Moneycontrol
Last Updated : Dec 17, 2018 11:32 AM IST | Source: Moneycontrol.com

Expect subdued volatility with no major price movement this week

Nifty has a strong support of trend line and 200 DMA around 10,750 whereas a fall below these levels can extend index towards 50 DMA (10550).

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Shabbir Kayyumi

Narnolia Financial Advisors

Market opened on a subdued note last week and continued with its stellar rally Tuesday onward after election results are declared. Appearance of Bullish engulfing candle in Nifty and long bull candle near strong Kagi monthly support of 10,386 suggest a significant bottom has been made by the market on election result day.

Weekly RSI is trading near 50 almost from last three weeks, indicating sideways to positive momentum. At the same time, Nifty VIX closed lower around 15.16 for the first time since October 2018 where we had seen volatility breakout. This indicates subdued volatility in coming sessions with no major price movement.

Although Nifty is trading above its major short-term moving averages, it has to surpass and decisively trade above 50 percent Fibonacci retracement level of swing high 11,760 & swing low 10,003 which is around 10,882 to extend its up move. On the contrary, Nifty has a strong support of trend line and 200 DMA around 10,750, whereas a fall below these levels can extend index towards 50 DMA (10550).

In terms of open interest data, highest Open Interest (OI) in Put is seen around 10,000 strikes followed by 10,500 strikes.

Bank Nifty

Banking index has formed double doji pattern on daily time frame in last two trading sessions, it is indecisive in nature; however lower level of doji is 26,730 & higher level is 26,950 and breaching of these levels will give a sharp movement in that direction. Nevertheless short term & mid-term trend is positive and immediate resistance is around 27,200 & support around 26,200 levels.

PFC | Buy around Rs 90 | Target: Rs 104 | Stop Loss: Rs 83 | Upside 15 percent

PFC- The stock has corrected from the peak of Rs 108 and currently it has shown signs of bottoming out around Rs 83 levels. Formation of double bottom on hourly chart showing positive moves on upside. Long bullish candle near point of polarity on weekly chart is showing the possibility of bounce back further on upside. With decent volume participation witnessed, we recommend a buy in this scrip around Rs 90 for an upside target of Rs 104 with stop loss of Rs 83.

Bank Of India | Buy above Rs 89 | Target: Rs 100| Stop Loss: Rs 83 | Upside 12 percent

The stock has given a decent correction from the peak of Rs 216 to Rs 73 and takes support at its lower levels. Now it has regained strength indicating a positive bias. Formation of cup and handle pattern is suggesting upside strength. Emergence of Bullish engulfing candle on weekly chart is further showing strength. We anticipate the stock to rise further in the coming days with strength in volume; one can take long position above Rs 89 levels for the target of Rs 100 with stop loss of Rs 83 on closing basis.

JSW Steel | Buy around Rs 288 | Target: Rs 318 | Stop Loss: Rs 278 | Upside 10 percent

JSW Steel - Formation of doji near 100 WMA indicates halt in the downswing of the scrip. Positive divergence in RSI and oversold RSI in weekly suggest that stock has bottomed out. Line of parity on weekly chart is showing strong support. Positive crossover in MACD along with declining histogram suggests buying in the scrip. Buy JSW Steel around Rs 288 with stop loss of Rs 278 for the target of Rs 318 marks.

Siemens | Buy around Rs 960 | Target: Rs 1050 | Stop Loss: Rs 910 | Upside 9 percent

Siemens from last few days, scrip has been taking support from its upward sloping line and has given trend line breakout on upside.

Positive divergence in MACD and sustainability of RSI above 9 EMA suggest upside move in the coming days. Multiple bullish candles near the foot of the trend line showing strength. Formation of symmetrical triangle indicates upside movement. One can buy the script at Rs 960 with stop loss of Rs 910 for the target of Rs 1050.

Grasim Industries | Buy around Rs 840 | Target: Rs 910 | Stop Loss: Rs 810 | Upside 8 percent

Grasim Industries - Occurrence of Three white soldier at bottom levels showing an upsurge move on higher side. RSI took a flip on positive side from its oversold levels creates positive sentiment. Moreover, declining histogram of MACD along with positive crossover is also looking conducive for the scrip. Furthermore, strong support is seen near 835 levels where 50 DMA is seen.

Breakout is expected to come above 853 from where buying momentum in the stock will increase in coming sessions. By looking all these mentioned factors, we recommend to buy Grasim around 840 for the target of 910 with stop loss of 810 marks on closing basis.

The author is Head - Technical & Derivative Research at Narnolia Financial Advisors.

Disclaimer: 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.
First Published on Dec 17, 2018 11:32 am
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