24th v 2017 IndiaNivesh Weekly Pulse RETAIL TECHNICAL RESEARCH 10300 10400 to decide the next course of markets! Close 10390 Chart 1 : Nifty - Daily R1 / R2 10405 / 10500 S1 / S2 10300 / 10200 50 EMA 10170 100 EMA 9992 200 EMA 9649 Ninad Tamhanekar, CMT Technical Analyst - Equity Tel: +91 22 62406417 ninad.tamhanekar@indianivesh.in Mehul Kothari Sr. Technical Analyst - Equity Tel: +91 22 62406416 mehul.kothari@indianivesh.in Market Outlook Although the week remained lacklustre for the domestic markets but the trend was largely in the favour of Bulls. The benchmark indices traded in a narrow range throughout the week but they kept on inching higher. The index Nifty spot gained more than a percent and closed well above the intermediate resistance of 10340. Meanwhile, the index Nifty Bank ended flat. We observed buying interest in individual stocks and as a result the NIFTY SMALLCAP (+2.53%) and NIFTY MIDCAP (+2.53%) outperformed the sectoral indices. Given above is the daily chart of Nifty spot which indicates that the index is stuck between the 10340 10405 levels which are the Fibonacci ratios derived from the previous move. Further as per the options data, the OI concentration is at 10300 PE & 10400 CE followed by 10500 CE. Keeping in mind the upcoming derivative expiry and shared rationale we are of the opinion that only a convincing move above or below the range of 10300 10400 might dictate the further course of the markets. We expect increase in volatility in the coming weeks and thus advise traders to remain stock specific and trade with proper exit strategy. IndiaNivesh Securities Ltd 24th v 2017 1 of 10
Trend lines in Actions Chart 2 : GPPL Weekly (Prev. Close : 153) Chart 3 : PIDILITE Daily (Prev. Close : 842) GPPL is at a threshold of a key falling trend line. A convincing move above 156 can recuperate momentum in the stock. (Bullish) PIDILITE might take breather as it is facing stiff resistance from regression trend line. (Neutral) Chart 4 : DHFL - Daily (Prev. Close : 618) Chart 5: SIEMENS Daily (Prev. Close : 1192) A Doji candlestick pattern at crucial support trend line signposts probable suspension of the correction. (Neutral) A close below falling trend line would be a serious menace to the secular bull trend. (Neutral). Trend lines are a visual representation of support and resistance in any timeframe and a simple tool available for trend analysis. The greater the number of touch points increases the importance, break on the either side may lead to major moves or trend reversals. The above charts will help you go through recent trend line breakouts / breakdowns. IndiaNivesh Securities Ltd 24th v 2017 2 of 10
Volume Shockers Chart 6 : QUESS Weekly (Prev. Close : 924) Chart 7 : MCLEODRUSS Weekly (Prev. Close : 198) Recorded highest ever volumes since August 2016 along with price breakout, suggesting continuation of bull trend. (Bullish) For the first time since March 2011, stock recorded such a volume accompanied with huge candlestick, signposts possible trend change. (Bullish) Chart 8 : TV-18 Weekly (Prev. Close : 50.5) Chart 9 : VTL Weekly (Prev. Close : 1284) Robust volumes recorded for the first time since March 2007 along with price breakout, indicating that the stock is gearing for fresh up move. (Bullish) More than 10x Volumes of 10 weeks average, with fall in price, raises concern for the stock. (Neutral) The given stocks witnessed climatic volumes during the week went by. IndiaNivesh Securities Ltd 24th v 2017 3 of 10
Bollinger Band breakouts / breakdowns Chart 10 : PCJEWEL - Daily (Prev. Close : 383) Chart 11 : SRF - Weekly (Prev. Close : 1848) Upsurge in volatility after consolidation suggest change in trend. (Bullish) One year consolidation might be getting over, as prices closed above upper Bollinger band. (Bullish) Chart 12 : MANNAPURAM - Daily (Prev. Close : 106) Chart 13 : FUTCONSUMER - Daily (Prev. Close : 63) A close above upper Bollinger band indicates that the stock is gearing for fresh up move. (Bullish) One year consolidation breakout confirmed as price closed above upper Bollinger band. (Bullish) Bollinger Band contraction represents period of low volatility and may be considered by traders for a potential sign of future increased volatility and possible trading opportunities. Thus, in the above examples we have shared few stocks which underwent a breakout / breakdown from the Bollinger band that indicating further acceleration in the on-going trend. IndiaNivesh Securities Ltd 24th v 2017 4 of 10
The Averages An exponential moving average (EMA) is a variant of moving average which is similar to a simple moving average, apart from the weightage as more weight is given to the recent closing prices. We have added 50, 100 and 200 DEMA to our analysis which represents shortterm, medium term and long term trend respectively. As short term traders can use 50 DEMA swing trading decisions, while 100 DEMA can be used by medium term. The long-term investors will focus on 200 DEMA and could consider the same for accumulation & distribution of their investments. The Daily Exponential Moving Average (DEMA) is suited for trending market however it could possibly witness multiple cross over in sideways trend. When the market is trending and in oscillation mode as well has sustained trending nature, the DEMA will also show a similar oscillation & vice-versa. However to limit the multiple whipsaws to a certain extent, the stocks mentioned in the table have closed 1% above or below the respective moving averages. Going ahead, these averages can act as initial filter to on-going trend, or could possibly consider as support & resistance. IndiaNivesh Securities Ltd 24th v 2017 5 of 10
Nifty 50 Overbought / Oversold Stocks above 70 & below 30 Relative Strength Index RSI- The above shown chart represents the comparison of price action of benchmark index Nifty vis a vis the overbought/ oversold zone of Nifty 50 stocks considering the value of daily RSI. The Overbought zone occurs when the RSI value crosses 70 levels while the oversold zone occurs when it plunges below 30 levels. As per last three years data, we can analyse that, whenever the number of overbought stocks in Nifty 50 goes above 12 the market tend to make an intermediate top, while oversold position occurs when number of oversold stocks of Nifty 50 goes above 13 the market tend to form intermediate bottom. As per the above logic, above shown chart suggests that there is no sign of change in the trend. IndiaNivesh Securities Ltd 24th v 2017 6 of 10
Stock of the Week BUY Prev. Close 228 Chart 14: DLF Monthly Chart Target 300 Stop Loss 194 52 Weeks High 229.8 52 Weeks Low 101 50 EMA 198.50 100 EMA 191 200 EMA 180 Stock Outlook The above mentioned chart shows the consolidation resembling rounding bottom formation. The stock recorded breakout from falling trend line along with close above upper end of Bollinger band. The ongoing bullish price action is supported with positive placement of momentum oscillators. Thus, we recommend buying the stock in the range 228-222 with a stop loss of 194 for target of 270 / 300. IndiaNivesh Securities Ltd 24th v 2017 7 of 10
Weekly Derivatives Analysis Weekly - Open Interest Shockers Nifty Option Snapshot The highest open interest is seen at 10300 strikes PE of 6.2 mn shares, while on the CALL side, the highest open interest is seen at 10500 strikes CE to the tune of 5.95mn shares. On a w-o-w basis, significant short addition has emerged at 10200-10400 strikes PE to the tune of 40 lakh shares along with short covering in 10200-10300 strikes CE to the tune of 26 Lakh shares respectively. The above mentioned data indicates that the Nifty is likely confine in a range of 10300-10500. And a move above 15.55 in VIX would bring fresh momentum in the market. IndiaNivesh Securities Ltd 24th v 2017 8 of 10
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