NIFTY Index Chart Analysis Markets focus is likely to shift towards Q3FY19 earnings.

Although the final trading session of the calendar year 2018 stayed rather lifeless with the markets closing on a flat note, the calendar year 2018 itself was a sharp contrast to its last trading session. The Nifty remained dominated by both global and domestic events. Despite witnessing high volatility in the calendar year 2018, Nifty ended the year in the green. However, the gains remained restricted, with the Nifty gaining just over just over 3 per cent. Going ahead, volatility is likely to remain on the higher side as a number of events are lined up in CY2019. 

In the last two weeks of December, the global indices have witnessed some volatility, while Nifty is trading in a capped range of 450 points. However, some selective stock picking/dumping is underway. Investors are looking for some triggers for a decisive momentum. In the coming weeks, on the domestic front, the market will take cues from two important events, namely, the development in the parliament's winter session and the Q3FY19 earnings, which will be closely watched after the mixed performance in Q1 and Q2. On the global front, China’s Caixin Manufacturing PMI and Japan’s and US’s manufacturing data points are some of the other global macro indicators that may direct the markets in the coming weeks. 

The NSE benchmark index Nifty has been consolidating in a range of over 450 points. This kind of consolidation repetitively gives buying opportunity at the support level and profit-booking or selling opportunity at the resistance levels, until it breaks out from the price range. On the weekly time frame, the index formed a bullish candle resembling a hammer-like pattern which implies strength. However, on the daily scale, the index has been oscillating in a rising channel structure. The 14-period RSI cooled off after touching the 60 zone and, at present, its reading is 55.53. According to MACD analysis on the daily time frame, there is a centerline bearish crossover, which predicts pause in the trend. 

Going ahead, the psychological 11,000 level will be the important hurdle for the index. In recent times, we have seen that whenever the index came near about 11,000 mark, it has witnessed immediate sell-off and, therefore, it could not sustain near this psychological level. A sustainable close above the 11,000 level would extend the pullback toward the level of 11,090, which is 61.8 per cent retracement of the down-leg from its all-time high to the lows of October. On the flip side, the 200-day simple moving average, which is currently placed at 10,778, is likely to act as immediate support for the index. A decisive close below this level would open the gate for further correction towards the zone of 10610-10580, which is a confluence of 61.8 per cent retracement level of the last upward move and the 50-day moving average. 

STOCK RECOMMENDATIONS 

GSFC ............. BUY .............. CMP Rs 111.95 

BSE Code : 500690
Target 1 .... Rs 125
Target 2 ..... Rs 130
Stoploss....Rs 106 (CLS) 

Gujarat State Fertilizers & Chemicals Ltd is currently trading a Rs 111.95. Its 52-week high/low stand at Rs 166.30/Rs 85.60 made on January 16, 2018 and October 11, 2018, respectively. Considering the weekly time frame, since the beginning of January 2018, the stock is trading with lower tops and lower bottoms. Recently, after forming a strong base around the level Rs 85-89, the stock witnessed a sharp pullback. Considering the daily time frame, the stock has witnessed breakout of downward sloping trendline formed by joining the swing highs from May 2018. The breakout was supported by justifiable volumes. Among momentum oscillators, the 14-period daily RSI is on a rising trajectory and trading in the bullish zone. The daily MACD stays bullish as it trades above its signal line. In the medium term, the recent swing low of Rs 106 is likely to act as a major support, while on the upside, the stock is likely to head towards the level of Rs 125, followed by Rs 130. We recommend a BUY with a stop loss of Rs 106 on a closing basis.

PFC ........... BUY ............ CMP Rs 104.05 

BSE Code : 532810
Target 1 ..... Rs 115
Target 2 ..... Rs 120
Stoploss....Rs 95 (CLS) 

Power Finance Corporation Ltd is currently trading a Rs 104.05. Its 52-week high/low stand at Rs 129.45/Rs 67.60 made on January 12, 2018 and July 17, 2018, respectively. Since the early 2014, the stock is trading in a broad range. This kind of consolidation repetitively gives buying opportunity at the support level and profitbooking or selling opportunity at the resistance levels, until it breaks out from the price range. Recently, after forming a strong base around the support zone of Rs 65-Rs 70, the stock bounced sharply. Considering the weekly time frame, the stock has recently given breakout of downward sloping trendline formed by joining the swing highs from May 2017. The 14-period RSI, after taking support around 38, has been on a rising trajectory. The stock's crucial moving average, i.e. 21-day exponential moving average, is likely to act as a strong support, which is currently placed at Rs 98. On the upside, the stock is likely to touch the level of Rs 115, followed by Rs 120. We recommend a BUY, with a stop loss of Rs 95 on a closing basis.