NIFTY Index Chart Analysis

NIfty trading in 200 point range with low volatility The Nifty has been trading in a 200-point range in the past 14 sessions. It was at least 6 times in the last 14 days, that the index attempted to overcome the 12,000 mark on a closing basis; it managed to do so on 7th November but with a bearish formation on the charts. The Nifty did sustain above the 11,800 mark during the period but posted bearish or indecisive formations. The volumes have been below average and the market breadth was negative on most of the days. Even on a positive day like Tuesday (19th November) when the Nifty posted a 55.6 point gain, the breadth was negative. Domestic institutions have been net sellers in the month of November until now and FIIs too have turned net sellers in each of the past four trading days. The index heavyweight Reliance Industries and BFSI stocks held the Nifty near its lifetime highs. With the help of these, for the second consecutive week, the Nifty has been able to hold the crucial support of 11,800. Interestingly, this is also the gap area of 30th October. Even though the gap is filled, the Nifty has been sustaining itself above the mark on a closing basis. For the next few days also this area of support is critical for the market. 

Structurally, if the Nifty closes below the 11,800 mark, it will have a downside implication of about more than 200 points. It also indicates that the up move seems to be over. On the weekly chart, the Nifty formed a back to back small body long-legged candle for the past two weeks. These formations suggest indecisiveness. These formations are a results of several such candles on the daily chart for the past ten days. In any case, if the rally extends and the Nifty closes above its 8th November high of 12,034, there are chances of it reaching a new life-time high. So far, the bulls are defending the critical support of 11,800 and the bears are active at the higher levels or near to the resistance at the 12,034 mark on the Nifty. 

However, the broader market is not participating in this strength. Major sectors like IT are lagging for the past few weeks. And small and mid cap indices have actually closed in the negative last week. Even though a selective few mid and small caps are performing well, the representative indices are lagging. The Nifty Midcap-100 index is oscillating around its 200-DMA. The Nifty small cap-100 index is still 5 per cent down from its 200-DMA. The Midcap-100 looks better than the Smallcap 100, structure-wise. The major indicator, RSI, has broken down from an upward channel and is forming a base around the 60 levels or within the bullish zone. The MACD histogram is in the negative on the daily chart, although there has not been any negative momentum picking up. On the weekly charts, it is still strong enough to protect the bullish momentum. If the volumes increase on positive days coinciding with the Nifty closing above 12034 levels, then it would be a big bullish sign for the market in the current scenario. We suggest keeping 11800 as a stop loss for long positions and adding fresh longs on the Nifty closing above 12034 on closing basis. We can expect a decisive move in the coming week. 

In short, the market is trading in a 200 point range with low volatility. As long as this indecisive nature continues, the market may have some more lackluster sessions. On a breakout on either side, the possibility of a sharp move in the respective direction cannot be ruled out. As the Nifty is trading near its resistance area, be with the positive momentum. 

CASTROL INDIA ......................... BUY ....................... CMP Rs153.55
BSE Code : 500870
Target 1 .... Rs165
Target 2 ..... Rs170
Stoploss.... Rs142 (CLS) 

There are early signs of Castrol India coming out of its four-year down trend. After breaking down from the Rs177 base of parallel lows and descending highs, it formed two lower highs and lower lows on the weekly chart. The 50-DMA is about to cross the 200-DMA. On the daily chart, it has broken out of a bullish flag pattern with a massive volume on Tuesday. It is making higher highs consistently after a flat base pattern in August'19. It is now on the verge of a breakout with another big 150 days cup and handle pattern, with a depth of 34.8 per cent. The cup pivot or handle beginning high is at Rs159.4. The MACD is above the zero line and the histogram is in a bullish territory for the past 10 weeks. The RSI is in an extreme bullish zone. Stochastic has given a buy signal from an extreme oversold condition. The stock is also meeting all the CANSLIM criteria. Its price relative strength is at 85 and EPS strength is at 82. The stock's witnessing greater buying demand with a 3.73 per cent increase in its institutional holding. The return on equity (ROE) is at the highest level, ie at 61 per cent. The 25 per cent earnings growth in Q2FY20 shows the fundamental strength of the stock. We suggest buying this stock at Rs153.55 with a stop loss of Rs142. The target is open to Rs165- Rs170 in the medium term. 

SANOFI INDIA .............................. BUY ...................... CMP Rs6908.10
BSE Code : 500674
Target 1 ..... Rs7400
Target 2 ..... Rs7500
Stoploss.... Rs6500 (CLS) 

Sanofi India is currently trading at its lifetime highs. After breaking out from its 58-week down channel last month, it is consolidating in a range for the past four weeks. Finally, it has formed a big bullish bar on decent volumes. The stock has witnessed a golden crossover, ie the 50-DMA crossing above the 200-DMA. The stock is currently trading well above these two long term moving averages. The stock also meets the trend template of Mark Minervini. The MACD and the RSI are showing bullish strength in the stock. The MACD histogram suggests on a continuation in the upside momentum. The trend strength indicator ADX is at 22.25 and the +DI is above the ADX and -DI, which also indicate strength. The stock is also meeting most of the CANSLIM characteristics as it is trading in a tight area with high volumes. Its greater buyer demand reflects an increase in institutional holding. A 61 per cent increase in earnings and 18 per cent sales growth is pretty attractive for the stock. With 14 per cent Return on Equity (ROE), the stock looks attractive at the current levels. Buy this stock at Rs6908.10 with a stop loss of Rs6500. The target is open to Rs7400- Rs7500 in the medium term.