NIFTY Index Chart Analysis

NIFTY Index Chart Analysis 

Markets at resistance-turned-support level 

The year 2017 went quite well for the Indian stock markets, with benchmark indices surging more than 25%, digesting major domestic and global hiccups. Recently, the markets continued their lacklustre movement at the peak levels, but were refrained from correcting by justifiable auto sales numbers in December. The high domestic demand with seasonal discounts led to healthy sales in December. Maruti reported 11.4% growth, while Tata Motors hit a record growth of 31% in December its highest ever December sales since 2012. The rising prices of commodities, namely, gold and crude oil, led to consolidation in the Indian markets. The depreciating dollar pulled gold to a three-and-half month high, while crude oil rose to its highest level since 2017 at USD 67.12/barrel due to violent protests across Iran and is expected to hit USD 70 soon. The consistent rise in crude prices henceforward may lead to fiscal slippages, which can result in rising inflation in the country. Further, the expected reintroduction of long term capital gains tax spread negative sentiments amongst stock market participants. Going forward, we expect markets to continue its upward momentum in the year 2018, with better corporate earnings. Union Budget, RBI policy review ,followed by monsoon, being the major drivers. 

Indian benchmark indices are seen consolidating after two days of tremendous volatility during Gujarat and HP election results. The consolidation continued but with a negative bias after Nifty breached its all-time high at 10,552 on December 27. Nifty has seen negative divergence in movement of prices and oscillators. Considering the daily time frame, Nifty has taken 21-day EMA support at 10400-10390 levels on January 2. The low volumes and 14-period RSI quoting at 57 suggest lack of momentum for now. Going forward, we hold 10440-10400 as the immediate support levels, followed by 10370-10310. However, if Nifty corrects, 10100-10030 would act as provisional trend reversal. On the upside, post-10550, the sky is the limit for the Nifty. For the near term, we maintain our view of 10650, followed by 10800, as major resistance levels. 

KPR MILLS ........... BUY.......... CMP Rs815-829
BSE Code : 532889
Target 1 ..... Rs897 
Target 2 ..... Rs912 
Stoploss....Rs762(CLS) 

The stock of KPR Mills is currently trading at Rs814. Its 52-week high/low stand at Rs882/Rs549.75, which were made as on June 8, 2017 and January 13, 2017. Considering the daily time frame, after hitting 52-week high, the stock has been witnessing lower tops and lower bottoms price movement. With this, the stock formed a downward sloping channel pattern and gave a breakout at Rs787 level at the end of December 2017. The breakout was supported by huge volumes and the 14-period RSI quoting at 67 depicting momentum. 

Recently, the stock also breached its major resistance at Rs810 level, portraying a kind of rounding bottom breakout. Going forward, we may see continuation of a rally or some correction for a better upside. Hence, we recommend a BUY in the scrip at CMP of up to Rs800 on the downside. 

LOVABLE LINGERIE......... BUY........ CMP Rs241.80-246
BSE Code : 533343
Target 1 ..... Rs267
Target 2 ..... Rs276
Stoploss....Rs230 (CLS) 

The stock of Lovable Lingerie is currently trading at Rs241.80. Its 52-week high and low stand at Rs283.40/Rs184.05 made on June 15, 2017 and August 24, 2017. The stock has a tendency to give zig-zag movements on the daily time frame. The stock has formed a kind of symmetric triangle by joining July 12 and August 11 high and low, respectively. 

Recently, the stock broke out of the pattern at Rs245 level, but witnessed a pullback to close below the downward sloping trendline level. The breakout was supported by higher volumes and 14-period RSI at 62, which suggest momentum. The stock price is above its upper Bollinger Band at Rs241 level, but it is yet to give an upside signal. The stock also took 200-day EMA support at Rs240 level. Hence, we recommend a BUY in the scrip on re-testing  Rs246-247 levels.