We shall also review our short, medium and long term stock picks.
Short term view of the index:
The anticipated correction in the index arrived ultimately. In the last weekly review I had mentioned that:
“This means that the market is witnessing profit booking at higher levels. Going by this chart, we may see further corrections next week. But those corrections will be good for the index and the overall market.”
Let us discuss the daily chart of Nifty displayed below.
The long upper shadows indicate the inability to close higher or selling pressure. In other words, as the indices rose higher, a sell off brought them lower. We had seen 2 such days last week with doji body and long upper shadow and 1 day with doji body and a long lower shadow. On Monday the bulls were in control of the index and the Nifty had gained 53.30 points. Once again, on Tuesday a doji body with long upper shadow appeared. This again meant a sell off. On Wednesday the index got corrected by 32.05 points. The last Thursday of the month is important to Futures and Options traders since the contracts expire on that day. The index once again gained 31.10 points.
The anticipated correction arrived finally:
Today, the index opened at 4619, just a tick below yesterday’s close. But right through the day, it was in red, as shown in the intraday chart below. Every attempt to push the index up was negated by vigorous selling.
(Chart courtesy: NSE)
Nifty touched an intraday low of 4424, after about two and a half hours of trade. Though it recovered slightly, the final hour of trading encountered a sell off yet again. The Nifty managed to close at 4445, losing a good 3.78% today.
On a weekly basis, it has lost about 121 points or 2.65%.
In my very first article for The India Street, “INDIAN STOCK MARKET – AN OUTLOOK” I had mentioned that:
“The longer term target for the Nifty, when calculated from a low of 920, works out to 4600.”
On Tuesday, the Nifty had touched a high of 4648 and registered a close of 4621.
Next week’s forecast:
Today’s red candle has 89% real body. This indicates a strong sell off. The previous high of 4363 should act as the support for the index. If that gets broken 4291 should act as another support for the short term. The index has just managed to break the 38.2% retracement from 4648 today at 4438 but managed to close above it. 61.8% retracement works out to 4309. It falls below the first support 4363 and should be the downside target for this correction.
Medium and long term view:
No major reversal signs have been found in weekly chart or monthly chart of Nifty. So we continue to be bullish on the index.
Top 5 gainers and losers among index stocks for the week:
| Scrip | % Gain | Scrip | % Loss |
| ITC | 11.66 | SUZLON | 12.96 |
| REL | 10.73 | PNB | 12.74 |
| RANBAXY | 6.22 | ACC | 9.79 |
| TATAPOWER | 4.88 | TATAMOTORS | 8.92 |
| ONGC | 1.80 | TATASTEEL | 8.89 |
Top 5 gainers and losers among index stocks for the month:
| Scrip | % Gain | Scrip | % Loss |
| REL | 24.30 | SUZLON | 12.54 |
| SAIL | 13.22 | CIPLA | 9.58 |
| MARUTI | 11.57 | HCLTECH | 9.45 |
| ITC | 11.44 | SUNPHARMA | 8.93 |
| ZEEL | 11.17 | GLAXO | 8.72 |
Medium term view of some index stocks:
ITC has turned bullish in weekly charts. REL continues to remain bullish. Sun pharma is on the verge of a bearish breakout. Wipro’s medium term bearishness continues.
The India Street has covered HDIL, Allied Digital and IVR Prime IPO’s recently.
HDIL got listed on July 24 (Issue price: Rs.500). It opened with a premium of Rs.38 and gained 3.71% and 7.12% on Wednesday and Thursday. However, it lost 6.69% today as most scrips witnessed selling pressure.
Allied Digital got listed on July 25 (Issue price: Rs.190). This also opened with a hefty premium of 142.50 at 332.50 but only managed to close today at 302.
IVR Prime Urban Developers IPO was oversubscribed by 5.75 times. Qualified Institutional buyers oversubscribed by 8.60 times, high networth individuals by 1.85 times, retail investors by 1.54 times, employees by 0.72 times.
Review of The India Street stock picks:
We have been discussing technically bullish stocks for short, medium and long term perspectives. Some of these stocks have performed well.
Out of the 40 stocks analyzed so far, 15 have yielded more than 10% over the last 4 weeks. 5 stocks (EVERESTIND, PARSVNATH, ROHITFERRO, TATAMETALI and TINPLATE) have yielded nothing. Top 5 stocks from our picks are given below:
| Scrip | % Gain |
| ORBITCORP | 30.42 |
| OPTOCIRCUI | 27.10 |
| SOUTHBANK | 25.25 |
| ADANIENT | 20.78 |
| DENABANK | 20.50 |