NIFTY Index Chart Analysis

Benchmarks off their peaks amid profit-booking, 11,230 to act as support for Nifty 

Indian key benchmark indices are off their peak levels on account of heightened trade war tensions across the globe, the latest flare-up being the US-Turkey trade war. The current week started off on a pessimistic note amid sell-off in the Turkish lira after Donald trump announced doubling of tariffs on import of metals from Turkey. The Turkish issue spooked global markets on fears of the issue affecting the global banking systems. The retreat in the global indices brought about a reversal here as traders booked profits in the Indian stock markets. On the domestic front, corporate earnings have been already priced into the markets, along with the release of basic macroeconomic numbers in the first two weeks of August 2018. During the week, the cautiousness ahead of the release of CPI and WPI data dragged down investor sentiments even as the RBI cued in advance by raising interest second time in a row. Both FIIs and DIIs remained hesitant buyers since the end of last week. 

The broader market indices too retreated breaking their consolidation after the indices had just breached their crucial resistance levels giving rounding pattern breakouts, which were not very significant though. On the sectoral front too, most of the sectoral indices moved southward, except for IT and FMGC which breached their record highs while pharma consolidated. The reason being dollar yet again hitting all-time high against the rupee at 69.86/dollar. Brent oil is still struggling at lower levels between USD 72.80-73 per barrel. Technically speaking, our benchmark index Nifty hit beyond our mentioned resistance at 11450, but it could not breach the 11500-mark and reversed from the 11495 level.

Considering the daily time frame, Nifty had formed a small body bear candle on August 9 with almost an open-high in intra-day trade. Nifty confirmed Doji with a relatively bigger bearish candle on the next day. This provisional reversal was supported by rising volumes and the 14-period RSI negative crossover in the overbought zone. Nifty gave a gap-down opening on August 13, attempted gap-filling, but retreated again to close lower. Considering the weekly time frame, Nifty had hit a shooting star-like pattern last week and started off the week on a negative note. In case Nifty continues to decline amid profit-booking, we hold 11290-11230 as the immediate supports, followed by 11135 as the major support. However, on the daily time frame, Nifty has taken support at 61.8% retracement of the rally from 11235 to the peak, and hence, if it bounces back above 11405- 11430, we hold 11500-11550 as the major resistances. Thereby, on the weekly time frame too, shooting star would turn a whipsaw. 

STOCK RECOMMENDATIONS 

LUMAX AUTO TECH .......... BUY.............. CMP Rs 202.40 

BSE Code : 532796
Target 1 .. Rs 218
Target 2 ..... Rs 224
Stoploss....Rs 181(CLS) 

The stock of Lumax Auto is currently trading at Rs 200.35. Its 52-week high and low stand at Rs 203/Rs 95.82 made on August 13, 2018 and August 11, 2017, respectively, where the 52-week high also acted as an all-time high. The stock witnessed inverse head & shoulders pattern breakout at Rs 174 on August 6, 2018, with a significant bullish candle followed by horizontal trendline breakout at Rs 180 level, which is also a rounding base breakout. The stock consolidated for three trading sessions and attempted a bounce, but it retreated to close flat on August 10. However, the stock has bounced back yet again to continue its northward movement. The recent trading sessions show volume pick-up and the 14-period RSI has given a multiple resistance breakout at 68 and has approached 76, which for now cannot be termed overbought in this particular stock. On the weekly time frame, the current week shows its fourth consecutive upbeat, with no signs of reversal for now. We recommend it a BUY. 

TATA ELXSI LTD ............. BUY .......... CMP Rs 1422.25 

BSE Code : 500408
Target 1 ..... Rs 1520
Target 2 ..... Rs 1551
Stoploss....Rs 1280 (CLS) 

The stock of Tata Elxsi is currently trading at Rs 1422.25. Its 52-week high/low stand at Rs 1491.75/ Rs 791.48, which were made as on July 26, 2018 and August 11, 2017, respectively. Considering the daily time frame, the stock is seen trading with small higher tops and higher bottoms since March-end 2018. With this, the stock is seen trading in an upward sloping channel pattern. Within the channel, the stock has been taking 50-day EMA support. In recent times, after hitting all-time high near its upper channel line, the stock corrected, but retraced in-between 23.6 and 38.2% levels and consolidated for nine trading sessions. Within the channel, the stock has given a small symmetric triangle pattern breakout at Rs 1395 level on August 13. The breakout was supported by rising volumes and the 14-period RSI positive crossover after witnessing a negative divergence from mid-July to July-end. We recommend a BUY