Nifty 50 on 29 November
The Nifty 50, the Indian stock market’s benchmark index, held the previous day’s low and rebounded sharply, gaining 217 points after Thursday’s sharp sell-off. Friday’s session started on a positive note at 23,927.15 and traded sideways during the initial hour. However, strong buying in pharma, auto, and oil and gas stocks lifted the index above 24,100. As a result, the index formed a bullish harami candlestick pattern on the daily chart and closed at 24,131.10. The advance-decline ratio was positive for the session, settling around 2:1.
The gross domestic product (GDP) growth rate data for the second quarter, July-September, was published on Friday evening. It grew at 5.4% in Q2, compared to 6.7% in Q1. This is the slowest growth in the last seven quarters, mainly due to comparatively slow growth in the industrial sector. This figure is far below market expectations and the Reserve Bank of India’s estimates of 7%.
Technically, the index filled the recent gap-up area created at the beginning of the week on Monday and found support in the range of 23,800–23,850. The momentum indicator, 14-period Relative Strength Index (RSI), is trending slightly upward and is currently placed at 49. Another technical indicator, moving average convergence/divergence (MACD), is trending with a positive crossover but is still placed below the central line.
Last week’s move in the index suggests that it has support around 23,800 and resistance around 24,400. Therefore, these levels may act as crucial support and resistance zones for this week. A breakout or breakdown could determine the market direction. Further, the current market trend suggests that a fall below 23,800 may lead to a retest of 23,300 (i.e., 50-week moving average).
According to O’Neil’s methodology of market direction, the current market status is in a “Rally Attempt”. A Rally Attempt begins on the third day when the index closes higher from the most recent bottom after being in a correction (also known as downtrend).
Performance of Nifty Bank
On Friday, this major sectoral index opened on a positive note. However, it then started behaving in a volatile manner. It opened at 51,984.15, breached Thursday’s low, and remained traded in the range of 51,759.45-52,170.90, before closing at 52,055.60 on Friday. It formed a bullish candle with a lower-high and lower-low price structure on the daily chart.
The volume was comparatively lower than on Thursday. The momentum indicator, RSI, is trending in the flat zone and is currently placed at 55, along with a positive crossover on MACD. This index may remain volatile unless it is trading below 52,500. To turn bullish in the coming days, it must cross and hold above 52,500.
According to O’Neil’s methodology of market direction, the current market status is in a “Confirmed Uptrend”. The uptrend begins with a follow-through day or when the index reclaims its previous uptrend high.
Two stocks to buy, recommended by MarketSmith India:
Sansera Engineering: Current market price ₹1,587.65| Buy at ₹1,565 – 1,590| Profit goal ₹1,890| Stop loss ₹1,465| Timeframe 1-2 Months
Divis Laboratories: Current market price ₹6,172.70| Buy at ₹6,100-6,200| Profit goal ₹6,970 | Stop loss ₹5,690 | Timeframe 2-3 Months
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
