With favourable industrial output (IIP) and inflation data (CPI), the Indian equity market witnessed a strong rebound for the third consecutive week with Nifty index closing above the crucial psychological level of 10,400.
Further, the index managed to retest 10,500 levels during the last trading session (Friday) although it failed to hold and closed at 10,480 levels with 1.44 percent gain on the weekly basis.
The sectorial index also indicated a positive trend on the weekly basis with Nifty IT, Bank Nifty and Metal index closing higher despite the geopolitical tension.
After witnessing a breakout from 10,450 levels on Thursdayâ€™s trade, the index formed a bullish candlestick pattern which consecutively ended with the formation of sustain bullish candlestick pattern on its weekly price chart.
The relative strength index or the RSI level on weekly chart stood at 55 which signalled a neutral stance with no divergence against the price.
However, a flattened weekly MACD signalled a likely positive crossover. Based on a Fibonacci retracement, a support for the index placed at 10,417 levels and resistance at 10,561 levels.
With positive set of macro data, and better-expected earnings result, the index is likely to build uptrend momentum in coming session as it decisively indicated in the last week trade.
However, a geopolitical tension is expected to keep index volatile on a rangebound move although we maintain an upwards bias at 10630 levels on weekly basis and at 10,390 on the downside.
Deepak Fertiliser witnessed a robust momentum during last weekâ€™s trading session after consolidating over three months from the earlier peak and made a strong rebound from Rs 288 levels.
The scrip made a crucial breakout from its 200-days EMA level indicating a reversal trend in its price chart. Further, Bollinger bands indicated a price hitting upper band which is a positive signal.
After closing with about 9 percent gain on weekly basis, the scrip made a bullish reversal candlestick pattern on its weekly price chart. Further, a weekly RSI at 55 indicated a sustained buying regime coupled with positive cues on MACD.
The scrip is now facing a resistance at Rs 402 levels and support level at Rs 355 on pivot points. We have a BUY recommendation for Deepak Fertiliser which is currently trading at Rs 373.50.