DSIJ Mindshare

Nifty Index Chart Analysis

The Indian market began the week amid profit booking but soon resumed its upward march powered by strong set of numbers by the private sector bank Indusind Bank, fall in dollar and hopes of attractive sops in the upcoming union budget. Fall in December CPI inflation and unexpected growth in November factory data despite demonetisation, coupled by better than expected corporate earnings till date also boosted the investors sentiment, this helped markets extended gains for the third consecutive week. For the week ended January 13, 2017, the Nifty 50 settled 1.90 per cent higher at 8,243.80.

Most of the sectoral indices ended the week on positive note. The Metal index was a star performer followed by Power, FMCG, Auto and Oil & Gas. On the other hand, Realty, Healthcare and Telecom index closed in negative terrain. Technically, the Nifty index saw a major up-move from low of 6825 to 8968 and from there it retraced almost 50 per cent of this major up-swing. The 50 per cent retracement levels come around levels of 7890-7900. On the weekly chart after taking support around the levels of 7893 which is 50 per cent retracement level, the Nifty Index has formed a higher top and higher bottom pattern and secondly, it had managed to sustain above its major resistance zone which was placed in the area of 8280-8330, where it faced resistance for the past couple of weeks. 

Now going forward the zone of 8475-8510 is a crucial resistance area. Why this area is a crucial resistance area? Firstly, the opening downside gap which was created as on 11th November, 2016 is placed in the zone of 8460-8510. Secondly, the neckline of Head and Shoulder pattern is placed around levels of 8475-8480 and according to change of polarity i.e. previous support level is likely to act as a resistance level.

Hence, Nifty is likely to face strong resistance in the zone of 8475-8510. However, if Nifty moves above the zone of 8475-8510 it’s likely to test levels of 8600-8730 on the higher end. On the downside, Nifty has immediate support placed around levels of 8300-8330, why the area of 8300-8330 is a crucial support area? Firstly, 200-day Simple moving average is placed around levels of 8300 and secondly, the downswing from high of 8598 to low of 7893, 61.8 per cent retracement level is placed around levels of 8330. A decisive close below 8300-8330, is likely to open gates for 8200 on the downside.

Though there are clear indication that the upward move is likely to continue, however, the opening downside gap and re-test of major Head and Shoulder pattern which is placed in the zone of 8460-8510, until the Nifty moves past these levels, there are chances that the upward move may see some pause.

STOCK RECOMMENDATIONS

KAVERI SEED COMPANY ... BUY ... CMP Rs.471

BSE Code : 532899  Target 1 ..... Rs.485 | Target 2 ..... Rs.500 | Stoploss....Rs.400 (CLS) 

The stock of Kaveri Seed Company is currently trading at Rs.471. Its 52 week high/low stands at Rs.473/ Rs.300 were made as on June 09, 2016 and January 18, 2016. The stock after registering high of Rs.473 formed a ‘Doji’ Candlestick pattern and thereafter it entered into a correction and it marked a low of Rs.324.5. Around the lower levels, the stock formed a ‘Bullish Tweezer Bottom’ like pattern, not a perfect text book one.

The stock since then has formed structure of higher top higher bottom on weekly time frame. At present, the stock has witnessed breakout of ‘Triangle’ pattern along with decent volumes. Considering the above hypothesis we expect stock to continue its momentum on the upside up to levels of Rs.485-500, maintain a strict stop loss for the long position at levels of Rs.400.

APOLLO TYRES ... BUY ... CMP Rs.188

BSE Code : 500877 Target 1 ..... Rs.200 | Target 2 ..... Rs.214 | Stoploss....Rs.173 (CLS) 

The stock of Apollo Tyres is currently trading at Rs.188. Its 52 week high and low stands at Rs.234.75/ Rs.127.05 made on October 06, 2016 and January 20, 2016. After registering high of Rs.234.75 stock formed a ‘Pin Bar’ on weekly time frame, thereafter it entered into a corrective phase. Stock took support around levels of Rs.173.30 which also coincides with 61.8 per cent retracement level of from low of Rs.139 to high of Rs.234.75. The stock has taken support on the upward rising trend line formed by joining low of Rs.139. On Weekly time frame RSI is quoting around 50 levels, as per the range theory of RSI 40-60, the RSI will attempt to touch levels of 60. Combing above mentioned technical confirmation, the recent correction in the stock is a good opportunity to accumulate this stock for a target of Rs.200-214, Stop loss for the trade would be around levels of Rs.173.

DSIJ MINDSHARE

Mkt Commentary28-Mar, 2024

IPO Analysis29-Mar, 2024

Expert Speak29-Mar, 2024

Mindshare29-Mar, 2024

Multibaggers28-Mar, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR