NIFTY Index Chart Analysis

NIFTY Index Chart Analysis
Stock-Specific News To Drive Nifty Going Forward

As mentioned by us earlier, Nifty achieved its first target of 9930 after it broke out of 9710-9750 levels. The bulls in Indian stock market were just taking their cautious steps towards all-time high levels, when bears abruptly rammed into them and the heavyweight ITC plunged more than 13% in intra-day trade. The gains made by the Indian markets made on the back of positive macroeconomic numbers were washed off on Tuesday, July 18. Till the previous session, markets remained buoyant post better auto sales, lower inflation and positive factory output data, which cued towards an early rate cut by the RBI. However, ITC broke down on the decision of GST Council to impose compensation cess on cigarettes in addition to the GST rate, i.e. 28% + 5% ad valorem. To add to it, mixed results from IT frontliners and lower than estimated results of banking majors added volatility to the markets. Weak investor sentiments ahead of global corporate earnings report too dragged markets to close in the red. To sum up, Nifty is off its all-time high levels with a Doji candle pattern on a daily time frame, depicting a rollercoaster ride for traders.

Considering the daily time frame, Nifty opened with a gap-down on July 18 candle, where it filled the gap and yet again retreated to close flat. Nifty has made a low exactly at 50% retracement of the prior upward move at the 9790 level. Hence, 9790 will act as a major support for the Nifty. Nifty's 14-period RSI has created a negative crossover after turning from overbought zone.

Hence, in case Nifty falls further below the 9790 level, we hold next downside support at 9755, followed by 9720 which is its 21-day EMA support level. Below these levels is 9645, which may act as a provisional trend reversal. In case Nifty bounces back from the current levels, we hold 9895, followed by 9930 as resistance levels. Above 9930, we hold 9990 as the next upside resistance. 

On the weekly time frame, Nifty witnessed a correction post the rally for two consecutive weeks, where Nifty took support at 23.6% retracement level of the prior upward move. Considering the medium term, 9445 will act as a trend reversal for the Nifty, below which Nifty may test the 9150 level too. Nifty needs to break out of 9915-9930 levels on a weekly closing basis to continue with the uptrend. Above these levels, 10700-11200 will act as the next resistance levels for the Nifty. 

We are in the midst of earnings season and hence traders are requested to play stock-specific, as benchmark indices would be driven by corporate earnings of the heavyweights. For investors, it is an opportunity to buy on dips and sell at highs. GST has been rolled out and hence investors can enter the scrips benefiting from the same. 

STOCK RECOMMENDATIONS

KSB PUMPS
BSE Code :500249
BUY CMP Rs.774.10
TGT 1:Rs.835 TGT 2:Rs.850 SL Rs.740 (CLS)

The stock of KSB Pumps is currently trading at RS.774.10. Its 52-week high/low stand at RS.839.50/ RS.549.90, which were made on July 5, 2017 and October 26, 2016, respectively. Considering the daily time frame, the stock gave a 'cup and handle' pattern breakout with a longer green candle and huge volumes on June 28, 2017. Thereafter, the stock witnessed a pullback up to its prior multiple resistance levels at RS.740-745, which also acted as 61.8% retracement level of the prior upward move. 

Recently, the stock has bounced back from that support level. Its 14-period RSI is quoting at 58 and is nearing 60, which suggests momentum in the coming sessions. Hence, we recommend a Buy on the stock above RS.780, for a target of RS.835, followed by RS.850 and with a stop loss of RS. 740. 

VINYL CHEMICALS
BSE Code :524129 BUY CMP Rs.87.30
TGT 1:Rs.95.90 TGT 2:Rs. 102 SL Rs. 82.50 (CLS)

The stock of Vinyl Chemicals is currently trading at RS.87.30. Its 52-week high and low stand at RS.93/RS.55.65 made on July 7, 2017 and December 26, 2016. Considering the weekly time frame, the stock gave a downward sloping trendline breakout at RS.71.90-72 with rising volumes. 

On the daily time frame, the stock consolidated in a range and gave a breakout with a huge candle on July 7, 2017 with very high volumes. The stock corrected up to 50% retracement level of the prior upward rally after hitting its 52-week high and has bounced back. The 14-period RSI is quoting at 67 with a positive crossover. 

Hence, we recommend a Buy on the stock in the range of RS.87.30-88.30 for a target of RS.95.9, followed by RS.102 and with a stop loss of RS.82.50.