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Market outlook: Nifty may resume its upmove; top stocks to watch out for

The levels of 10,490-10,535 continue to remain critically important, which Nifty needs to breach.

Updated: Jan 03, 2018, 09.36 AM IST
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The area of 10,490-10,535 will continue to remain critically important area that the market will have to breach for a comprehensive breakout.
The benchmark Index Nifty50 continued to witness fierce consolidation as it ended a volatile day of trade on Tuesday nearly flat with a minor gain of 6.65 points or 0.06 per cent.

The highlight of the session was the serious resistance that the levels of 10,490 posed in the morning trade. The market immediately retraced once it tested its resistance area.

The area of 10,490-10,535 will continue to remain critically important area that the market will have to breach for a comprehensive breakout.

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While the levels of 10,490 and 10,535 will act as immediate resistance area, the levels of 10,405 and 10,365 will act as supports.

The Relative Strength Index (RSI) on the daily chart is 55.7205 and it continues to stay neutral against the price. The daily MACD is bullish as it continues to trade above its signal line. No significant formations are observed on candles.

The pattern analysis have once again reinforced the credibility of the resistance of the 10,490-mark. Going ahead, the zones of 10,490-10,535 will continue to act as major resistance. While the mentioned zone of 10,490-10,535 acts as immediate resistance.

The Inter-Market Analysis offers cues as to whether we will see deeper and serious correction or just plain simple range bound consolidation. Our market historically enjoys very high and strong correlation with the Hang Seng (Hong Kong Index).

This Index has broken above its previous high and now trades at historically high levels. In all likelihood, we may resume our upmove after much underperformance vis-à-vis the Asian peers over previous days.

However, until this happens, we need to approach the market with caution. Until the directional up move is re-established, exposures should be kept limited. Highly stock specific approach but positively cautious view is advised for the day.

STOCKS TO WATCH: Fresh long positions were seen building up in Ashok Leyland, Dish TV, BHEL, Tata Power, Adani Power, Tata Power, NTPC and TVS Motors. Short covering was seen in counters like HCL Technologies, HDFC, Ujjivan, Cummins Industries and Castrol India.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

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