17th Nov 2017 IndiaNivesh Weekly Pulse RETAIL TECHNICAL RESEARCH Moody s upgrade changed the Mood on D Street Will it change the determination of the Bears? Close 10284 Chart 1 : Nifty - Daily R1 / R2 10340 / 10500 S1 / S2 10200 / 10080 50 EMA 10151 100 EMA 9972 200 EMA 9629 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 In our previous edition of Nivesh Weekly Pulse we discussed about the Bearish Three Outside Down candlestick pattern on the daily chart of Nifty. In line with that pattern, the index sneaked below the mentioned support of 10120 at the beginning of the week. However, in last couple of sessions the markets rebounded sharply due to oversold conditions and stable global cues. In addition, the upgradation of India s sovereign bond rating by Moody s was like an icing on the cake for the bulls. Eventually, the index pared most of its weekly loss and closed flat. After today s gap up opening the Nifty got stuck near 10340 mark which was the 61.8% Fibonacci retracement level of the recent fall from 10490 10094. As a result we initiated buy in NIFTY 10300 (Nov) PE at 55 for the target of 100 and 150. In line with that view the index wiped off much of its gain which pulled the 10300 put towards 87 marks. Till the time the level of 10340 is not taken out convincingly the all-time high of 10490 might remain untouched. On the downside, going ahead 10200 could act as an intermediate support below which a fresh round of correction might start. IndiaNivesh Securities Ltd 17th Nov 2017 1 of 12
Trend lines in Actions Chart 2 : SRF Daily (Prev. Close : 1773) Chart 3 : JUBILANT Daily (Prev. Close : 677) SRF is at a threshold of a key falling trend line. A convincing move above 1780 can recuperate momentum in the stock. (Bullish) Bulls would stage comeback, as JUBILANT has closed above falling trend line, indicating trend change. (Bullish) Chart 4 : YES BANK - Weekly (Prev. Close : 306) Chart 5: INFY Daily (Prev. Close : 971) A Doji candlestick pattern at crucial support trend line signposts probable suspension of the current bear trend. (Neutral) For a bullish confirmation, stock needs to close above vital trend line on a Daily chart. (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 17th Nov 2017 2 of 12
Volume Shockers Chart 6 : BASF Weekly (Prev. Close : 1946) Chart 7 : REPCOHOMES Weekly (Prev. Close : 621) Recorded highest ever volumes since August 2012 along with price breakout, suggesting continuation of bull trend. (Bullish) For the first time since July 2014, stock recorded such a volume accompanied with Double Bottom formation, signposts possible trend change. (Bearish) Chart 8 : EVEREADY Weekly (Prev. Close : 398) Chart 9 : INFRATEL Weekly (Prev. Close : 380) Two years consolidation breakout along with almost 3x Volumes of 10 weeks average, indicates acceleration of momentum. (Bullish) Almost 5x Volumes of 10 weeks average, which is highest ever volumes accompanied with fall in price, raises concern for the stock. (Bearish) The given stocks witnessed climatic volumes during the week went by. IndiaNivesh Securities Ltd 17th Nov 2017 3 of 12
Bollinger Band breakouts / breakdowns Chart 10 : GATI - Daily (Prev. Close : 131) Chart 11 : NLC INDIA - Daily (Prev. Close : 104) Upsurge in volatility after consolidation at lower range suggest change in trend. (Bullish) Eight months consolidation might be getting over, as prices closed above upper Bollinger band. (Bullish) Chart 12 : DLF - Weekly (Prev. Close : 223) Chart 13 : HEIDELBERG- Daily (Prev. Close : 167) 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 17th Nov 2017 4 of 12
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 be can act as initial filter to on-going trend, or could possibly consider as support and & resistance. IndiaNivesh Securities Ltd 17th Nov 2017 5 of 12
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, for the first time since July 2017 number of overbought stocks in Nifty has risen to 9. However one needs to be cautious when this number crosses 13. IndiaNivesh Securities Ltd 17th Nov 2017 6 of 12
Stock of the Week BUY Prev. Close 89 Chart 14: TATAPOWER Monthly Chart Target 112 Stop Loss 81 52 Weeks High 91.15 52 Weeks Low 68.05 50 EMA 82.43 100 EMA 81.56 200 EMA 80.22 Stock Outlook The stock is on the verge of a breakout from the long term falling trend line as shown in the above chart. Also, a breakout above the 90 mark on closing basis will confirm a bullish Cup and Handle pattern. The ongoing bullish price action is supported with positive placement of momentum oscillators. Thus, we recommend buying the stock in the range 90-86 with a stop loss of 81 for target of 102 / 112. IndiaNivesh Securities Ltd 17th Nov 2017 7 of 12
Weekly Derivatives Analysis Weekly - Open Interest Shockers Nifty Option Snapshot The highest open interest is seen at 10500 strikes CE of 6 mn shares, while on the PUT side, the highest open interest is seen at 10000 strikes PE to the tune of 4.66mn shares. On a w-o-w basis, significant short addition has emerged at 10200-10500 strikes CE to the tune of 37 lakh shares along with liquidation in 10100-10400 strikes PE to the tune of 33 Lakh shares respectively. The above mentioned data indicates that the Nifty is likely confine in a range of 10200-10500. And a move above 15.55 in VIX would bring fresh momentum in the market. IndiaNivesh Securities Ltd 17th Nov 2017 8 of 12
Annexure BUY PRICE - 662 Chart 16: WOCKPHARMA Revise Stop Loss Rec. Date 27 th Oct 2017 Target 760 High / Low 743 Cmp 711 Action Revise SL 650 We gave a LONG recommendation in WOCKPHARMA near 660 mark on 27 TH Oct 2017 for the upside target of 760. The stock made a high of 743 which is almost 12% and is now trading near 710. We advise traders to hold the long positions until our next update with a revised stop loss of 650 from the actual stop of 620 IndiaNivesh Securities Ltd 17th Nov 2017 9 of 12
Weekly Pulse MIS IndiaNivesh Securities Ltd 17th Nov 2017 10 of 12
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