Mr. Mustafa Nadeem, CEO, Epic Research
Nifty marks a Bearish reversal pattern, Bearish Engulfing, on the weekly chart. Though directionless market continues to be in place as Nifty consolidated between the range of 10900 to 10600 for the fourth week. The overall global markets were also in a range given the recent festive season and New Year holidays witnessing thin volume.
The Start to overall year was with mixed data as A lower earnings guidance from Tech Giant Apple kept upside in check while also a weaker data from the US and China witnessing a manufacturing downturn. hence all this amounted to a negative sentiment with crude oil prices below $50 mark sparking global demand concerns.
Indian market did see some buying as RBI approved the merger of DB, VB, and Bank of Baroda in an attempt to further consolidate and integrate the banking system. This further sparked a rally in other PSU Banks like Syndicate, Allahabad, OBC etc. PSU Banks have already seen some long built up while leading momentum in Financials and few energy stocks have kept lower levels in check for Nifty at 10600 - 10500. Bank Nifty, on the other hand, has been neutral making a shooting star pattern showing indecisiveness.
A bearish engulfing is a reversal pattern where the previous range of trading activity(positive) is engulfed by bears making it a complete rejection for bulls at higher levels. Hence the pattern indicates the upside is now very important for bulls to breach which is placed at 10900.
RSI is dancing around 50 zone which indicates the consolidation may continue. A decisive breakdown from 10500 on the downside is signaling lower levels of 10100 while only a close above 10940 will give us a short-term target of 11150 and above that 11450. hence it all comes down to which way the more power lies.
Next week, RBI meet with foreign investors as the decline in corporate bonds haunts the domestic corporate sentiments. It comes after a month when RBI mandated to limit FPI exposure below 50% in single corporate bond and 20% of exposure of portfolio in any single group.
A key trigger for the market will be GST meet and another round of cuts in tax rates on many of the items. It has been the point of discussion on the street and further may give some direction as it happens just a month before the Interim Budget. Not Just That, We have TCS lined up with earnings along with Infosys, Indus Ind. So all in all a lot of big names will be driving the cues for its sector and will be watched critically. Post that Manufacturing numbers, Industrial production, and inflation.
It will be a volatile week but certainly where we may see some Directional move.
EDELWEISS - The open and low was the same of the stock and it closed near to days high with good volumes. It also gave closing above the 200 EMA on the hourly chart. We recommend buying above 183 for the target of 185 with the stop loss of 181.50.
UNIONBANK - Stock outperformed well with good volumes and closed near to days high. The stock gave closing above 200 EMA on the daily chart. We recommend buying above 93 for the target of 94.50 with the stop loss of 91.50.
EQUITAS - Stock has shown weakness and closed near to days low with average volumes. The stock has a strong resistance on the daily chart of trend-line. It also formed a flag pattern on the hourly chart. We recommend selling below 119 for the target of 117 with the stop loss of 121.