Nifty Index Chart Analysis Market direction may hinge on state poll results

The global equity market got a major lift from the dovish comments on interest rates by Federal Reserve Chairman Jerome Powell’s in his recent speech at The Economic Club of New York, where he seemed to indicate that future rate hikes would be more dependent on economic data than any other factors. This was music to the investors' ears. Moreover, the much-awaited meeting between the US President Donald Trump and China’s leader Xi Jinping was productive. Further, India’s gross domestic product (GDP) grew at 7.1 per cent in July-September quarter, which is the lowest growth in the last three quarters. 

Investors remained cautious as a lot of events are lined up in the coming weeks. After the fierce sell-off in the crude oil prices, market remained in consolidation phase last week as it expects OPEC to reduce oil production in the upcoming meeting scheduled on December 6, 2018 in Vienna. On the domestic front, investors are keeping keen eyes on two important events, one is the RBI policy statement and the second one is outcome of the state elections, which could dictate the direction of the market in the short term. 

Indian stock markets have seen FII inflows in 15 out of 20 trading sessions in November 2018 after consistent outflows since April 2018. The FIIs and DIIs both have cushioned the market by investing Rs 6083.16 crore in November 2018. The broader market indices underperformed the frontline indices last week. On the sectoral front, banking, finance, FMCG and IT led the market in the last week of November. After taking support around its crucial short term moving average, i.e. 20-day SMA, Nifty rose for five consecutive trading sessions and managed to close above the crucial moving average, i.e. 200-day SMA as well as filled the opening downside gap created on October 4, 2018. Considering the weekly scale, Nifty index formed bullish outside bar resembling a “Bullish Engulfing” pattern, which indicates bulls were in a dominant position. In the coming days, we expect Nifty to consolidate with immediate resistance placed around the level of 10,958, which is 100-day SMA. A conclusive close above 10,958 is likely to open the doors for the psychological important 11,000 level. The 14-period weekly RSI has recently given positive crossover. The 14-period RSI on the daily chart is quoting around 62.28, the first time it has successfully crossed the 60 mark since early September. Other indicators and oscillators are also in the bullish territory. 

For any intermediate decline, the opening upside gap zone of 10758-10782 created on November 29, 2018 may act as a support, while the upward slopping trendline formed by connecting adjoining lows from October 2018 and placed near the level of 10600-10670 is likely to act as major support. 

The psychological 11,000 level will act as immediate resistance, followed by 11090, which is the 61.8 per cent Fibonacci retracement level of the entire downward rally from the all-time high made in August to October's low. Investors are advised to adopt 'buy on dips' strategy in the coming weeks till Nifty breaches its upward slopping trendline support. 

STOCK RECOMMENDATIONS 

INFY ............. BUY .................. CMP Rs 681.45 

BSE Code : 500209
Target 1 .... Rs 720
Target 2 ..... Rs 750
Stoploss....Rs 635 (CLS) 


Infosys Ltd is currently trading at Rs 681.45. Its 52-week high and low stand at Rs 754.95/ Rs 478.23 made on October 1, 2018 and December 1, 2017, respectively. After registering 52-week high, the stock witnessed profit-booking, which halted near 50 per cent Fibonacci retracement level of the entire upward move started on September 14, 2017 up to its all-time high level. On the weekly time frame, the stock has formed a bullish engulfing bar, which predicts bulls are taking control. On the daily time frame, the stock has recently given downward slopping trendline breakout along with relatively high volumes. It also managed to close above its crucial short-term exponential moving average, i.e.21-day EMA, and it is in a rising mode, which is positive for the stock. The 14-period daily RSI is quoting at 57.30 and it has already given positive crossover. In the near term, the level of Rs 639 is likely to act as a support level which is 200-day EMA. On the upside, the stock is likely to test the level of Rs 720, followed by Rs 750. We recommend a BUY with a stop loss of Rs 635


TATACHEM ........... SELL ........... CMP Rs 666.70 

BSE Code : 500770
Target 1 ..... Rs 650
Target 2 ..... Rs 625
Stoploss....Rs 735 (CLS) 


The stock of Tata Chemicals Ltd is currently trading at Rs 666.70. Its 52-week high and low stand at Rs 786.95/ Rs 623.50 made on May 4,2018 and October 9, 2018, respectively. After hitting 52-week low, the stock bounced back from lower levels to test its 61.8 per cent Fibonacci retracement level of the recent downward move which started on September 3, 2018 up to its 52-week low. It has been facing stiff resistance around its 61.8 per cent retracement level. Also, in the last four weeks, the stock is trading in a narrow contracting consolidation range. On the weekly time scale, since last four weeks, the stock has been hovering around its long-term moving average, i.e. 200-week EMA but it is not able to give close above it. For the short term, the zone of Rs 720-735 is likely to act as major resistance. The 14-period daily RSI is quoting around 39.46 and it has not been able to cross the 60 mark. The MACD histogram is also below zero line. Considering all the above factors, we expect the stock to touch the level of Rs 650, followed by Rs 625, and the stop loss is suggested at the level of Rs 735 on a closing basis. We recommend a SELL, with a stop loss of Rs 735.

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