Dinesh Rohira
The global sell-off rout continued to weigh on the Indian equity market, keeping them in negative trajectory for an extended period of time. It decisively breached downward from the most important support level in the last closing session.
Both Sensex and Nifty declined about 14 percent each from their earlier peaks on account of this current global sell-off and partly driven by looming concerns in NBFC sector.
In the wake of a market rout, the Nifty index failed to hold 10,100 support levels which remained crucial for the index and slipped to touch a 7-month low of 10,004 levels.
A retest of the crucial support placed around 10,000 indicates negative market sentiment. The index declined about 2.7 percent on weekly basis to close at 10,030 levels on Friday.
The drag during the week primarily came from Nifty IT and pharma which were down 5.7 percent and 5.5 percent, respectively. The Nifty realty was the only gainer, up by about 0.5 percent during a week.
The index continued to form a solid bearish candlestick pattern both on weekly as well as on the daily price as it slipped from important support level.
The weekly RSI on the chart stood at 32 levels, while the MACD continued to trade below its signal line. It continues to trade below its crucial moving average, the upper resistance is seen at 10400 levels with next crucial support at 9950 levels.
A weakness in the market is expected to be persistent on the backdrop of negative sentiment globally coupled with constant domestic turmoil on account of liquidity crisis in the financial sectors and nominal earnings growth in Q2FY18 so far.
However, as long as it holds 9,950 levels on closing basis, a marginal pullback is likely in the coming series but it might be capped at 10,400 levels.
Hence, it will be advisable to avoid any aggressive build-up of a long position and use the rallies to exit from an existing long position. We continue to maintain range bound trade for the index at 10,320 levels on upside and 9,960 levels on the downside.
Here is a list of top three stocks which could give 3-5% return in November series:
Sterlite Technologies: Buy | Target: Rs 363 | Stop loss: Rs 330 | Return: 5%
Sterlite Technologies remained in an uptrend trajectory during the last week after trading on a rangebound level for over six months. It made a correction from the price-band of Rs 365 levels towards a low of Rs 281, down by about 23 percent before initiating the current upward trend.
It has also managed to break out from its 200-days level placed at Rs 310 levels coupled with strong volume growth during the past sessions indicating a buying sentiment at the current level.
The momentum indicator outlined a positive trend at the current level with RSI at 60 levels which are gradually moving upward, while the MACD made a bullish crossover recently to trade above its signal line. We have a buy recommendation for Sterlite Technologies which is currently trading at Rs. 345.95.
Jubilant Foodworks: Sell | Target: Rs 1,013 | Stop loss: Rs 1,191
Despite its pullback from a low of Rs 1,125 towards 1268 levels, Jubilant failed to sustain the rally and witnessed another leg of a selloff on its weekly price chart. The scrip initially corrected from 1564 levels to breach below all the moving average level.
It recently slipped from its 200-days EMA levels placed at 1210 levels and formed a long bearish candlestick pattern on its weekly chart.
It currently holds a strong support at 1091 levels and a breach below this level will trigger another leg of the downward rally.
The RSI stood at 31 levels while MACD continued to trades below its Signal-Line. We have a sell recommendation for Jubilant Foodworks which is currently trading at Rs. 1055.55
Asian Paints: Sell | Target: Rs 1,154 | Stop loss: Rs 1,214
Asian Paints continued to remain under selling regime after recording a peak of 1467 level which was formed six months ago. It decisively breached below its long-term crucial levels of 200-days EMA placed at 1261 levels recently.
Despite its attempt to reverse the trend last week, it failed to sustain the momentum to form a bearish candlestick pattern on its weekly price chart.
The formation also induces a rejection of price at the current level which is expected to further put scrip under pressure on a short-term basis. It currently holds a strong support at 1091 levels and breaches below this level will trigger another leg of the downward rally.
The RSI stood at 38 levels while MACD trades below its Signal-Line, indicating current weakness in scrip. We have a sell recommendation for Asian Paints which is currently trading at Rs. 1190.30
Disclaimer: The author is Founder & CEO, 5nance.com. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
