NIFTY Index Chart Analysis

On Dalal Street over the last couple of weeks, it was a thrilling ride as a host of events unfolded one after another, Some of these events were scheduled, while few others were not on the cards, like the surprise resignation of the RBI governor Urjit Patel. Also, the markets were extremely volatile as the exit polls indicated that the BJP may lose the assembly polls and the final outcome was in line with the exit poll estimates. As the uncertainty surrounding the state elections ended, the bulls managed to march ahead and cleared the 200-day moving average in no time. Also, the markets cheered timely appointment of the new RBI governor Shaktikanta Das. 

Whereas, the global equity markets continued to experience a sell-off on concerns about global economic slowdown. Indeed, China’s economy showed another sign of weakening in its industrial production output, while the Eurozone PMI fell to its lowest level in four years. The crude oil prices remained in consolidation as market participants doubt that the planned supply cuts led by OPEC will be enough to curtail oversupply. The positive domestic macroeconomic number has been cushioning the market so far, despite weak global cues. The IIP data for the month of October came in at a robust 8.2 per cent and the retail inflation cooled off to 2.3 per cent. 

Going forward, the markets will take cues from two key important events, namely, the developments in the parliament's winter session, which will be the last full session of the NDA government before the general election, and the second one would be the Fed chairman Jerome Powell’s policy statement giving indication about the Fed's interest rate projection. The Indian Volatility Index VIX fell from the last week’s high of 20.43 to the Monday’s low of 14.54, which is lower by about 28.85 per cent. 

On the sectoral front, the Nifty Auto and Nifty PSU Bank indices have been outperforming, while on the flip side, the Nifty Pharma has underperformed the benchmark index since December 10, 2018. 

On the technical ground, NSE benchmark index Nifty had formed a bullish candle on the weekly time frame, after taking support around the crucial 61.8 per cent Fibonacci retracement level of the recent upward move started from the low of October 2018 to the high of December 3, 2018. On the daily time frame, the index has been seen oscillating in a rising channel structure.

After the outcomes of the state elections, the Nifty has been on a winning sphere and has managed to close above its long term moving average, i.e. 200-day simple moving average. The 14-day RSI is currently quoting around 59.76, and it has recently given positive crossover.

In the coming days, Nifty has two important hurdles to cross; one is the 100-day simple moving average, and the second one is psychological resistance of 11000 level. We may witness profit-booking near these levels. A close above the zone of 10940-11000 would extend the pullback towards the level of 11,090, which is 61.8 per cent retracement of the down leg from the all-time high level to lows of October. On the downside, in case of consolidation or correction, the 200-day simple moving average is likely to act as a support, which is currently placed at 10761 level. A decisive close below this level would open the gate for further correction towards the level of 10540, which is the level of 50-day simple moving average. 

STOCK RECOMMENDATIONS 

BERGEPAINT ........... BUY .......... CMP Rs 328.50 

BSE Code : 509480
Target 1 .... Rs 340
Target 2 ..... Rs 350
Stoploss....Rs 307 (CLS) 

Berger Paint India Ltd is currently trading at 328.55. Its 52-week high and low stand at Rs 349/ Rs 232 made on August 29,2018 and February 6,2018, respectively. After registering its 52-week high in the month of August, the stock corrected sharply, the correction halted near its long term upward sloping trendline support formed by adjoining lows from June 2015 and it coincides with the 100-week simple moving average. After taking support, the stock witnessed an upmove and recently, on the weekly time scale, the stock has given breakout of downward sloping trendline formed by connecting highs of all-time high to the high of November 2018. The 14-period RSI on weekly time frame has recently managed to cross the 60 mark, which is positive for the stock. The weekly MACD stays bullish as it trades above its signal line. In the near term, the level of Rs 307 is likely to act as a support level, which is the 200-day simple moving average. On the upside, the stock is likely to touch the level of Rs 340, followed by Rs 350. We recommend a BUY, with a stop loss of 307 

INDIGO .............. BUY ............ CMP Rs 1107 

BSE Code : 539448
Target 1 ..... Rs 1250
Target 2 ..... Rs 1290
Stoploss....Rs 950 (CLS) 

Interglobe Aviation Ltd is currently trading at 1107.25. Its 52-week high and low stand at Rs 1520/ Rs 697 made on April 20, 2018 and October 9, 2018, respectively. The stock has surged almost 62 per cent from its previous support zone near its 52-week low. On the daily time frame, the stock has recently given breakout of multitouch point trendline resistance, which resembles an 'inverted head and shoulder' pattern breakout. The breakout was supported by the justifiable volumes. It also managed to close above its crucial long-term moving average, i.e. 200-day simple moving average. According to MACD analysis on the daily chart, it has recently given centreline bullish crossover, which is a positive signal. 

In the medium term, the recent swing low of Rs 956 is likely to act as a major support and, on the upside, the stock is likely to head towards the level of Rs 1250, followed by Rs 1290. We recommend a BUY with a stop loss of Rs 950 on a closing basis.