NIFTY Index Chart Analysis

Despite several warnings about recession and further rate hikes, the Indian benchmark index has registered a fresh breakout during this week. The pullback rally in the global market is a positive factor which is influencing the moves in the domestic market. Nifty cleared the resistance on November 1 with above-average volume, indicating that the Indian stock market can lead the next bull market among the global equity indices. In fact, Nifty has formed a strong bull candle on the weekly chart. It has rallied by 8.35 per cent or 1,398 points since the low of September 30 in just 20 trading sessions. 

As it cleared the sloping trend-line resistance drawn from October 2021 highs, it has closed above the prior swing highs. By sustaining the gains for the second week, Nifty has negated the implications of expanding the triangle or broadening the formation’s bearish implications. This strong and decisive breakout has been witnessed after several failed attempts. The frontline index broke out of a bullish flag kind of pattern on the day of ‘muhurat’ trading. It traded in a range of 202 points and sideways for the whole week. The fresh week began with huge positive gaps and pick-up in volumes was seen along with upward movement.

The FPIs are back again with aggressive buying. With the several breakout patterns confirmed, the bull market is on the cards. The previous highest closing prices are 18,255.75 and 18,338.55. If we connect these two price points, Nifty closed above this sloping trend-line resistance. Now, going forward, a close above the level of 18,339 on a weekly closing basis will be a big positive for the market. If Nifty sustains above this zone, the immediate target is at the level of 19,210. Before reaching this target, the index may face resistance at the level of 18,663. At the same time, the support is at the level of 17,784, which is a parallel closing high range. 

Only a close below this will be a shortterm negative. Interestingly, Nifty is trading above all the key moving averages. But, only 20 DMA is in an uptrend. The 50 DMA and 200 DMAs are flattened and yet to enter into the uptrend. Currently, it is 3.61 per cent above the 50 DMA and 6.76 per cent above the 200 DMA. This is the longest distance after January 19. The 20 DMA support is at 17,443, which is 4.21 per cent away. Generally, the wide gap between the moving averages and the prices usually leads the latter to pull back to the average. Nifty closed above the Bollinger band, indicating some pullback before it resumes the uptrend.

Historically, the majority of corrections were limited to 13 months and eight months. The current corrections are in the 13th month. In this 13th month’s correction, Nifty has corrected only 18 per cent. This is the lowest correction level. Earlier, the major corrections were of at least 25 per cent. The RSI on daily and weekly charts is above 60 and in a strong bullish zone. It also cleared the prior swing high. However, several concerns are looming large on the market. The Federal Reserve is meeting this week and the market is expecting a rate hike. The market participants would be keen to hear the commentary of US Federal Reserve on the economy. 

The Dow index has been trading nervously for the last two days due to event risk. The DJIA has rallied over 14 per cent since the low of October 13. The S and P index has already formed three lower candles. The Dollar index (DXY) is moving higher after a decent correction. A close above USD 111.94 means that dangers are looming over the equity market. In a nutshell, the global markets are still trying to regain strength and the Indian market is approaching towards it all-time high level. Let’s closely watch this outperformance. Historical facts suggest we are at the end of the corrective phase, though the correction target has not been met. If the global recession is a reality in 2023, it will be difficult for the Indian markets to scale to fresh all-time highs.

DR.AGARWALS EYE HOSPITAL LTD. .......... BUY ............. CMP ₹1283.45

BSE Code : 526783
Target 1 .... ₹1500 
Target 2 ..... ₹1550 
Stoploss....₹1,170(CLS)

Dr. Agarwals Eye Hospital is one of the largest networks of eye care centres in India and Africa. It is known for clinical innovations. Currently, the company is present in 13 states and three union territories. It has also expanded into 10 countries in Africa. Its hospital network is now at 110, with over 400 teams of expert doctors. Technically, the stock is trading at a new high. It has registered above average volume with impulsive price action. Its relative strength is also at a new high and it is trading above all the key moving averages. The stock is trading 24 per cent above the 50 DMA and 58 per cent above the 200 DMA. The RSI is in a strong bullish zone. The weekly ADX shows solid strength in the trend. The MACD displays strong bullish momentum. The Elder Impulse System has formed a series of bullish bars. The KST and the TSI indicators are also in the bullish set-up. The stock has cleared the Anchored VWAP resistance. As the stock is trading at a new high with the RS line also at a new high, there is an indication of strong bullish strength. Buy this stock above ₹1,300. Maintain stop loss at ₹1,170. The short-term to medium-term target is ₹1,500. 

RAMKRISHNA FORGINGS LTD. .................. BUY ................ CMP ₹235.95

BSE Code : 532527
Target 1 ..... ₹274 
Target 2 .... ₹300 
Stoploss....₹210 (CLS)

Ramkrishna Forgings Limited is a supplier to various sectors like automotive, railways, farm equipment, bearings, oil and gas, power and construction, earth moving and mining both in India and the overseas’ markets. The company is also a critical safety item supplier for screw coupling, bolster suspension, side frame keys and draw gear assembly for railway coaches and wagons. The stock is trading 1 per cent near to the prior pivot. It has formed a 55-week Stage 2 cup pattern with 42 per cent depth. The stock is above all the key moving averages and all of them are in an uptrend. Currently, the stock is trading 7.39 per cent above the 20 DMA and 14.96 per cent above the 50 DMA. Its relative strength line is at a new high and this shows outperformance compared to the broader market. The stock is meeting a majority of CANSLIM characters. The EPS strength is fair at 75 and the buyers demand is at A+. Recently, institutional holding has increased by 3.06 per cent in the past one quarter. The 20-period RSI is in a strong bullish zone. The MACD shows strong momentum. The Elder Impulse System has formed a strong bullish bar. The weekly KST and TSI indicators are also in a bullish set-up. Since the stock is in a bull phase, buy it above ₹238. Maintain stop loss at ₹210. The short-term target is at ₹274 and it could test ₹300 in the medium term. 

*LEGEND:  EMA - Exponential Moving Average. MACD - Moving Average Convergence Divergence  RMI - Relative Momentum Index  ROC - Rate of Change  RSI - Relative Strength Index

(Closing price as of Nov., 01, 2022)