By Nagaraj Shetti
After displaying weakness from the new all-time higher of 15431 on Tuesday, Nifty slipped into adhere to-by means of decline on Wednesday and closed the day reduce by 104 points. The try of intraday upside bounce has failed and Nifty showed weakness amidst higher volatility in the afternoon to later portion of the session.
A affordable unfavorable candle was formed on Wednesday as per everyday timeframe chart with minor upper and reduce shadow. This pattern indicates downward correction in the market place with volatility. The Nifty failing to show any upside recovery in the mid to later portion of today’s session could hint at some more weakness in the coming session.
The minor positive chart pattern like larger highs and larger lows is in play on the everyday chart. As extended as Nifty sustains above 15000 levels, there is a possibility of an upside bounce from the reduce levels by forming a new larger low of the sequence. The opening upside gap formed on 15th Feb has been filled totally at 15180 and Nifty placed above it. The current upside bounce has occurred from the help of an additional opening upside gap of 8th Feb at 14977.
Though Nifty declined by 105 points on Wednesday, the general market place breadth was resilient and the broad market place indices like midcap one hundred and smallcap one hundred of NSE have closed slightly larger by .31% and .03% respectively. This could be hope for bulls to make a comeback from the lows.
The brief term trend appears to have turned down and the close to term uptrend status remains intact for the Nifty. The weakness of the final two sessions is anticipated to full in the next 1-2 sessions. Important supports to be watched about 15000 and we count on the market place to show upside bounce from the lows. On the contrary side, a decisive move beneath this 15K mark could open more weakness in the brief term.
Stock Picks:
Buy Cummins India Ltd (CMP Rs 794)
After displaying minor weakness in the final week, the stock price tag (Cummins) has witnessed a sustainable upside bounce so far this week-as per weekly time frame chart. We observe a bigger positive sequence like larger highs and larger lows as per weekly time frame chart. The larger low as compared to larger higher has been smaller sized in size, which indicate a lack of promoting enthusiasm in the participants at the highs. The volume and RSI shows positive indication.
Buying can be initiated in Cummins India Ltd at CMP (794), add more on dips down to Rs 765, wait for the upside target of Rs 875 in the next 3-4 weeks. Place a stoploss of Rs 745.
Buy Bank of Baroda (CMP Rs 84.15)
The PSU Banking stocks have been outperforming in the final handful of weeks and this stock (Bank of Baroda) was also in limelight. We observe a bigger rounding bottom formation as per weekly chart. The constant formation of larger tops and bottoms signal strength of an uptrend. Volume has expanded throughout upmove and weekly 14 period RSI sustains above 60 levels. This is positive indication.
Buying can be initiated in Bank of Baroda at CMP (84.15), add more on dips down to Rs 80.50, wait for the upside target of Rs 93 in the next 3-4 weeks. Place a stoploss of Rs 78.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed by the author are his personal. Please seek advice from your monetary advisor prior to investing.)