Nifty Index Chart Analysis
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Some more consolidation likely before major breakout or breakdown
The repercussions of geopolitical tensions seemed to have been blurred for the Indian stock markets. This is evident from Nifty's consolidation breakout and its inching higher since last couple of days. More than any extreme positive movement in the specific frontliners, this time around it was because of stronger positive market bias which has been pushing indices higher. The DIIs are seen offsetting the sell-offs from the FIIs, which had turned to safe havens amid tensions prevailing between North Korea and the US. However, SEBI has been constantly amending norms so as to make Indian markets a better place to invest and thereby attract higher capital. The breakout driven by exuberant auto sales data is seen continuing ahead of inflation and IIP release.
Technically, considering the daily time frame, after a symmetric triangle breakout at the 9925 level on the first day of Sept 2017, Nifty witnessed a pullback on the very next trading session, wherein prices entered the triangle yet again. Thereafter, Nifty consolidated for a while and has yet again witnessed consolidation breakout heading towards the 10100 mark, which is the crucial resistance level. The consolidation breakout is supported by justifiable volumes and the 14-period RSI entering the momentum level of 61. Going forward, above the level of 10100, we hold 10135-10150 as the immediate resistances for the Nifty. Nifty is showing lesser signs of a downside. However, in case of any turnaround in the wake of any new development in the geopolitical situation, we hold 10000-9970 as the immediate supports, followed by 9925 as resistance-turned-support.
On a weekly basis, Nifty finally gave a breakout of four weeks consolidation and is on the verge of giving 14-period RSI positive crossover at the 68 level. Nifty may hit the peak levels and then consolidate in the overbought zone for a while. Thereby, on the upside above 10100-10150, we hold 10300 as our next resistance level for the Nifty. If Nifty retreats from the current levels, which is not very likely, we hold 9940 as the major support, which is the upward sloping trendline level.
Nifty's trend remains positive, unless 9685 is broken on the downside. For immediate triggers, we have macro numbers which may direct the markets, followed by RBI policy review at the start of next month.
HAVELLS INDIA .......................... BUY ...................... CMP Rs506.95
BSE Code : 517354 | Target 1 ..... Rs535 | Target 2 ..... Rs555 | Stoploss.... Rs484 (CLS)
The stock of Havells India is currently trading at Rs506.95. Its 52-week high/low stand at Rs525.40 / Rs303.60 which were made on May 11, 2017 and November 21, 2016, respectively. Considering the daily time frame, the stock formed 8 points symmetric triangle and thereafter witnessed consolidation near the eighth point, where prices trailed near Rs496 level for nearly 10/11 trading sessions. Recently, the stock gave a breakout on a closing basis with huge volumes and 14-period RSI quoting at 64 depicting good momentum.
The stock holds multiple resistances at Rs510-511. In case the stock breaks out of Rs511 on a closing basis, it may witness an upward rally. Thereby, we recommend a BUY on the stock for a target of Rs535, followed by Rs555 and with a stop loss of Rs484.
TATA SPONGE IRON LTD .................. BUY ..................... CMP Rs920.50
BSE Code : 513010 | Target 1 ..... Rs975 | Target 2 ..... Rs1000 | Stoploss.... Rs875 (CLS)
The stock of Tata Sponge is currently trading at Rs920.5. Its 52-week high and low stand at Rs938/ Rs474.95 made on September 12, 2017 and November 9, 2016, respectively. The stock has closed above the Rs886 level for the first time on a monthly basis forming inverse Head & Shoulders pattern, though on the upside. In case it sustains above Rs886 till the end of September 2017, it could give a sharp upside thereafter. On the daily time frame, the stock has been trading in the range of Rs775 and Rs900 since April 2017. Recently, the stock gave a multiple resistance breakout at Rs900 and witnessed a pullback followed by a bounce back on September 12 candle with high volumes.
With this, we recommend a BUY on the stock for a target of Rs975 followed by Rs1000 and with a stop loss of Rs875.
