Nifty Index Chart Analysis

Post a week’s breather, Indian markets are yet again all set to hit new highs. However, the pace remains quite gradual, indicating consolidation for now. The markets remained less reactive of the US Fed’s interest rate hike decision, despite the decline in inflation. The US retail sales declined amid slowdown in payroll growth. However, the move to hike interest rate was taken on account of government’s initiative to reduce its balance currently quoting at USD 4.5 trillion. Indian markets witnessed profit-booking along with cautiousness, in anticipation of capital flight to the US markets post rate hike. On the contrary, the strong cues from Europe, viz., the expected start of negotiations between UK Brexit secretary and the EU and the French President Emmanuel Macron’s win in elections brought about revival in Indian markets. However, lethargy persists in the markets due to lack of domestic triggers.

Considering the daily time frame, prior to a recent bounce, Nifty had witnessed correction up to 9565-9560, which was 38.2% retracement level of the prior upward rally. This level also acted as a 21-day EMA support level that led to a bounce back. Moreover, the 14-period RSI is quoting at 60 with a positive crossover, depicting further momentum in Nifty. Thereby, we can say that Nifty may make another upward rally, touching yet another record high, provided it breaks its major resistance at 9710-9750 on a closing basis. Moreover, Nifty has filled the gap in intra-day session itself on Monday after a gap-up opening. Hence, in case we see a turnaround, which is not likely for now, we hold support at 9615-9600, followed by 9570-9560.

Considering the weekly time frame, Nifty seems to have bounced back after a breather post three consecutive weekly green ticks. However, the bigger picture states that Nifty is trading in consolidation with quite smaller and gradual upticks. The 14-period RSI on weekly time frame is quoting at 74, depicting over-bought situation. Hence, in case Nifty slides below 9560 on account of profit booking, we may see it testing 9470 followed by 9390 in the medium term. On the upside, we maintain our view of 9930-9990 in the medium term.

We are in the midst of the monsoon season and heading for GST implementation from July 1, which are the major triggers for the markets. We maintain our long-term positive outlook on the Nifty as it has sustained positive trend. Hence, despite stretched valuations, which are still lower as compared to the 2007 top, we expect Nifty to hit 10700-11200 soon.

STOCK RECOMMENDATIONS

VRL LOGISTICS.....BUY....... CMP Rs.337

BSE Code  : 539118 Target 1 ..... Rs.370 Target 2.... Rs. 377 Stop loss.... Rs.320 (CLS)

The stock of VRL Logistics is currently trading at Rs.337. Its 52-week high/low stand at Rs.377.50 / Rs.244.70 which were made as on July 21, 2016 and November 9, 2016, respectively. Considering the weekly time frame, the stock witnessed a change from a negative trend in April 2017 after it broke the major resistance at Rs.331.8 level. Recently, after a slight correction, the stock has taken support at the 21-day EMA level, which is was placed at Rs.315. The current weekly candle depicts reversal with relatively higher volumes and a positive RSI crossover at 60. Hence, we can expect it to give a trend line breakout at Rs.352, which is also a cup  and handle pattern breakout. Thereby, we advise you to enter the stock at CMP to 344, for a target of Rs.370 followed by Rs.377, with a stop loss of Rs.320.

INDRAPRASTHA GAS....  BUY.... CMP Rs.1084

BSE Code: 532514 Targets 1..... Rs.1175 Target 2..... Rs.1200 Stop loss....Rs.1025 (CLS)

The stock of IGL is currently trading at Rs.1084. Its 52-week high and low stand at Rs.1125/ Rs.576.70  made on June 7, 2017 and June 24, 2016, respectively. This states that the stock is trading in an uptrend and Rs.1125 is also its all-time high level. Considering the daily time frame, the stock had given a major multiple resistance breakout at  Rs.1070 level during end of May 2017. Thereafter, the stock witnessed a pullback up to Rs.1055, where it gave a double bottom. The stock has seen a reversal from recent two trading sessions. The rise is supported by rising volumes and the RSI's positive crossover quoting at 59, which suggests momentum. Considering the weekly time frame, the stock had given a breather in the previous session after three consecutive positive weeks. The current week also started on a positive note, depicting further upside. With this, we suggest a buy in the stock at the CMP for a target of Rs.1175-1200 and with a stop loss of Rs.1025.