NIFTY Index Chart Analysis

NIFTY Index Chart Analysis
Nifty Breaches Resistance, Gradual Upside Visible

Nifty has ultimately succeeded in achieving our first target of 10700 before the end of FY18. Admissible corporate earnings so far have kept the Indian stock markets going. Frontline Q3 earnings have helped Indian benchmark indices hit all-time highs yet again, despite external hiccups from commodities front. Brent crude hit above its critical level of USD 70/barrel recently, amid robust global demand, production cut from OPEC and strong buying in oil futures Recently, the country reported its IIP data, i.e. the factory output, which hit its 25-month high at 8.4% in November, driven by the 10.2% rise in manufacturing. Further, Indian CPI rose at its fastest pace in 17 months at 5.2% as forecasted, led by increasing prices of vegetables and crude oil. The ever-rising CPI would delay or even halt RBI’s monetary easing. The WPI too rose to 3.58% as against 2.10% in the corresponding month of the previous year. The country also received its GDP forecast, which looked quite optimistic after FY19; however, the second half of FY18 is expected to remain subdued at nearly 6.5%. Thereby, the markets witnessed slow momentum amid the mixed macroeconomic numbers. The upcoming Union budget would also decide the fate of the market, where the government has lowered its fiscal borrowing requirement to Rs20,000 crore from Rs50,000 crore ahead of the budget.

Technically, the major benchmark index, Nifty, is seen in the doldrums, struggling at peak levels because of lack of momentum, being in the overbought zone. Though the momentum oscillators RSI and stochastics above 70 depict tiredness, no indicator is yet giving sign of an immediate correction for now. In fact, RSI still holds above its trendline level of 67. Talking of the daily movement, Nifty had seen a gap-up opening on January 15 and, thereafter, it witnessed correction for gap-filling from the very next day and has bounced back recently with rising volumes, for 61.8% retracement level of the prior upward rally. With this, on the upside, we hold 10780, which is the upward sloping trendline level formed by joining Aug 2 and Nov 6 points, as the immediate resistance level, while 10900 will act as the next resistance. Otherwise, we may yet again see a retreat, where we hold 10660-10590 as immediate supports. This is the seventh consecutive weekly uptick for the Nifty, and hence on continuation, we hold 11000-11200 as our next medium-term resistances. On the other hand, if the markets correct on account of profit-booking, we hold 10500-10400 as the supports, where 10400 may act as provisional trend reversal. 

KAKATIYA CEMENT SUGAR & IND......... BUY ........ CMP Rs404.55
BSE Code : 500234
Target 1 ..... Rs448
Target 2 ..... Rs469
Stoploss....Rs380(CLS) 

The stock of Kakatiya Cement is currently trading at Rs404.55. Its 52-week high/low stand at Rs448.90/ Rs292.75, which were made on May 4, 2017, and January 20, 2017, respectively. Considering the daily time frame, the stock has formed a symmetric triangle pattern with the starting point on July 1, 2016. The stock has made multiple lower highs and higher lows since then. In the last eight trading sessions, the stock attempted upper trendline breakout four times, but it failed to sustain the levels on a closing basis. Hence, any significant breakout here onwards may give an impulsive upside in the stock. Currently, the stock has a breakout at Rs417 level. The volumes are justifiable and the 14-period RSI is quoting in the range of 50-65. The stock may gain momentum when the RSI hits 60-63. Hence, with expected momentum, we suggest a BUY in the scrip above Rs417 on a closing basis.

ICICI PRUDENTIAL LIFE INSURANCE CO......... BUY ..... CMP Rs419.00
BSE Code : 540133
Target 1 ..... Rs460
Target 2 ..... Rs475
Stoploss....Rs390 (CLS)  

The stock of ICICI Prudential is currently trading at Rs419.00. Its 52-week high/low stand at Rs507.90/ Rs330, made on July 4, 2017 and January 16, 2017, respectively. The stock was trading with lower tops and lower bottoms until it broke its immediate major resistance at Rs400 on January 8, 2017. With this, the stock also gave its downward sloping trendline breakout with rising volumes and 14-period RSI quoting at 68. After four consecutive upbeats, the stock corrected up to 38.2% retracement level and has recently bounced back. Now, the stock has formed a kind of inverse head & shoulders pattern, which has a breakout at Rs420-422 levels. Once the stock breaches these levels on a closing basis, it holds a potential upside of 45 to 55 points in the medium term. Rising volumes and RSI trailing at 68 suggest momentum in the stock. Hence, we suggest a Buy in the scrip above Rs420 level