By Nagaraj Shetti
After displaying an upside bounce in the final 3 sessions, Nifty reversed down sharply on Wednesday and closed the day with a hefty loss of about 265 points. After opening on a adverse note, Nifty slipped into weakness in the early component of the session. It later shifted into a variety move with an try of upside recovery. The sharp intraday weakness triggered in the later component and the Nifty closed close to the lows.
A lengthy adverse candle was formed and this indicates a reversal pattern of the final handful of sessions upmove. Hence, the formation of the higher wave-variety candle pattern of Tuesday has turned out to be a reversal pattern as of now. This is a adverse indication and signals more downside in coming sessions.
Nifty is forming reduce highs and lows on the everyday chart and is anticipated to revisit the reduce gap help of 14350 in the brief term. This could also imply additional down move under the critical weekly 10 period EMA as per weekly chart at 14580 levels.
Previously, this moving typical has provided very good help for the industry in the subsequent weeks and led to upside bounce in previous. Hence, Nifty not discovering help of this moving typical this time could imply probabilities of broad-based weakness starting in the industry.
The brief term trend of Nifty appears to have reversed down right after a tiny upside bounce. Next reduce levels to be watched about 14350-14300 in the next handful of sessions prior to displaying a further round of tiny upside bounce from the lows. Any pullback rally could obtain resistance about 14675-14750.
Buy Sequent Scientific Ltd – (CMP Rs 248.05)
The downward correction of the final 5 weeks appears to have completed in the stock cost, as per weekly timeframe chart. The stock cost has witnessed sharp upside bounce on Tuesday-Wednesday and closed greater. This pattern indicate an try of upside breakout right after a down trend. This action could be a close to term bottom reversal for the stock trend about Rs 215-220 levels. The weekly 10 period EMA is constantly providing help for the stock cost and the current upside bounce has occurred from close to this help about Rs 225 levels. The momentum oscillator shows positive indication.
Buying can be initiated in SEQUENT at CMP (Rs 248.05), add more on dips down to Rs 238, wait for the upside target of Rs 272 in the next 3-4 weeks. Place a stoploss of Rs 232.
Buy Balrampur Chini Mills Ltd – (CMP Rs 218)
The costs of this Sugar stock has been in a sharp uptrend more than the final handful of weeks. The decline of final week appears to have regained in this week, as stock cost surged up by 7% as of now. Further upmove from right here could outcome in an upside breakout of the hurdle of Rs 226 levels and that could open more upside for the brief term. Weekly 14 period RSI has turned up from close to 60 levels, which indicate strength of an upside momentum. Volume has began to expand with upside in the stock cost.
Buying can be initiated in Balarmpur Chini at CMP (218), add more on dips down to Rs 210, wait for the upside target of Rs 240 in the next 3-4 weeks. Place a stoploss of Rs 203.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed are the author’s personal. Please seek the advice of your economic advisor prior to investing.)