Nifty Index Chart Analysis
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Indian benchmark indices witnessed consolidation for consecutive two weeks in a row with lack of major corporate earnings during the period. Markets also followed investors' cautiousness ahead of prevailing geopolitical tensions and Fed's rate policy announcement, which remained unchanged. Markets also discounted the manufacturing and services PMI that remained unchanged at 52.5 and dropped marginally at 50.2 respectively. We have metal, pharma, infra and FMCG sector results to be released and sector specific policies which would direct the markets going forward. The FIIs have turned net sellers in the month of May with negative equity net investment of Rs 1928 crores. Markets seemed to have halted after a big revival from April 24-26, 2017.
Considering the weekly time frame, Nifty is trailing at its all-time high levels with relatively lower volume. The trend remains positive unless 9020-8980 level is broken on closing basis. The 14-period RSI is prevailing at 69-70 levels which has been depicting over-bought one, but does not give clear indication of a sell for now. In case Nifty corrects below 9075 followed by 8090, it can test 8090 in medium term. However, a bounce back from here and a breakout above 9415 levels can pull Nifty towards 9590 mark.
On the daily time frame, Nifty after registering high of 9367 during April end and thereafter the index witnessed consolidation to downward movement with negative closing on intraday basis on almost all trading sessions. However, Nifty scaled above level of 9367 to hit fresh all time high of 9377 but it could not sustain the levels on closing basis. Currently, Nifty is seen consolidating with diminishing volumes. Hence, if Nifty breaks out and manage to close above levels of 9367-9377 we may scale up to levels of 9415, which is the upper band level of 20-days Bollinger. In case markets retreat, we hold 9270-9240 as the immediate supports._rde
Our long-term view is positive and Nifty is likely to maintain uptrend with small corrections in between. On immediate basis if Nifty corrects we hold the 9261 followed by 9226 and 9190 as the next supports for the Nifty which are the retracement levels of the prior upward rally. Current week's movement if not range bound would be the deciding factor for the directionless markets. Traders are suggested to remain cautious and play stock specific ahead of the corporate earnings as the frontline results may direct Nifty during particular trading sessions.
STOCK RECOMMENDATIONS
RPG LIFE SCIENCES
BSE Code : 532983
Buy CMP : Rs.378
TGT 1 : Rs.430 TGT 2 : Rs.465
SL: Rs.350 (CLS)
The stock of RPG Life Sciences is currently trading at Rs 378. Its 52-week high/low stands at Rs 536.20 / Rs 221 which were clocked on January 5, 2017 and June 24, 2016. The stock has witnessed a strong bull run around the level of Rs 44-45 and went to register high of Rs 536.2 in the month of January, 2017. However, the stock failed to sustain at higher levels and entered into a corrective phase. At present, the stock is trading around crucial support levels as defined by the horizontal trend line. Additionally, it coincides with the 50 per cent retracement level of uptrend from low of Rs 221 to high of Rs 536.2. On the daily time frame, 14-period RSI is in oversold region, hence a bounce back is likely. We advise traders to initiate a long position in this stock at Rs 372-377 with a price target of Rs 430-465, strict stop loss should be maintained at Rs 350.
TATA COFFEE
BSE Code : 532301
Buy CMP : Rs.133
TGT 1 : Rs.150 TGT 2 : Rs.157
SL: Rs.123 (CLS)
The stock of Tata Coffee is currently trading at Rs 133. Its 52-week high and low stands at Rs 150.05/ Rs 85.4 and had been made on October 20, 2016 and May 24, 2016. Considering the daily time frame, the stock has just given a multiple resistance breakout at Rs 131.5-132 levels and also an ascending triangle pattern breakout with reasonably higher volumes. This breakout has appeared after a reversal subsequent to taking support at its 50-days EMA at around 125 level. It's the third consecutive positive trading session for the stock and continuation would be confirmed on its breaking Rs 133.1-135.5 on a closing basis. The stock may also correct up to the trendline level of Rs 132 and reverse for another upward rally. Hence, we advise traders to initiate a long position in the stock at a range of Rs 133.9-131.5 for a target of Rs 150 followed by Rs 157 and a stop loss of Rs 123.
(Closing price as of May 09, 2017)