Union Budget 2017-18

Will this BUDGET lead markets

to New Highs?
Budget Special Sectoral Overview
(Technical Report)
2017-18

Research Team
 Budget Special Sectoral Overview

Index

Nifty 50 3

Nifty Bank 4

Nifty IT 7

Nifty Auto 10

Nifty Infra 13

Nifty Metal 16

Nifty PSU Bank 19

Nifty Energy 22

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 Budget Special Sectoral Overview

Near Term View

Nifty 50 (CMP: 8561) Bullish

Weekly Chart

Source: Falcon

Rationale:

It has been a year of events on the domestic as well as global front. We witnessed few ups and downs in last eleven months
and it seems that the market is at a comfortable position now. First, our markets bottomed out on the Union Budget day last
year (i.e. February 29, 2016 after posting a low of 6825.80) and this was followed by a massive rally of more than 2000
points on Nifty in merely six months. Due to this relentless up move, some correction was on cards. Finally, events like
demonetization, Mr. Trumps victory as US President and US fed rate hike, provided this much awaited correction for our
market.
Now, with a broader view, the correction was very essential for our market as prolonged bull-markets always consists of
healthy corrections. Technically speaking, the Nifty completed its corrective move after precisely testing the 50% Fibonacci
retracement level of the entire rally from 6825.80 to 8968.70. Then, after forming a strong base around 7900, few other
technical indicators like, the RSI-Smoothened, 5 & 20 EMA Crossover and Parabolic SAR on weekly chart confirmed a
resumption of larger degree up trend. Hence, considering a medium term perspective, we expect Nifty to retest all-time highs
quite soon and even a move beyond it is on cards. However having said that, due to last one months strong rally, low
hanging fruit is already gone in the market and hence, traders should now be very selective in their stock pickings. In case of
intermediate dips, one should use it as a buying opportunity and look to accumulate value buying propositions. In the near
term, 8450 8300 would now be seen as a strong base and we dont see these levels getting breached soon. We hope this
budget propels our market at all-time high soon or may be beyond it.
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 Budget Special Sectoral Overview

Near Term View

Nifty Bank (CMP: 19515) Bullish

Weekly Chart

Source: Falcon

Rationale:

Post forming a low at 17607, the Nifty Bank index has rebounded sharply in line with the broader market. If we analyze the
higher degree charts, the recent low of 17607 coincided with the 20EMA on monthly chart, 89EMA on weekly chart and
the low was registered tad below the 38.2% retracement of the previous upmove.

The upmove from the above mentioned supports indicate that the longer term trend of the index is up and post a corrective
phase within an uptrend; the index has resumed the larger degree upmove. The 5 EMA is above the 20 EMA on both daily
and weekly chart and the SuperTrend indicator is in BUY mode on daily, weekly as well as monthly charts, thus hinting
towards short term and medium term uptrend. Also, if we observe the momentum readings, the RSI Smoothened oscillator
has registered low around the level of 40 (which is usually considered as bull market support zone) and has given a positive
crossover with its average. The oscillator is indicating a positive momentum on the monthly charts too. All the above
mentioned indicators are hinting towards an uptrend and thus any declines in the index in near term should be used as a
buying opportunity. The supports for the index are placed around 19085 and 18730 and any corrective move towards the
mentioned supports should be bought into. In next few months, the trended upmove could lead the index towards the range
of 20300-20500.

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 Budget Special Sectoral Overview

Near Term View

Kotak Bank (CMP: 774) Buy on Dips

Weekly Chart

Source: Falcon

Rationale:

Since the month of May 2009, the stock is in an uptrend which can be noted on the higher degree charts.

During this uptrend, 89 EMA on weekly charts have always acted as support for the stock as the prices have closed
below the mentioned average only twice in Feb 2011 and Feb 2014 (both were false breakdowns).

Post the recent corrective move from `833 to 693, the stock had formed a bullish Hammer pattern on weekly charts
near the weekly 89 EMA. Prices have resumed the broader degree uptrend since then.

The stock has strong support in the range of `760-750 and thus, traders should look to buy the stock in the mentioned
range for a target of `820 in coming 1-2 months. The stop loss for this trade set up can be kept at `720.

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 Budget Special Sectoral Overview

Near Term View

ICICI Bank (CMP: 269) Buy on Dips

Daily Chart

Source: Falcon

Rationale:

Since last seven months, the stock has been oscillating in a broad range of `235-295.

During this period, the 200 SMA on the daily chart has acted as support on every corrective decline.

The recent price consolidation above the 200SMA has also led to formation of an Inverted Head and Shoulders
pattern, which is a trend reversal pattern. However, the breakout from the same would be confirmed only on a
close/breakout above the neckline resistance of `274.

The recent upmove in last week was support by huge volumes which too is a positive sign.

Considering the above technical evidence, traders can buy the stock in the range of `260-265 for a target of `295-300
in coming 2-3 months. The stop loss for this trade set up can be kept at `245.

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 Budget Special Sectoral Overview

Near Term View

Nifty IT (CMP: 9849) Neutral

Weekly Chart

Source: Falcon

Rationale:

Last few quarters were not that good for Nifty IT index as it had corrected by more than 25 percent from its high of
12908.10, registered in March 2015. The index took a support around the 50% retracement levels of the entire up move
from 5936.40 to 12908.10, which coincided with the lower end of the Falling Channel on weekly chart. The Nifty IT index
formed a Long Legged Doji on both daily and weekly charts at the recent bottom and started rebounding piercingly. The IT
index has rallied by around 1000 points in recent past and then consolidated in a narrow range for few sessions.

On Tuesday, we witnessed decent correction in IT conglomerates due to news on tightening norms for H1-B visa holders. At
current juncture, the index is hovering within the territory of Falling Channel on weekly chart and it is expected to trade
within that range in upcoming sessions too. Since, the IT index is trading near to its strong support; long trades may fetch
better returns as compared to short sells. Thus, traders should follow stock centric approach within the IT sector.

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 Budget Special Sectoral Overview

Near Term View

INFY (CMP: 929) BUY

Weekly Chart

Source: Falcon

Rationale:

The stock has seen decent correction in the recent past and has reached to its strong demand zone of `900 910.

On Friday, the stock rebounded sharply from the mentioned support zone and formed a Hammer candlestick on daily
chart; which was later followed by the positive momentum on Monday. The mentioned candlestick pattern can be a short
term reversal trigger for the counter.

Also, the RSI oscillator has turned in upward direction from its support zone of 35 37 on daily chart, indicating
strength in the counter.

Looking at the above technical evidences, we are expecting an up move in the stock. Hence, traders are advised to go
long in the stock at current juncture and on declines to `915 for a target of `1020 in upcoming weeks. The stop loss for
this trade set up can be kept at `880.

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 Budget Special Sectoral Overview

Near Term View

Just Dial (CMP: 365) BUY

Daily Chart

Source: Falcon

Rationale:

The stock has seen decent correction in last few months. Recently, the stock formed a Hammer pattern on weekly chart
at the bottom, and started rebounding piercingly.

For the first time, after April 2016, the stock has managed to close above 5 EMA on weekly chart. Also, we witnessed a
positive crossover of 5 EMA and 20 EMA on daily chart after many months.

Recently, the volumes are high in the upmove as compared to corrective moves, indicating buying interest in the counter.
The RSI - smoothened oscillator has taken support around 40 levels and started heading northwards on daily chart,
indicating strength in the counter.

Considering current chart structure, we are pre-empting a formation of Inverse Head & Shoulder pattern on daily chart.
Thus, we advise traders to buy this stock at current levels and on declines to `360 for a target of `425 in upcoming
weeks. The stop loss for this trade set up can be kept at `335.

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 Budget Special Sectoral Overview

Near Term View

Nifty Auto (CMP: 9838) Bullish

Weekly Chart

Source: Falcon

Rationale:

Auto conglomerates have always participated heavily in all the rallies that we have witnessed in last so many years. This
time too it did not stay behind as the index has managed to register decent gains in last eleven months.

If we meticulously observe the weekly chart, we can see completion of recent corrective phase precisely at 50% Fibonacci
retracement level of the previous up move from 6859.40 to 10466.90. This level coincided with the 89 EMA, which acted
as a sheet anchor during the month of November 2016. Since then the index has rallied more than 12% and is now poised
for retesting all time high (10466.90) quite soon. In fact, considering few indicators like, Parabolic SAR and RSI-
Smoothened, the index can even post a new all time high. With a near to medium term view, small dips are likely to get
bought into as we see strong base emerging at 9600 9450. Considering the risk to reward ratio, traders needs to keep
right propositions at right time in order to fetch higher returns.

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 Budget Special Sectoral Overview

Near Term View

Tata Motors (CMP: 524) Buy on Dips

Weekly Chart

Source: Falcon

Rationale:

After undergoing a lot of stress during the calendar year of 2015, the stock seemed to have formed a strong base and is
in a comfortable position to ride the tide for next few months.

The daily chart seems in an uptrend along with the strong structure in monthly time frame. At present, the stock may
consolidate for a while; but any dip towards the daily 89 EMA can be seen as a very good buying opportunity.

Hence, one can look to accumulate this stock in the vicinity of 89 EMA and 200-day SMA, which we believe would
attract lots of traders attention.

The stock has a potential to move towards its 52-week high of `598.40 in next few months. The stop loss can be fixed at
`454.

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 Budget Special Sectoral Overview

Near Term View

Motherson Sumi (CMP: 332) BUY

Weekly Chart

Source: Falcon

Rationale:

The stock seems to be in a long consolidation phase. Recently, we witnessed some positive traction with healthy volumes.

We witnessed a breakout from trend line resistance around `336 on January 27, 2017. However, the follow up buying is
clearly missing. But, if we look at the higher degree chart structure, it looks encouraging.

All key moving averages along with the RSI-Smoothened oscillator are sloping in the upward direction on weekly chart;
indicating strength.

Thus, despite a strong corrective move, we advise traders to accumulate this stock only on dips towards `325 320 for a
target of `372 over the next three to four months. The stop loss should be fixed at `299.

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 Budget Special Sectoral Overview

Near Term View

Nifty Infra (CMP: 2940) Bullish

Weekly Chart

Source: Falcon

Rationale:

This sectoral index has underperformed (our benchmark index) miserably if we compare historical performance, especially
with a stupendous up move seen way back in 2007. However, since last Union Budget, the index has managed to go hand
in hand after posting a low of 2204.05 in the month of February 2016.

Now, if we look at the weekly chart, a formation of Bullish Cap and Handle is clearly visible. At this juncture, prices are
quite close to the trend line level of 3000. Looking at the recent momentum and rising slope of RSI-Smoothened on weekly
chart, we expect the index to surpass this hurdle in the near term. In this scenario, we would expect the index to continue this
northward journey at least towards 3150 3250. Hence, traders are suggested to keep looking for buying opportunities in
its constituents on any meaningful dips. The immediate support for this index is placed at 2890 2800.

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 Budget Special Sectoral Overview

Near Term View

L&T (CMP: 1446) BUY

Weekly Chart

Source: Falcon

Rationale:

The chart structure of L&T is quite identical to its sectoral index. The stock has completed its corrective phase and has
formed a strong base around `1300.

Post this, we witnessed a decent up move to form a downward sloping Cup and Handle pattern on weekly chart.

At present, the stock is trading around the trend line resistance of `1475, but looking at multiple technical evidences,
sooner we expect this breakout to happen in the upward direction.

Thus, traders can accumulate this stock from current level to a decline up to `1400 for a target of `1650 over the next
three to four months. The stop loss should be fixed at `1300.

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 Budget Special Sectoral Overview

Near Term View

NTPC (CMP: 172) Buy on Dips

Monthly Chart

Source: Falcon

Rationale:

This stock has clearly underperformed over the past few years; but recently we saw some encouraging signs on charts.

The stock prices finally broke out in the upward direction from its five years congestion zone in the month of November
2016 after stock prices confirming a monthly close above `158, which was acting as a major hindrance for years.

In the course of action, the stock confirmed a Higher Top Higher Bottom on monthly chart along with the positive
placement of Super Trend.

Considering the risk to reward ratio, traders can look to accumulate this stock only on dips towards `166 162 for a
target of `190 over the next three to four months. The stop loss should be fixed at `152.

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 Budget Special Sectoral Overview

Near Term View

Nifty Metal (CMP: 2487) Bullish

Monthly Chart

Source: Falcon

Rationale:

Last few months were phenomenal for metal stocks and as a result, the Nifty Metal index outperformed the broader indices
in the year 2016. The rally in base metal prices in last 9-12 months worked well for metal stocks as most of the metal &
mining counters had seen a splendid rally in this period.

The Nifty Metal index, which was making Lower Highs Higher Lows on monthly closing chart (line chart) had given a
Triangle breakout and managed to sustain above the same. Also, the set of moving averages (E5, E20 and E89) are placed
positively along with Parabolic SAR and RSI smoothened on monthly chart. Since, the metal index has rallied by more
than 1600 points from its November 2016 low; a corrective move cannot be ruled out. The Nifty Metal index is poised for a
rally towards 12000 12300 levels and any correction towards 10000 10200 should be used as a buying opportunity.
The above bullish view on the Metal index will negate on a close below 9500 levels. Thus, traders are advised not to get
carried away by the short term corrections and look for buying opportunities on metal & mining stocks on declines.

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 Budget Special Sectoral Overview

Near Term View

NMDC (CMP: 144) Buy on Dips

Monthly Chart

Source: Falcon

Rationale:

The stock is moving in an uptrend by maintaining Higher Highs Higher Lows on weekly chart.

The stock has doubled in last one year and had given breakout from the Falling Wedge pattern on monthly chart.

For the first time in last six years, the stock is giving a monthly close above 89 EMA, which is a positive sign for the
stock.

Also, the RSI smoothened oscillator is moving northwards and had crossed its previous highs, indicating strength in the
counter

Considering current chart, traders are advised to look for buying opportunities in the range of
`132 135 for a target of `165 - 170 in upcoming 3-4 months. The stop loss should be placed at `115.

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 Budget Special Sectoral Overview

Near Term View

Tata Steel (CMP: 463) Positive

Monthly Chart

Source: Falcon

Rationale:

Since last 15 months, the stock is forming Higher Top Higher Bottom structure and is thus in an uptrend on weekly
chart.

The stock has given breakout from the Symmetrical Triangle on the monthly chart which can be seen in the above
exhibit.

The 5 & 20 EMA on weekly as well as monthly charts is indicating uptrend. Also, the momentum reading on the
monthly chart is indicating continuation of the uptrend.

Considering above technical evidences, traders are advised to use declines in the stock as buying opportunities and
trade the stock with positive bias.

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 Budget Special Sectoral Overview

Near Term View

Nifty PSU Bank (CMP: 3174) Bullish

Weekly Chart

Source: Falcon

Rationale:

During the month of November, the Nifty PSU Bank index had formed a Doji candlestick on the monthly chart. The
mentioned pattern signifies indecision and thus, the index consolidated in the range of 2890-3270 during the months of
December and January.

Although the index continues to consolidate in a range, there are initial signs of the probability of an upmove in the index.
Near the lower end of the mentioned range, the index had formed a Doji followed by a Hammer candlestick pattern on
weekly chart. Post that, the index has rallied higher and formed a large body bullish candle during last week. The
SuperTrend indicator on the weekly charts is in BUY mode and the 5 EMA has given positive crossover to 20 EMA. Also,
the RSI Smoothened oscillator on weekly and monthly charts is indicating a positive momentum. Thus, although the index
has resistance in the range of 3400-3500, there is higher probability that the index would breach the resistance and rally
higher to post a trended move. Only on breach of the lower end of the above mentioned range, the view on the index will be
negated. Traders are advised to focus more on stock specific moves within the sector as some of the stocks could fetch better
returns than the broader market in near term.

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 Budget Special Sectoral Overview

Near Term View

SBI (CMP: 260) Buy on Dips

Weekly Chart

Source: Falcon

Rationale:

Post registering a low around `149 in the month of February 2016, the stock reversed its previous downtrend and
formed Higher Tops and Higher Bottoms.

After the spectacular upmove, the stock has been consolidating and is showing a time-wise corrective phase.

Since there are no signs of trend reversal, traders and investors can accumulate the stock on declines, in anticipation of
the resumption of the uptrend post completion of the ongoing consolidation phase.

Hence, traders are advised to buy the stock on decline around `250 for a target of `282 in next 3 months. The stop loss
for this trade set up can be kept at `232.

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 Budget Special Sectoral Overview

Near Term View

IDBI Bank (CMP: 77) Buy on Dips

Weekly Chart

Source: Falcon

Rationale:

Post a consolidation phase of almost nine months, the stock has recently picked up positive momentum and has given a
breakout from the falling trendline resistance.

The 5DEMA and the 20DEMA have shown a positive crossover and thus, the short term trend for the stock is up.

If we observe the RSI Smoothened oscillator on the weekly charts, it is observed that the oscillator has taken support
near the level of 40 in the entire consolidation phase since March and it has recently moved above the resistance of 60.

The bullish set ups in averages supported with the positive momentum readings indicates that the stock could move
higher in next few months.

Hence, traders are advised to buy the stock on decline in the range of `74-73 for a target of `83 in next 2 months. The
stop loss for this trade set up can be kept at `69.

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 Budget Special Sectoral Overview

Near Term View

Nifty Energy (CMP: 10674) Bullish

Monthly Chart

Source: Falcon

Rationale:

The Nifty Energy index had shown a stellar performance during last year. The energy index, which had a spectacular rally
from year 2001 to 2008, was trading in sideways direction from last eight years. The sideways movement has resulted into
formation of a Triangle pattern on monthly chart.

Currently, we are witnessing a breakout from the mentioned pattern, indicating continuation in the ongoing upward
momentum. The moving averages and other technical indicators are placed positively on monthly chart, indicating strength
in the counter. Since the stock already had decent rally in recent past and the momentum oscillators are moving in
overbought territory on daily and weekly chart; correction of 400 500 points cannot be ruled out. The index has potential
to move towards 12200 12500 levels in upcoming months. Thus, we advise traders to look for buying opportunities in its
components on declines.

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 Budget Special Sectoral Overview

Near Term View

GAIL (CMP: 468) Positive

Monthly Chart

Source: Falcon

Rationale:

The stock had given consolidation breakout above `450 in the recent past and managed to sustain above the same.

Recent up move in the stock was supported by healthy volumes, which further validates the breakout criteria.

The set of moving averages (E5, E20 and E89) along with Parabolic SAR are placed positively on both weekly &
monthly chart.

Since, there is no sign of reversal seen on higher timeframe (weekly & monthly), the stock may continue its upward
momentum towards the upper trendline (see exhibit).

Looking at the above technical evidences, traders are advised to trade this counter with positive bias as `440 450
range is likely to act as strong support.

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 Budget Special Sectoral Overview

Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com

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