Technicals

WHAT LIES AHEAD: NEAR-TERM PICTURE



SPOT NIFTY: Indian stock markets were hit yet again by the trade war fears between China and US, rising Dollar and cautiousness ahead of OPEC meeting. Otherwise lack of domestic triggers except for normal monsoon forecasts, markets remained lacklustre to negative during the week. Broader markets continued with the downfall and underperformed the benchmark indices. On sectoral terms, Metal dragged the most with more than 4% losses. Power, Realty and FMCG followed with nearly 2% losses. Technically, Nifty is lying in between a kind of Symmetric Triangle pattern with resistance at 10830-10840 while support near 10670. Within the triangle Nifty has witnessed downward sloping trendline support on June 21 at 10725. Volumes are justifiable but oscillators trailing below 55 suggest lack of momentum for now. Hence, in case Nifty hits below 10725 on closing basis, we hold 10670-10630. 10550 will act as the next support. However, since Nifty is trading above its major 21,50,100,200 days EMA, so in case Nifty bounces back from the current levels and hits above 10810-10830, we hold 10890-10930 as the next resistance levels.

NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge for market's short-term expectation of volatility added 2.22 per cent and settled around 12.44. Nifty June 2018 futures closed at 10734 at a discount of 7.1 points over spot closing of 10741.10. Nifty July 2018 futures closed at 10740.30 at a discount of 0.80 point over spot closing of 10741.10. The Nifty Put Call Ratio (PCR) Open Interest wise stood at 1.19 for June month contract. Among Nifty calls, 10,800 Strike Price from the June month expiry was the most active call. Among Nifty Puts, 10,700 Strike Price from the June month expiry was the most active put. For the June series the maximum OI outstanding for Calls was at 11,000 strike price and that for Puts was at 10,700 strike price.

LEGEND : 
EMA - Exponential Moving Average
MACD - Moving Average Convergence Divergence
RSI - Relative Strength Index

STOCK STRATEGY

BATA INDIA ................... BUY .................CMP Rs.834

BSE Code: 500043
Target 1: Rs.890 Target 2: Rs.915
Stoploss: Rs.780 (CLS)



Current Observation: The stock, after registering a high of Rs 832.80 in the first week of November 2017, entered into a decline mode and made low of Rs 653.10.

At present, on the weekly chart, the stock has witnessed a horizontal trendline breakout at all-time high levels along with robust volumes. It has also formed a sizeable bullish candle on the weekly time frame.

The stock is trading above its 21-week simple moving average, which has acted as a strong support since April 2018. The 14-period RSI on the weekly time frame is in the bullish zone and in the rising trajectory.

The level of Rs 780 is likely to act as a strong support and this could be maintained as a stop loss for long positions. On the upside, the stock is likely to touch the levels of Rs 890-915.

Conclusion: Considering the breakout of the horizontal trendline along with robust volumes and the stock trading above its 21-week simple moving average, we recommend buying this stock for a target price of Rs 890-915, with a stop loss at the level of Rs 780.

REVIEW OF STOCK STRATEGY

We had recommended our readers to buy the stock of Torrent Pharmaceuticals at Rs 1446 in issue no. 35 (dated June 18, 2018). The stock witnessed follow-up buying and moved higher as per our expectation.

We had recommended our readers to book profit in the stock through our SMS service on June 19, 2018, at Rs 1511. We hope all our readers benefited from this recommendation and made handsome returns on this recommendation.