks)  
BSE Code – 500410 | Stoploss: 1200 (cls)
55 Day EMA: 1203
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Shriram Transport Finance | CMP – Rs 594 | Sell

Shriram Transport Finance peaked at an intraday high of Rs 805.05 as on January 16, 2013. The stock went into a correction phase and declined to post an intraday low of Rs 638.10 as on April 11, 2013. It then launched into an intermediate uptrend to peak at an intraday high of Rs 842.70 as on May 28, 2013. The stock entered a corrective phase and declined to post an intraday low of Rs 592.20 as on August 1, 2013, and formed a double bottom by forming a bullish engulfing pattern. It saw a minor bounce and broke its trendline support on August 19, 2013 as well as formed a double bottom. The stock has seen a breakdown along with a rise in volumes, which suggests that it has changed its long-term trend and is now in the grip of bears.

Currently, the scrip has reversed its trend, which is confirmed by a bearish candlestick pattern and an increase in volumes. With the oscillators looking negative, it may see a further downside.

Trading Pointers:

Indicators: MACD-Sell | RMI-Sell | Stochastic-Sell | ROC-Sell | RSI-Buy
Support: 565, 550 | Resistance: 620, 655
Targets: 1st Target: 530 (4-6 weeks) | 2nd Target: 500 (12-14 weeks)  
BSE Code – 511218 | Stoploss: 655 (cls)  
55 Day EMA: 675.47
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Cairn India | CMP - Rs 303.60 | Buy

Cairn India bottomed out by posting an intraday low of Rs 267.70 as on March 28, 2013, commenced a minor uptrend, and rallied to peak at an intraday high of Rs 313.30 as on April 30, 2013. The scrip entered a corrective phase to bottom out by posting an intraday low of Rs 272.55 as on June 26, 2013, registering a higher low. It entered into an intermediate uptrend and peaked by posting an intraday high of Rs 312.90 as on July 25, 2013. The stock has formed multiple tops around Rs 313-314.

The recent price action has seen the stock move out of its sideways trading range supported by steady volumes, which signals the end of the consolidation phase. We expect the stock to resume its northward journey once it closes above Rs 313-314.

Trading Pointers:

Indicators: MACD-Buy | RMI-Sell | Stochastic-Sell | ROC-Buy | RSI-Buy
Support: 295, 284 | Resistance: 314, 330
Targets: 1st Target: 330 (4-6 weeks) | 2nd Target: 345 (12-14 weeks)  
BSE Code – 532792 | Stoploss: 284 (cls)
55 Day EMA: 296.40
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Exide Industries | CMP - Rs 128.20 | Buy

Exide Industries bottomed out by posting an intraday low of Rs 115.65 as on April 8, 2013, commenced a major uptrend, and rallied to peak at an intraday high of Rs 144.35 as on May 5, 2013. The scrip entered a corrective phase to bottom out by posting an intraday low of Rs 116.50 as on June 25, 2013, registering a higher low. It entered into an intermediate uptrend and peaked by posting an intraday high of Rs 135.25 as on July 19, 2013. The stock formed a spinning top pattern and entered into a correction phase. It has a major hurdle around the 135-136 level, and once it crosses this level on a closing basis it may see a good upside.

Currently, the stock seems to approaching a breakout of its downward sloping trendlines. With the daily and weekly picture looking better, a further upside from these levels cannot be ruled out.

Trading Pointers:

Indicators: MACD-Buy | RMI-Buy | Stochastic-Sell | ROC-Buy | RSI-Sell
Support: 125, 116 | Resistance: 135, 142
Targets: 1st Target: 138(4-6 weeks) | 2nd Target: 144 (12-14 weeks)  
BSE Code – 500086 | Stoploss: 116 (cls)
55 Day EMA: 127.58