NIfty Index Chart Analysis

Indian bulls seemed to have halted at the peak, after posting a stunning rally from the lower level of 7900. Nifty witnessed a prolonged breather after a sharp move post announcement of the Budget. RBI’s status quo-ist decision to hold the interest rates and await the release of inflation data prevented markets from further gaining ground.

Moreover, investors remained wary ahead of the assembly elections, all of which resulted in consolidation with some intra-day volatility for the markets. The intra-day volatility was driven by banks, as some banks posted better than expected Q3 corporate earnings while, on other side, poor January month auto sales data indicated the effect of demonetisation which, in turn, held the markets down.

Moreover, optimistic global sentiments amid improved Chinese trade data and US President Donald Trump’s phenomenal tax plan too saved Indian benchmark indices from entering into major correction. After showing sharp up-move in the last couple of weeks or so, on the weekly time frame, Nifty formed a 'Doji'-like candlestick pattern. The formation of Doji candle pattern after a reasonable upmove are impending signs of top reversals, but they need to be confirmed by bearish or negative candle in the subsequent weeks.

As stated in our earlier Nifty technical view, a close above 8730-8750 levels gave a strong jerk to the Nifty, taking it to the new swing high of 8820-8825 levels. But Nifty is facing strong resistance around levels of 8820-8825. If Nifty manages to sustain above the level of 8820-8825, bulls will regain their lost momentum and may advance towards levels of 8890 and 8950. On the downside, crucial support for Nifty stands at the level of 8700 and if closes below the level of 8700, it will invite correction up to the level of 8590, followed by 8540 which are the 38.2 per cent and 50 per cent retracement levels, respectively, of the recent upside rally.

On the daily time frame, the positive sequence of 'lower top and lower bottom' is intact and recent swing low of 8715 bottom. On the daily time frame, Nifty has formed a long lower shadow candlesticks with stronger openings followed by stronger recoveries after volatile sessions. Nifty meanwhile filled the opening upside gap of 8748-8770 given on February 6. The daily 14-day RSI has entered the overbought zone at 73, which is suggesting halt in the upside momentum. As long as the daily RSI is above level of 60 the trend remains in favour of the bulls, and any dip can be considered as a minor or routine correction after a sharp upmove.

Going forward, important event for the market is assembly elections in five states at the end of February 2017, and there is consensus amongst the market participants that the maximum support is to the NDA government. This is likely to be a positive trigger for the markets, however, any surprises from the state elections may invite correction and volatility in the markets.

Century Plyboard (I) ... BUY ... CMP Rs. 228

BSE Code : 532548 | Target 1 ..... Rs. 257 | Target 2 ..... Rs. 267 | Stoploss....Rs. 201 (CLS)

The stock of Century Plyboards is currently trading at Rs. 228. Its 52 week high and low stands at Rs. 267/ Rs. 140.4 made on October 20, 2016 and February 17, 2016. The stock after registering a new 52-week high of Rs. 267, entered into a corrective phase, and during this corrective phase, it took support at its prior support level of 157-155. The stock formed a ‘Hammer’ candlestick pattern and posted a reversal from there as if ‘V’ pattern was in the making. Currently, the stock is trailing above its 61.8 per cent retracement level of 224, which suggests continuation of the upside move. The 14-period RSI is quoting at 63 which aids bullish trend. Considering a daily time-frame, the stock may continue to move northwards. we advise traders to initiate a long position in this stock at Rs. 225-220 with a price target of Rs. 257-267, but strict stop loss should be maintained at levels of Rs. 201. 

Sarda Energy & Minerals (I) ... BUY ... CMP Rs. 241

BSE Code : 504614 | Target 1 ..... Rs. 287 | Target 2 ..... Rs. 296 | Stoploss....Rs. 255 (CLS) 

The stock of Sarda Energy & Minerals is currently trading at Rs. 241. Its 52 week high/low stand at Rs. 296.6 / Rs.75.5 which were made as on November 1, 2016 and February 26, 2016, respectively. Considering the weekly time frame, the stock has formed a ‘cup and handle’ like pattern that suggests a bullish continuation. The 14-period RSI is quoting at 62 which is positive for the stock. On the daily time frame, the stock has formed a triangle which has a breakout at 260-265 levels. The stock is currently trailing near its 61.8 per cent retracement of the prior downward rally, which if broken on the upside, can prove highly positive. The mediumterm trend remains positive. We advise traders to initiate a long position in this stock at Rs. 249-245 with a price target of Rs. 287-296. A strict stop loss should be maintained at the level of Rs. 225