Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : The start to the week was not on a pleasant note as geopolitical and global growth concerns gripped D-Street, which continued to bleed with the Nifty extending its fall to the eighth straight session on Tuesday. However, the bulls turned the table on Wednesday and registered a strong rally on the back of short covering and favourable cues from the global markets. In the US, the FOMC delivered the minutes from its January meeting and suggested that the central bank will remain accommodative for a while. Going ahead, market participants around the globe would keep an eye on the trade talks between the US and China aimed at ending the tariff war. After eight successive days of decline, the bulls bounced back and the swing low of 10,583 made in the last week of January was defended. The Nifty index had formed a Morning Star-like pattern on the daily time frame on Wednesday and follow-up buying was seen after the formation of this candlestick pattern on Thursday, which indicated that the bulls are likely to be in the driver’s seat in the coming trading sessions. However, the upmove from hereon may not be smooth for the index as it still has critical resistance in the form of a long term moving average, i.e. 200-day moving average, to cross, which is placed at the level of 10,860, but it has averted any immediate danger of breaking down. One could switch to aggressive mode after Nifty surpasses this crucial resistance of 10,860, while on the downside, immediate support for the index is placed in the form of 100-day moving average at the level of 10,682, followed by the major support of 10,580.

 NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge for market’s short term expectation of volatility, dipped by 5.92 per cent to end at 16.05. Nifty February 2019 future last price stood at 10,807 at a premium of 17.15 points over the spot closing of 10,789.85. Nifty March 2019 future last price stood at 10,845 at a premium of 55.15 point over the spot closing of 10,789.85. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 1.11 for the February month contract. Among Nifty Calls, 10,800 strike price from the February month expiry was the most active Call. Among Nifty Puts, 10,700 strike price for the February month expiry was the most active Put. For the February series, the maximum OI outstanding for Puts was at 10,700 strike price, and that for Calls, it was at 11,000 strike price. LEGEND : EMA – Exponential Moving Average. MACD – Moving Average Convergence Divergence RSI – Relative Strength Index 

STOCK STRATEGY CAN FIN HOMES .............................. BUY .......................... CMP Rs 271.70
BSE Code ...... 511196 Target 1 .... Rs 295 Target 2 .... Rs 305 Stoploss ...Rs 250 (CLS) 

✓ Current Observation: Considering the daily time frame, the stock formed bearish engulfing candle near downward sloping trendline on December 31, 2018 and, thereafter, it witnessed gradual correction. The correction halted near the upward sloping trendline. 

✓ At present, the stock has given breakout of downward sloping trendline along with decent volumes Additionally, the stock formed sizeable bullish candle on the breakout day, which adds strength to the breakout. Recently, the stock managed to close above its short-term moving average, i.e. 20-day EMA and 50-day EMA. 

✓ The 14-period RSI is currently quoting at 56.58 and it has recently given positive crossover. The daily MACD stays bullish as it is trading above its zero line. 

✓ The level of Rs 250 is likely to act as a strong support for the stock and this can be maintained as a stop loss, while on the upside, the stock is likely to touch the level of Rs 295, followed by Rs 305. 

✓ Conclusion: Considering that the stock has given breakout of the downward sloping trendline and the stock is trading above its short term moving averages, we recommend buying this stock for the target price of Rs 295, followed by Rs 305, with stop loss at Rs 250 level on a closing basis. 

REVIEW OF STOCK STRATEGY 

We had recommended buying the stock of Bharat Financial at Rs 949.60 in Issue No. 17 (dated February 18, 2019). Post our recommendation, the stock did not sustain at higher levels due to emergence of selling pressure in the market. The scrip saw low volumes and, at present, it is hovering around the trendline support. However, we can expect to see smart upmoves if it closes above the Rs 955 level going ahead. Our suggestion would be to hold your position in the counter till next week. As we had suggested in our stock strategy, apply Rs 900 as a stop loss for this stock on a closing basis.