NIFTY Index Chart Analysis

Markets at resistance-turned-support level

Gujarat, and to some extent Himachal Pradesh, elections kept the Indian stock markets on the toes during the last 15 days of December 2017. Since the BJP win was a given, reinforced by the pre-polls and exit polls, the stock markets had initiated the election outcome rally on December 6 itself. However, the interest rate hike by the US maintaining its FY18 positive outlook and the RBI’s dovish stance ahead of rising inflation led to some correction in the markets, followed by yet another rally. Markets witnessed a strong pullback due to the tough fight by the Congress in Gujarat. The BJP won in Gujarat, but it was a very marginal victory with just 99 seats and the Congress winning 77 seats, while in Himachal Pradesh, the tally was 44 and 21, respectively. Traders were stunned by the extreme volatility of 369 and 1206 points in Nifty and Sensex, respectively, on the day of election results. Many traders suffered huge losses on the day with major stocks posting gap-down openings hitting the stop losses and recovering later sharply in the second half. 

On the technical grounds, Nifty has formed a channel pattern on the daily time frame, with prices moving at lower tops and lower bottoms, since its all-time high at 10490 on November 6. Nifty gave a not-so-prominent breakout on December 15 at the 10320 level. On the day of election results, Nifty gave a gap-down opening of 70 points and entered the channel pattern yet again, but retested the breakout on the same day itself, breaking its previous major resistance at 10410 level. Thereafter, Nifty has maintained its northward momentum and has succeeded in breaking its all-time high at 10490. Considering the near term outlook, Nifty had given an open-high at 10494 on December 20, depicting a provisional profit booking. Thereby, we hold 10395-10335, followed by 1028510235, as the major support areas if profit-booking continues for some more period. Otherwise, 10490 is the resistance for now. If Nifty faces resistance at 10490 for the entire month, it would form a double top on monthly basis where 10000-9970 would act as trend reversal levels for the Nifty. However, breakout within the month would lead Nifty to newer highs, where we hold 10550-10650 as the next immediate resistances. 

Stock Recommendations

NFL LTD 
BUY .......
CMP Rs67.40
BSE Code : 523630
Target 1 ..... Rs72.50 
Target 2 ..... Rs74.50 
Stoploss....Rs62.30(CLS) 

The stock of National Fertilizers is currently trading at Rs67.40. Its 52 week high/low stand at Rs89.50 /Rs33.20 which were made as on May 11, 2017 and December 26, 2016. Considering the monthly time frame, after a consistent rally of 203% from November 2016 to May 2017, the stock witnessed a correction of up to 50% retracement level of the rally and has been consolidating for three months thereafter. On the weekly time frame, the stock has bounced back after hitting a double bottom at Rs58.55-58.75 level. Considering the daily time frame, the stock has given a multiple resistance breakout at Rs66.50-67.50 levels, along with a downward sloping trendline breakout at Rs67.30 levels. The breakout is supported by rising volumes and 14-period RSI quoting at 67.50 suggesting momentum. Recently, the stock also broke out of the middle and upper Bollinger Bands at Rs59.30 and Rs66.70 levels, depicting a stronger move ahead. Thereby, we suggest a BUY in the stock

JINDAL STEEL
BUY ..............
CMP Rs186
BSE Code : 532286
Target 1 ..... Rs201
Target 2 ..... Rs210
Stoploss....Rs172 (CLS) 

The stock of Jindal Steel & Power is currently trading at Rs186. Its 52 week high and low stand at Rs186.20/ Rs64.95 made on December 20, 2017 and December 27, 2016, respectively, depicting consistent upside. Considering the daily time frame, after hitting a multiple resistance at around Rs177 level, the stock corrected up to its major support line at Rs157 level. Thereafter, the stock made a Doji on December 14 with a 14-period RSI positive crossover, the stock has rallied consecutively for four sessions till December 20, breaking its major resistance at Rs177. The stock also witnessed a breakout of 20-day and 50-day EMA levels on December 18. On the weekly time frame, the stock had given a multi-year rounding bottom breakout at Rs170 and witnessed a pullback. It has bounced back in the current week with higher volumes and RSI positive crossover at 62. Thereby, we suggest a BUY in the stock.