The ghost of the Hindenburg Report continues to hang-out the Indian inventory markets; the markets have witnessed a pointy selloff over the previous two periods after the activist short-seller leveled some severe allegations towards the Adani Group. Whereas Hindenburg Analysis focuses on “forensic monetary analysis”, they’ve accused the Adani Group of significant monetary wrongdoings, huge inventory value manipulation, and working an accounting fraud scheme for many years.

Over and above this, the markets can even face the Union Funds 2023 which is scheduled to be tabled on Wednesday, February 1. Volatility is anticipated to rule the roost and we’ll see the markets, usually, going all over and staying risky by means of the approaching week.

Amid this unsure and risky atmosphere, some elements from the broader markets are displaying resilience and a few indicators of a possible backside in place, and the potential for a technical pullback. Such setups would work even higher with low beta shares which are general much less risky equivalent to this retail inventory that’s seen laying the bottom for a possible technical pullback from present ranges.

Trent Ltd (TRENT.IN)

TRENT.IN marked its excessive close to 1500 ranges in August final yr; after a short consolidation, the inventory tried to take out that stage in November. Nevertheless, after marking an incremental excessive close to 1550, the tried breakout failed. The inventory got here off from the highs under the breakout level and slipped additional right into a corrective decline. The next value motion publish the failed try to interrupt out additionally resulted within the formation of a posh head and shoulders sample. Subsequently, the inventory declined and whereas finishing its value measurement draw back goal, it examined the zone 1150-1160 zone just lately. General, the inventory has comparatively underperformed the broader markets over the previous months.

The newest value motion has proven an emergence of a robust bullish divergence of the relative energy index (RSI) towards the value. Whereas the value marked decrease bottoms, the RSI did not. This led to the formation of a bullish divergence with value. Apart from this, RSI additionally reveals a classical bullish failure swing. RSI slipped under 30, it bounced again however retraced once more. Nevertheless, it did not mark a brand new low and bounced again above the earlier excessive level leading to a bullish failure swing.

The shifting common convergence/divergence (MACD) oscillator has proven a optimistic crossover; it is now bullish and trades above the sign line. The inventory has additionally rolled contained in the bettering quadrant; this hints at a probable starting of the section of relative outperformance of the inventory over the approaching days. The inventory has rolled contained in the bettering quadrant of the Relative Rotation Graph (RRG). This hints at a possible starting of section of relative outperformance of the inventory towards the benchmark which on this case is the broader NIFTY 500 index.

If the inventory phases a technical pullback, it has the potential to 1290 ranges. This might translate into a possible value appreciation of 8% to 10% from the present ranges. Any shut under 1110 would negate this view.

Foram Chheda, CMT

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Milan Vaishnav, CMT, MSTA | Consulting Technical Analyst | www.EquityResearch.asia | www.ChartWizard.ae