NIFTY Index Chart Analysis

The equity markets were seen consolidating for the last six days before the event risk of five state elections. Nifty is trading above the 50 DMA and it has formed an inside bar, trading within last Thursday’s range (November 16). While staying in a narrow range, Nifty was unsuccessful in moving in a decisive direction. Within the sideways, the index has not closed below the previous day’s low, which is a positive aspect. On Thursday, it formed a shooting star like candle and almost got a confirmation for its bearish implications. That said, the index has not breached any support. 

The 19,875 level acted as resistance during last week. As the index is in a tight range, within the support and resistance, we can neither be bearish nor bullish for now. The exit polls are likely to be out on Thursday evening and may impact the markets. Even before the exit polls, the equities will discount the outcome of the results. So, the monthly expiry may experience a very volatile session. The pattern analysis shows that Nifty is still in the counter-trend rally and in the rally attempt status. The volumes were lower for the last five days, which is a characteristic of a pattern.

At the same time, the volumes have been declining for the last 10 weeks. They are much below the average volumes. If Nifty trades in the 19,627-19,875 range, sideways action will continue. For an uptrend, the index must close above 19,875 to form a higher high, which is a trend reversal signal. The benchmark index is trading above all the key short-term and long-term averages. The8 EMA support is placed at 19,725. A close below this will give initial signals of weakness. But, to confirm a trend reversal, it must close below 19,627, with added distribution days.

As the index has sustained above the 50 DMA for the last eight days, many stocks are forming ascending bases, and some have already registered breakouts. Once Nifty closes above 19,875, the market structure will change as it makes a higher high. The consolidation process may extend depending on the next three weeks of movement. After forming a higher high, it must form a higher low too. The RSI is flat around the 60 zone. But, the negative divergence on the hourly chart will get a confirmation for its bearish implications if it closes below 48. 

The daily MACD shows a decline in momentum. There is no major priceinfluencing factor seen in the indicators. The volatility is completely absent, although some intraday spikes were observed. The India VIX is still in the lower range. The implied volatility (IV) is also around 10, which is unsuitable for shorting the market or taking aggressive leveraged positions. As there is no technical development on the chart, focus on the previous week’s low of 19,675 and the 20-week average (19,575) as a key point of support. Only below this support zone may we see a sharp decline. Otherwise, the market is in a neutral to positive bias. 

The relative rotation graphs (RRG) show that there are major changes in the sectoral performance and set-up. The Realty, PSU Bank, Auto and PSE indices are in the leading quadrant. But the PSU Bank index is losing its momentum. The FMCG, Energy and FinNifty indices are improving their momentum and relative strength in the improving quadrant. The IT, Pharma and Metals indices have weakened and remain in the weakening quadrant. The BankNifty is trying to enter into the improving quadrant from the lagging quadrant. Very few sectors are defending the market from a decline. The Mid-Cap, Small-Cap and PSU stocks continue their outperformance.

STOCK RECOMMENDATIONS

HIMADRI SPECIALITY CHEMICAL LTD ............ BUY .......... CMP ₹264.35
BSE Code : 500184
Target 1 .... ₹300 
Target 2 ..... ₹322 
Stoploss....₹235 (CLS)

Himadri Speciality Chemical Limited (HSCL) is an integrated manufacturer of various carbon-based products, starting from coal tar. The company operates 500,000 MTPA coal tar distillation units in West Bengal. Various distillates of the plant are used to manufacture coal tar pitch (CTP), various types of carbon blacks (CB), sodium naphthalene formaldehyde (SNF) and other advanced carbon-based materials. The coal tar distillation unit is the single largest such facility in India and the company commands a leading position in the domestic CTP and CB markets. The manufacturing capacity of CB is 120,000 MTPA and of specialty CB is 60,000 MTPA. The stock is trading near the pivot level of a 10-week double-bottom pattern. The price pattern also looks like a bullish pennant. It is also trading near the lifetime high. Its relative price strength is at a new high, showing an outperformance compared to the broader market. The volumes were above average last week. The price took a support at 50 DMA. Currently, it is 6.43 per cent above the 50 DMA and 68.01 per cent above the 200 DMA. The daily MACD shows an improved bullish momentum. The daily RSI shifted its range into the strong bullish zone. The Stochastic Oscillator has given a fresh bullish zone. The stock is above the MAMA-FAMA-KAMA band. It is above the Ichimoku cloud. In short, the stock is ready to register a bullish breakout. Buy this stock above the ₹264-271 zone. Maintain stop loss at ₹235. The short-term to medium-term target is at ₹300-322. 

JINDAL STAINLESS LTD. ..................... BUY .................... CMP ₹542.10
BSE Code : 532508
Target 1 ..... ₹599 
Target 2 .... ₹622 
Stoploss....₹472 (CLS)

India’s leading stainless steel manufacturer, Jindal Stainless Limited had an annual turnover of ₹35,700 crore in FY23, and is ramping up its facilities to reach 3 million tonnes of annual melt capacity in FY24. It has two stainless steel manufacturing facilities in India in the states of Odisha and Haryana. Jindal Stainless has a worldwide network in 15 countries and one service centre in Spain. In India, there are 10 sales offices and six service centres. The company’s product range includes stainless steel slabs, blooms, coils, plates, sheets, precision strips, blade steel and coin blanks. The stock closed at the pivot of the 10-week cup pattern. On a daily chart, it has broken out of a 51-day double-bottom pattern. The volumes were recorded above average for the last three weeks. Its relative price strength is at a new high, showing its outperformance compared to the broader market. The stock is trading above all the key moving averages. It is 14.41 per cent above the 50 DMA and 49.06 per cent above the 200 DMA. All the averages are in an uptrend. The weekly MACD has given a fresh buy signal. The RSI is in a strong bullish zone. As the stock is trading at a new lifetime high, it has cleared all resistance. It is well above the Ichimoku cloud. The weekly Stochastic RSI is also in the bullish set-up. Institutional investors have increased their stake in the company. In short, the stock is at a new high with a strong volume. Buy this stock above the ₹534-545 zone. Maintain stop loss at ₹472. The short-term to medium-term target is ₹592-622. 

*LEGEND:  ◼ EMA - Exponential Moving Average.  ◼ MACD - Moving Average Convergence Divergence  ◼ RMI - Relative Momentum Index  ◼  ROC - Rate of Change  ◼ RSI - Relative Strength Index

(Closing price as of November 24, 2023)

Disclaimer : Above recommendations are based on various technical parameters and any fundamental input has not been considered for the recommendations. Follow strict stop loss for the recommendation.