By Nagaraj Shetti
After displaying sharp weakness and intraday upside recovery on Tuesday, Nifty shifted into a consolidation with weak bias on Wednesday and closed the day reduce by 37 points. A modest positive candle was formed at the lows with minor upper and reduce shadow. Technically, this pattern indicate a formation of higher wave variety candle pattern. Normally, such formations right after a affordable decline could hint at a possibility of halt in present trend and this requires to be confirmed with affordable upmove in the subsequent sessions.
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The smaller sized degree of positive chart pattern like greater tops and bottoms as per every day chart is intact. It is evident from the every day chart that marketplace reversed its trend right after couple of sessions declines in previous. Hence, any positive close on Thursday could bring bulls back into action for the quick term.
The important assistance of 10 period EMA on the every day chart is intact and this typical has been supplying important supports for the Nifty on dips for a lot of occasions in the last 35-40 sessions. Having sustained above this assistance on Tuesday and Wednesday, the odds of upside bounce is most likely in the coming sessions.
The quick term trend of Nifty remains damaging. But, lack of sharp stick to-by way of promoting and an emergence of purchasing from the reduce supports recommend probabilities of upside bounce in the marketplace in the next 1-2 sessions. A sustainable move above the quick resistance of 17800 could open powerful upside bounce towards 18000 mark. Immediate assistance is placed at 17580-17600 levels.
Stock Picks:
Buy Bharat Heavy Electricals Ltd- (CMP Rs 62.90)
After displaying consolidation variety movement in the last one month, the stock value has witnessed a sharp upside bounce in this week and closed greater. Present upside breakout of the hurdle at Rs 61 appears to have confirmed. This also indicate a confirmation of important bottom reversal at Rs 50, which was formed in later element of Aug. The constant greater bottoms have been formed as per weekly chart and this could imply more upside for the stock value ahead. The weekly 14 period RSI shows positive indication.
Buying can be initiated in BHEL at CMP (Rs 62.90), add more on dips down to Rs 60.50, wait for the upside target of Rs 71 in the next 3-4 weeks. Place a stoploss of Rs 58.
Buy GODFREY PHILLIPS INDIA LTD – (CMP Rs 1164.95)
After displaying minor consolidation in the last week, the stock value continued its sustainable upmove in this week. The weekly chart pattern indicate a decisive upside breakout of the important overhead resistance at Rs 1100 levels and the stock value closed greater. The volume expanded in this week along with the upside breakout in the stock value. The weekly 14 period RSI shows additional strengthening of upside momentum.
Buying can be initiated in GODFRYPHLP at CMP (1164.95), add more on dips down to Rs 1120, wait for the upside target of Rs 1285 in the next 3-4 weeks. Place a stoploss of Rs 1085.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s personal. Please seek the advice of your economic advisor prior to investing.)