NIFTY Index Chart Analysis

Markets Directionless At The Moment, May Head Northwards 

India's sovereign rating upgradation by Moody's with a stable outlook was a turning point for Indian benchmark indices that were struggling to head northwards again. The indices were struggling because the release of WPI and CPI data that had hit multi-month high in October and a probable shift of investments to safe havens amid oil price rise had brought in some cautiousness amongst investors ahead of the expected dovish stance by the RBI in the next policy review meet.

However, the struggle was transient as the ongoing reforms by the Modi government to improve structural and financial position of the country in the competitive global market became a key tipping point for Moody's decision. Moreover, Modi government's amendment to bring down GST rates of more than 200 items from 28% to 18% too buoyed various business segments. The Modi government's endeavour to retain its position in the upcoming election might be also getting discounted in the markets.

However, with many 'ifs' (premium valuations) and 'buts' (realisations after demonetisation and GST roll-out in the second half), the investors have remained ambiguous on the direction of the markets in the coming days. Technically, on the weekly time frame, after takingsupport at the exact 50% retracement of the prior upward rally at 10,090 level, Nifty witnessed a short covering in the last week itself. The current week depicts some sluggishness with lack of active trigger to direct the markets. The first three sessions of the week have more or less witnessed consolidation with reasonably lower volumes and oscillators lying between 50-60 levels.

Going forward, seeing that the price recovery has gone beyond 61.8% retracement of the correction witnessed in the last two weeks, we hold 10,395- 10,405 as the next immediate resistances, provided Nifty hits above 10,370 on a closing basis. Thereafter, 10,490, which is the all-time high, followed by 10,550 will act as the next resistances. On the downside, 10,260-10,200 will act as the immediate supports for the Nifty if it breaches 10,300 on a closing basis. 

Considering the broader view, 10,095, followed by 9,925, will act as the major support levels for a bounce back. On the contrary, now that we have almost done with major corporate earnings, there is hardly any room for further volatility or stock-specific extreme movements. 

Hence, if Nifty gradually continues to head upwards, we hold 10,670-10,700 as resistances in the medium term.

STOCK RECOMMENDATIONS

APOLLO TYRES LTD 

( BUY ) BSE Code : 500877
CMP Rs. 245.50
TGT 1:Rs. 266 TGT 2: Rs. 274
SL Rs. 228 (CLS) 

The stock of Apollo Tyres is currently trading at Rs.245.50. Its 52-week high/low stand at Rs.288.30/ Rs.171.60, which were made as on August 7, 2017 and February 16, 2017. On the monthly time frame, the stock has bounced back from the support at 50% retracement level of the prior upward rally. Moreover, it had given a cup and handle pattern breakout in April 2017 at Rs.230 level that pulled the price up to its 52-week high level. The stock corrected thereafter up to the trendline level, while has cued a bounce-back during the current week. Now, considering the daily time frame, the stock has given a breakout of a multiple point downward sloping trendline at Rs.241 level with high volumes on a closing basis, breaking prior two major resistances at Rs.241 and Rs.244 levels. With this, we recommend a Buy on the stock.

VIVIMED LABS 

( BUY ) BSE Code : 532660
CMP Rs. 121.05
TGT 1:Rs. 130.50 TGT 2: Rs. 137
SL Rs. 112 (CLS) 

 The stock of Vivimed Labs is currently trading at Rs.121.05. Its 52-week high and low stand at Rs.153.30/Rs.82.50 made on September 21, 2017 and November 21, 2016. Considering the daily time frame, the stock had breached its double top at around Rs.136 level and surged up to Rs.153.30, which is its 52-week as well as all-time high level. Later, the stock had witnessed a gradual but consistent correction of nearly 26% from that level. Recently, the stock consolidated for almost 9 sessions in a row and witnessed a consolidation breakout at Rs.122 level with huge volumes and positive crossover from near to the oversold zone. The stock has also given a kind of downward sloping trendline breakout at Rs.117.50 level, formed out of a correction from the peak levels. With expected fresh buying after a huge correction in the stock, we recommend a Buy on the stock..