Nifty Index Chart Analysis

Indian markets after registering an all time high level of 9218.40, retreated from the higher level, and registered negative returns on a weekly basis for the first time in the month of March. Sectors like Pharmaceuticals and Information Technology dragged the market lower amid on-going concerns with respect to regulatory issues with US FDA, and a strong appreciation in the rupee. Buying interest was seen in banking stocks as well, and market participants turned positive after Finance Minister, Arun Jaitely, promised a solution for the growing NPA problem in the near term. Considering the daily time frame, Nifty after registering all time high levels of 9218.40, failed to sustain at higher levels, and entered into a corrective mode, owing to dampened cues from the global markets. However, during this correction process, the Nifty filled the opening upside gap, which was formed as on March 16, 2017; and it has partially filled the upside gap which was formed post the outcome of State election. Now, going forward, Nifty has strong support in the range of 8970-9000. Why is Roadmap 8970-9000 a crucial support area for Nifty? Firstly, the opening upside gap which was formed on March 14, 2017 is placed around this range, and secondly, the 21-day EMA is placed at the level of 9003. Lastly, the zone of 8980-8990 is the previous intermediate top, and hence, previous top is likely to act as a strong support.

As long as Nifty50 holds above the levels of 8970-9000, the trend remains in favour of the bulls. However, if bulls fail to hold onto the levels of 8970-9000, it’s likely to correct up to levels of 8860 in the short-medium term. Whereas, on the upside, the level of 9120 is a crucial resistance area, and above this level, the next resistance is placed at levels of 9220 and 9300. The weekly 14 period RSI has turned down from the top of 70 levels and it may dip up to levels of Technicals 60. However, it’s important that the weekly RSI does not slide below level of 58-60 as it may result in a shift in the momentum. In the coming days, we have March series Future and Option expiry. Additionally, the government will report external debt data followed by infrastructure output data for the month of February, foreign reserve, data related to bank deposit growth on a year-on-year basis, and bank loan growth, on March 31. Auto sales figures will be reported in the first week of April. Apart from the above mentioned factors, market will take cues from the global markets as well. Therefore, we may see rise in the volatility in the coming days as numerous events are lined up, and the crucial level for Nifty would be 89709000.

STOCK RECOMMENDATIONS

TATA CHEMICALS ........................ BUY ............................ CMP Rs.592 

BSE Code : 500770 | Target 1 ..... Rs.669 | Target 2 ..... Rs.690 | Stoploss....Rs.510 (CLS) 

The stock of Tata Chemicals is currently trading at Rs.592. Its 52-week high/low stand at Rs.592.15 / Rs.360.1 which were made as on March 17, 2017 and April 05, 2016. Considering the daily weekly frame, the stock bounced back from the 50 per cent retracement level of the prior big upward rally at 444 levels after it corrected from its prior all-time high of 586. After recovering, the stock is seen consolidating at its all-time high level. The stock has formed a kind of Flag pattern and once the stock gives a breakout at 586 on closing basis, we can expect a move of up to 669 in the first place. The 14-period RSI is quoting at 65 that suggests a good momentum for the stock. Thereby, we recommend BUY in the stock for a target of Rs. 669 followed by a mediumterm target of Rs. 690. Maintain a stop loss of Rs. 510.

ALLAHABAD BANK ........................ BUY ......................... CMP Rs.72.15

BSE Code : 532480 | Target 1 ..... Rs.85 | Target 2 ..... Rs.93 | Stoploss....Rs.69(CLS)

The stock of Allahabad Bank is currently trading at Rs.72.15. Its 52-week high/low stand at Rs.88.40/ Rs. 49.10, which were quoted on September 07, 2016 and May 26, 2016 respectively. The stock after registering a high of Rs. 88.40, entered into a correction phase. At present, the stock has witnessed breakout of downward sloping trend line, joined from the high of Rs. 88.40. The stock has been trading above its important medium-long term moving averages, i.e. 50-day EMA, 100-day EMA and 200-day EMA, which further confirms the bullish trend of the stock. The 14-period RSI is quoting at 64, which suggests a good momentum for the stock. Thereby, we recommend BUY in the stock for a target of Rs. 85, followed by a mediumterm target of Rs. 93. We would advise to maintain a stop loss of Rs.69.