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Go long in Titan, Indraprastha Gas and ITC

The index continues to trade below its shortlong term daily moving averages and thus lack the strength.

ETMarkets.com|
Aug 19, 2019, 08.38 AM IST
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The rising India VIX, USD/INR and falling brent crude oil prices are likely to result in whipsaws for the benchmark index.
By Sandeep Porwal
Technical Analyst- Institutional Desk, Ashika Stock Broking

Where are We? A tussle between the bulls and the bears continues since the beginning of the month, the index traded at a subdued note with rising volatility. Out of the many factors; USD/INR acted as a party spoiler for the index (equity) bulls since the currency pair staged the much awaited reversal from its intermediate lows and now trading above its 200-DMA (70.30) and closed above the level of 71 in Friday’s session. On the sectoral front, the Nifty Energy bucked the downtrend and rallied 3% during the week gone by, while the broader market failed to indicate any sign of respite.

What is in Store? The index continues to trade below its shortlong term daily moving averages and thus lack the strength. Fibonacci retracement drawn from the October 2018 low of 10,000 to June 2019 highs of 12,100 gives a 61.80% level of 10,800, these levels remain an important pivot in the short term for trend reversal/continuation. The lack of follow-up still remains a big concern for the market, thus trading range remains within the band of 11,180-10,800. We now expect the index to consolidate in the short term while for directional trigger the above-stated range shall be watched closely.

What Could Investors Do? The rising India VIX, USD/INR and falling brent crude oil prices are likely to result in whipsaws for the benchmark index. Weakness in key global markets warrants a cautious stance by both traders and investors.

On the stock front, we recommend long in Titan, Indraprastha Gas and ITC, expect upsides to the tune of 6% and above, while follow-up correction is likely in Dr Reddy’s.

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