Nifty In Consolidation Phase

The 50-share NSE Nifty has moved on expected lines. The market, after registering a high of 5755, peaked out around these levels. After registering this high, Nifty went into a short-term downtrend and retracted to the levels of 5470-5500. Around these levels, Nifty marked a short-term bottom by forming a double bottom. From these levels, the market bounced back strongly, while moving close ahead above the 5620 level is important. Despite a strong upward momentum, a technical setup is not favourable for the market. The market remains in the grip of bears as it is trading below its upward rising trendline.

Nifty has marked multiple resistances around the levels of 5970-5950, which are trend-changing levels. If the recoveries are sparse and the 5480 level seems unsustainable, then that would be a crucial support level. If Nifty doesn’t touch this level, its weekly chart would show a rising up trendline.

At the current level, the outlook looks positive as the buying seen on the bottom levels with good volumes has finally given a turn to the market sentiments. Also, the sharply positive advance-decline line is a mute witness to the current ongoing implosion.

After a strong rally, the broader market – Mid-Caps and Small-Caps – are consolidating and forming a base at the current levels. The Banking sector is helping the markets to shift gears and post gains owing to good buying around the support levels over positive news inflows. The Oil & Gas sector is in a mood to outperform the market and seems set to stage an up-move after a decent consolidation. Capital Goods remain in the bear phase and are witnessing a minor pullback from the oversold zone over a short covering. IT and Metals have seen a breakdown and they may continue to struggle at the higher levels. Healthcare and FMCG are steady and continue to support the market in its upward journey.

The Nifty has been witnessing a sharp recovery, and is not showing any signs of reversal. The index has seen a good consolidation in the range of 5500-5600. A closing above 5620 will give a breakout from this consolidation, and one can look for a pullback around 5730-5750 as an immediate level on the upside. On the downside, if the prices break below 5470, then one can expect the index to correct further till 5370-5350.
[PAGE BREAK]

Coal India | CMP - Rs 294 | Sell

Coal India bottomed out by posting an intraday low of Rs 301.10 as on May 18, 2012, took support at the Rs 300 level, recovered smartly, and peaked by posting an intraday high of Rs 386.25 as on September 17, 2012. The stock declined from here, struggled a bit, was unable to cross its previous high, and registered a low of Rs 374.85 as on December 3, 2012. Following that, the stock entered into a corrective phase, and since then, it has been trading below its long-term moving average. In the last couple of weeks, the stock was trading in a range of Rs 316-293. It has given a breakdown on the lower end of the range, along with a rise in volumes. The stock has formed a three outside down candlestick patter as on April 15, 2013, which is a negative signal.

Currently, Coal India could be commencing a medium-term downtrend. With the oscillators in the negative, a further downside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Sell | RMI-Buy | Stochastic-Sell | ROC-Sell | RSI-Buy
Support: 289, 280 | Resistance: 303, 315
Targets: 1st Target: 280 (4-6 weeks) | 2nd Target: 270 (10-11 weeks)   
BSE Code – 533278 | Stoploss: 316 (cls)
55 Day EMA: 319.87
[PAGE BREAK]

Tata Steel | CMP - Rs 295 | Sell

Tata Steel peaked at an intraday high of Rs 479.30 as on April 23, 2012, and declined to post an intraday low of 388.70 as on May 21, 2012. The stock made a strong base around the Rs 388-390 levels, commenced a short-term uptrend, and peaked by posting an intraday high of Rs 455.60 on July 4, 2012. It entered a corrective phase and posted an intraday low of Rs 347.20 as on September 6, 2012. The stock formed a double bottom around this level, entered into a short-term uptrend, and peaked by posting an intraday high of Rs 448 as on January 7, 2013. After a decent rally, it entered into a medium-term corrective phase, continuously making lower highs and lower lows pattern on the charts.

On April 15, 2013, the stock went down 1.69 per cent and formed a bearish candlestick pattern. It has broken the descending triangle pattern in the last trading session. We anticipate that the stock may see a further downside rally and continue to make fresh lows. Therefore, one can initiate a short position for a downside target of Rs 275-270, with a stoploss of Rs 313.

Trading Pointers:
Indicators: MACD-Sell | RMI-Sell | Stochastic-Sell | ROC-Sell | RSI-Buy
Support: 284, 275 | Resistance: 300, 310
Targets: 1st Target: 275 (4-6 weeks) | 2nd Target: 270 (10-11 weeks)   
BSE Code – 500470 | Stoploss: 313 (cls)  
55 Day EMA: 345.50
[PAGE BREAK]

BPCL | CMP - Rs 394 | Buy

BPCL bottomed out by posting an intraday low of Rs 315 as on November 17, 2012, and these levels have rarely been seen since. The stock launched into an intermediate uptrend to peak at an intraday high of Rs 449 as on January 21, 2013. It couldn’t sustain these levels for long, and declined to post an intraday low of Rs 368.50 on February 28, 2013. The stock entered a corrective phase to form a support around the Rs 363-365 zone, and saw a minor consolidation around these levels to form a strong base. It commenced a short-term uptrend from the Rs 365 level and has given a breakout of a downward sloping trendline as on April 15, 2013. On the same day, the stock formed a bullish gap up candlestick pattern. It closed in the higher range of the Bollinger bands and gained about five per cent along with a rise in volumes.

Currently, BPCL seems to set to stage an up-move after a decent consolidation. With the daily and weekly picture looking better, a further upside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Buy | RMI-Sell | Stochastic-Buy | ROC-Buy | RSI-Buy
Support: 383, 375 | Resistance: 396, 414
Targets: 1st Target: 415 (4-6 weeks) | 2nd Target: 430 (12-14 weeks)   
BSE Code – 500547 | Stoploss: 375 (cls)
55 Day EMA: 382.07
[PAGE BREAK]

Ajanta Pharma | CMP - Rs 680 | Buy

Ajanta Pharma bottomed out by posting an intraday low of Rs 258.50 as on April 18, 2012, and these levels have rarely been seen since. The stock launched into an intermediate uptrend, and made higher tops and higher bottoms. It registered a high of Rs 805.80 as on April 5, 2013, but could not sustain this level for long and posted an intraday low of Rs 632 as on April 12, 2013. Now, the stock has entered into a consolidation phase, post which it may resume its uptrend.

Currently, Ajanta Pharma seems to be on the verge of commencing a higher top, higher bottom formation on the daily charts, indicating the possibility of a further upside from these levels.

Trading Pointers:
Indicators: MACD-Sell | RMI-Sell | Stochastic-Sell | ROC-Buy | RSI-Buy
Support: 670, 630 | Resistance: 711, 790
Targets: 1st Target: 740 (4-6 weeks) | 2nd Target: 790 (12-14 weeks)   
BSE Code – 532331 | Stoploss: 631 (cls)
55 Day EMA: 622.56

Sebi Disclosure: The author is an active market participant and could not only be having positions but could even be having contrary positions in the stocks mentioned above.