NIFTY Index Chart Analysis

With the Reserve Bank of India’s (RBI's) liquidity easing already discounted in the markets, Indian benchmark indices kicked off profit-booking on August 2 after hitting all-time high levels. The spoke in the wheel was put by Securities Exchange Board of India, which directed the stock exchanges to take action against 331 listed companies, alleging them to be shell companies. To add to this, further downside came in ahead of the weak macroeconomic data, wherein IIP entered negative zone in June, declining by 0.1% amid slowdown in manufacturing and capital goods sectors. On the contrary, PI surged sharply to 2.36% and 1.88%, respectively, in July, although well below RBI’s comfort level of 4%. Ignoring or discounting the data, Indian benchmark indices bounced back on short covering since last two trading sessions. 

Now, we are approaching the end of cordownside came in ahead of the weak macroeconomic data, wherein IIP entered negative zone in June, decliningporate earnings season, which would help reduce some volatility in the marketsand give it a firm direction going forward. 

Technically, considering the daily time frame, Nifty witnessed short covering after 5 consecutive falls and a Doji candle at the end to depict reversal. The Doji was formed where Nifty took resistance turned- support near the 9690 level. 

However, the recovery is not so convincing with no events for trigger, represented by lower volumes. Moreover, the 14-period RSI is quoting at 46 after a sharp fall from 77, which suggests lack of momentum. Having said this, if Nifty continues to move up, albiet gradually, we hold 9840-9885, followed by 9930 as major resistance levels. On the downside, if the recovery acts as a breather or aretracement, then we hold 9770-9740 as immediate supports, followed by 9685-9645 as the crucial support level. Over the medium term, Nifty has corrected close to 61.8% retracement level of the prior upward rally on the weekly time frame. Tereafter, it gave a gap-up opening during the current week. Thereby, on a medium-term basis, Nifty should break and sustain above 9975- 10100 levels to continue with the uptrend. However, if 9450-9445 is broken on the downside on a closing basis, we can expect a provisional trend reversal.

However, going forward, we expect some consolidation in the markets before any major breakout or breakdown

CONTAINER CORPORATION .................. BUY ......... CMP Rs 1230.10
BSE Code : 531344 Target 1 ..... Rs 1329 Target 2 ..... Rs 1381 Stoploss....Rs 1152 (CLS) 

The stock of Concor is currently trading at Rs 1230.10. Its 52-week high/low stand at Rs 1250.45/ Rs 844 which were made as on May 23, 2017 and December 21, 2016, respectively. Considering the daily time frame, the stock had given a multiple point downward sloping trendline breakout on August 3. The stock witnessed a pullback and a bounce back above the trendline level of Rs 1176. The breakout is supported by higher volumes and 14-period positive crossover at 67, which suggest good momentum for the stock. It also shows a consolidation breakout at Rs 1210 level, which was kind of a multiple resistance level. On the weekly time-frame, the stock has resistance placed around the level of Rs 1290, which would give trend reversal if broken on the upside. We recommend a BUY on the stock for a target of Rs 1329 followed by Rs 1381 and
with a stop loss of Rs 1152. 

TECH MAHINDRA ......................... BUY ......................... CMP Rs 418.15
BSE Code : 532755  Target 1 ..... Rs 447 | Target 2 ..... Rs 463 | Stoploss....Rs 392 (CLS) 

The stock of Tech Mahindra is currently trading at Rs 418.15. Its 52-week high and low stand at Rs 515.30/Rs 357.60 made on February 21, 2017 and May 29, 2017, respectively, which shows that the stock has been trading in a negative trend with lower tops and lower bottoms. However, recently the stock has been trading in the range of Rs 414-373, hitting a kind of triple bottom pattern at Rs 373. The stock’s latest candle has given a breakout at Rs 414 with justifiable volumes and 14-period RSI positive crossover which is quoting at the 64 level. Thereby, the stock would give a trend reversal if it sustains above Rs 414 level. The stock also filled the gap formed during May 29, 2017 which is its 52-week low level. 

Thereby, we recommend a BUY in the stock for a target of Rs 447, followed by Rs 463 and with a stop loss of Rs 392.