Dinesh Rohira
The Indian equity market witnessed wild volatility in the last week, posting a third massive selloff in October. On October 11, the Nifty fell by 2.16 percent, following global selloff across equity markets.
Regardless of measures taken by the Reserve Bank of India (RBI) to improve and inject liquidity in the financial market, a consistent rise in US treasury yield auguring interest rate hike at rapid pace continued to weigh negative sentiment in emerging markets.
However, the index managed to rebound strongly on October 12 with 2.32 percent gain led by buying in Auto, Metals, and Banks stocks.
In a wake of back-and-forth rally, the Nifty index slipped from an important level of 10,774 (200-days EMA), and further broke below important support of 10,200 to hit the weekly low of 10,138.
The index, however, managed to recoup from this lower band to trade near short-term hurdle of 10,500 and closed weekly session at 10,472.5 with about 1.5 percent gain in the week.
The gainer during a week was Nifty Bank, Media and Energy, up by 3.9 percent, 8.2 percent, and 7.2 percent respectively. The IT index was the top loser sinking 6.7 percent.
The index formed a small bullish candlestick pattern on its daily price chart after forming spinning-top like pattern in the previous session. On the weekly price chart, it formed a ‘hammer’ kind of candlestick pattern indicating a strength of bulls.
The weekly RSI on chart stood at 37, while MACD continued to signal a selling regime with no significant divergent in price. The upper hurdle for the index is currently placed at 10,774 (200-days EMA) and strong support is seen at 10,200.
As the market continues to observe weak cues on the global front, coupled with nervous sentiment among domestic investors, it is likely to keep Nifty index vulnerable in the short-term.
However, with kick-off in Q2FY19 earnings, it is likely to witness stock specific movements in the current scenario.
Thus, it is advisable to remain selective on stock and avoid building aggressive long position. We maintain short-term rangebound trade for index at 10,750 on upside and 10,230 on downside.
Zee Entertainment | Rating: Buy | Target: Rs 495| Stop-loss: Rs 430 | Upside: 6 percent
Zee Entertainment consolidated for last six-month from a higher price-band of Rs 599 towards a low of Rs 414 with about 31 percent correction in this period.
However, the scrip witnessed a strong upward reversal in the last one-week despite a negative market momentum, and also managed to break-out from 20-days EMA level placed at Rs 454.
There was a substantial volume growth of 45.78 percent (one month) at the current level which translates to a reversal in trend. The RSI stood at 56 inching upward while MACD had no significant formation.
Bajaj Finance | Rating: Buy | Target: Rs 2,392 | Stop-loss: Rs 2,260 | Upside: 5 percent
Bajaj Finance remained on uptrend trajectory in the last six months but it witnessed a healthy consolidation in one-month from a high of Rs 2,679 towards a low of Rs 1,974 which translates to fall of about 26 percent.
During the last one week, the scrip managed to rebound to break upward from its 200-days EMA placed at Rs 2,192 and made a fresh rally.
The momentum indicator outlined a positive trend at the current price with weekly RSI at 55 and gradually moving upward, while MACD continued to trade above its signal line.
HCL Tech | Rating: Sell | Target: Rs 956 | Stop-loss: Rs 1,010 | Downside: 3 percent
HCL Tech continued to remain under selling regime over last one-month slipping below its long-term crucial levels during last week and it is currently trading near its 52-week low of Rs 824. The scrip broke below its 100-days moving average of Rs 1,010 and it is likely to breach below its 200-days EMA at Rs 974 which will further provoke selling.
Along with a formation of lower band on the daily price chart, it also saw a subdued volume growth down by 5 percent in the same period. The RSI stood at 29 while MACD continued to trade below its signal line, indicating a selling regime.
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.
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