Dinesh Rohira
After being resilient to a global sell-off pressure for few sessions, the Indian equity market on Friday (December 21, 2018) traded in negative trajectory, in line with major global headlines.
The equity market ended the weekend session to trade below its psychological levels on closing basis due to rising concerns on slowdown in global growth coupled with concerns over US Fed’s decision to continue with its path to reduce its balance sheet.
During a week under review, the Nifty managed to sustain above its 200-days EMA placed at 10740 despite slipping below a psychological level of 10900-10800 on closing basis.
The index made a weekly high of 10985 level on intraday basis to outperform global indices, but it failed to sustain the rally towards weekend to touch a weekly low of 10738 levels. The index closed the session at 10754 levels, a decline of 0.5% on weekly basis.
The drag primarily came from Nifty IT and Media which was down by 4.3% and 3.7% on weekly basis. While Nifty PSU Bank and Metal were among gainer, up by 1.8% and 1.6% respectively.
On the weekly price chart, Nifty formed a bearish ‘shooting star’ kind of candlestick pattern suggesting a strong grip of bear traders, while it made a long bearish pattern on its daily price chart.
The momentum indicator slightly signaled negative divergence with its weekly RSI at 49 levels down from earlier, while MACD continued to trade below its signal-line. With index managing to sustain above important level of 10740 on closing basis, a higher resistance is currently placed at 10985 levels, while support is seen at 10550 odd levels.
The Nifty is likely to witness volatile setup in coming sessions. Further, as farm loan waivers take a centre-stage, its impact is expected to keep equity market under pressure given an importance of fiscal number.
Nevertheless, a softening of crude oil price and appreciation in rupee is likely to buoyant the market to trade in positive trajectory.
Therefore, it is advisable to go long on selective opportunities only and use rally to exit the position, and maintain trailing stop-loss.
With lack of major cues, we maintain a rangebound trading level at 10880 on upside and 10550 on downside.
Stock picks
Gruh Finance | Recommendation: Buy | TP: Rs 347| Stop-loss: Rs 305 | Upside: 5%
GRUH Finance traded in a positive momentum for consecutive sessions after remaining muted for short period, and subsequently managed to make decisive breakout from its 200-days moving average placed at 298 levels. The scrip made a healthy correction in last two months from a price-band of 340 odd levels towards a low of 240-250 levels.
After consolidation, the scrip made a strong rebound by taking a crucial support at 280 levels, and continued to remain upward with marginal headwinds. The scrip also witnessed a substantial volume growth during a same period, and formed a long bullish candlestick pattern on its weekly price chart.
The momentum indicator outlined a positive divergence in price with its weekly RSI at 57 levels, while MACD is likely to witness bullish crossover to trade above its Signal-Line in coming session
Zee Entertainment | Recommendation: Sell | TP: Rs. 430 | Stop-loss: Rs. 470 | Downside: 4%
Zee Entertainment continued to trade in negative trajectory on its six-month price chart despite making an initial recovery in past one month, but it failed to sustain the momentum in recent session to slip from its 200-days moving average on closing basis placed at 490 odd levels.
Despite its attempt to reverse a trend in one session, the scrip failed to sustain the momentum to trade below its psychological level which is seen at 450 odd levels. It further formed a solid bearish candlestick pattern on both weekly and daily price chart.
Further, a weekly RSI stood at 42 odd levels indicating negative divergence with respect to price, and MACD is likely to witness bearish crossover in coming session to trade below its Signal-Line.
Graphite India | Recommendation: Sell | TP: Rs. 770 | Stop-loss: Rs. 830 | Downside: 3%
Graphite India continued to trade substantially under negative trajectory over past one-month after making a healthy rebound from its October fall.
However, it failed to sustain the momentum to consolidate from higher band of 1050 odd levels towards a low of 790 levels currently. It remained under selling regime entire week to further slip below its 200-days moving average currently placed at 844 levels indicating a sustain pressure. It formed a bearish candlestick pattern with small upper tail on its weekly price chart and similar formation is seen on daily price chart.
The momentum indicator continued to outline weak trend with its weekly RSI at 41 level which signals downward divergence in price coupled with MACD trading below its Signal-Line on weekly chart.
The author is the Founder and CEO of 5nance.com
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