Nifty Index Chart Analysis

Indian stock markets bounced back after hitting major support levels, driven by robust macroeconomic numbers and slightly downward tilted inflation, which has created hopes for monetary easing in the forthcoming coming RBI policy. Further, corporate earnings season seem to be buoyant as Indian stock markets have sustained their high levels with intra-day volatility since the breakout on October 16, 2017. Markets witnessed consolidation at higher levels, but yet again broke out in the recent session with the spurt in banking stocks after the Central government announced recapitalisation of PSU banks to the tune of Rs.2.11 lakh crore. Considering the global bourses, strong quarterly results in the US too helped markets scale new highs. Going forward, the reappointment of Shinzo Abe as Japanese Prime Minister may bring in some pressure on the US and other nations, with more aggressive stance expected from Abe towards Pyongyang owing to escalating tensions between North Korea and the US.

Also, whether the markets would remain on an upward course or correct from here is now the matter of concern. The stocks have been rising with recovery in earnings, but with premium valuations, while the economy has been witnessing gradual deceleration. The idle cash post demonetisation has been brought into the system again, while the FIIs have been pulling out money since the GST roll-out.

Technically, the major Indian benchmark index Nifty had broken out of its major resistance at 10140-10180 levels on October 16 on a closing basis. Thereafter, Nifty consolidated for five sessions and yet again witnessed a breakout with a gapup opening on October 25, hitting a high of 10340. Going forward, Nifty may continue to go up from the current levels or may correct up to 10180-10120 for a further bounce back. In that case, we hold 10340-10380 as the immediate resistance levels. On the downside, the levels of 10230 followed by 10180 would act as immediate supports. Considering the trend maintained by the markets with justifiable volumes and the 14-period RSI at 66 depicting momentum, we hold 10550-10650 as the next major resistances above 10350. We are at the midst of earnings season and any de-growth in results of frontline companies may bring in correction in the markets. In which case, below 10120, we hold 10100-10070 as supports in the medium term.

The Indian Volatility Index (VIX), a gauge for market's short term expectation of volatility, inched up 1.75% and reached 11.79. Nifty November Futures closed at 10,325 on Wednesday at a premium of 30.85 points over spot closing of 10,294.15. Nifty November futures added 44.68% in open interest. The Nifty Put Call Ratio (PCR) was at 1.21 for November month contract.

STOCK RECOMMENDATIONS

GAIL LTD

BSE Code : 532155
CMP Rs. 451.80
TGT 1:Rs. 479 TGT 2: Rs. 496
SL Rs. 430 (CLS)

The stock of GAIL is currently trading at Rs.451.80. Its 52 week high/low stand at Rs.457.15 / Rs.300.98 which were made as on October 11, 2017 and November 24, 2016, respectively, which suggests an uptrend. The stock had failed to sustain uptrend during June 2017, but it was a whipsaw and the stock gave a kind of rounding bottom breakout on October 3 at Rs.434 level. Thereafter, the stock witnessed a pullback up to the trendline level, and recently, it has bounced back to head upwards. The volumes are growing and the 14-period RSI is quoting at 67, which suggests some more momentum ahead. Even considering the weekly time frame, the stock has just broken out of 'cup and handle' pattern at the same levels. Thereby, we recommend a BUY in the stock for a target of Rs.479 followed by Rs.496 and with a stop loss of Rs.430.

ARCHIDPLY INDUSTRIES

BSE Code : 532994
CMP Rs. 104
TGT 1:Rs. 113 TGT 2: Rs. 118
SL Rs. 97(CLS)

The stock of Archidply Industries is currently trading at Rs.104. Its 52 week high and low stands at Rs.117.90/ Rs.42.95 made on July 6, 2016 and November 22, 2016. Considering the daily time frame, the stock has given a kind of symmetric triangle pattern breakout at Rs.93.80-94 levels and has surged for two consecutive days thereafter. Meanwhile, the stock also broke the major resistance at Rs.102 level in the recent candle with huge volumes and the 14-period RSI quoting at 69. Considering the weekly time frame, the stock has started a new rally at the beginning of October 2017 after correcting nearly 32% from its 52-week high. On the weekly time frame, just rising volumes in the current week and the 14-period RSI at 61 suggests start of the momentum. With this, we suggest a Buy in the scrip for a target of Rs.113 followed by Rs.118 and with a stop loss of Rs.97.