By Nagaraj Shetti
After displaying a sign of strength with upside momentum on Tuesday, Nifty demonstrated an additional sharp upmove on Wednesday and closed the day larger by 211 points. After opening with upside gap of 57 points, Nifty shifted into a sustained upmove that continued for the complete session. Intraday consolidation or minor dips in amongst have been made use of as purchase on dips chance for the day. The opening upside gap remains unfilled.
A lengthy bull candle was formed, that closed at the edge of the critical overhead resistance at 14900 levels (resistance as per adjust in polarity and prior swing highs). Though Nifty is placed at the crucial hurdle, there was no sign of profit booking from close to the resistance on Wednesday. This is a positive indication and signal more upside in the brief term.
After the false downside breakout of the reduce variety of 14200 levels on 22nd April, Nifty displayed strength on the upside and has virtually reached the upper trajectory of the variety pattern at 14900 levels. Hence, a sustainable move above this hurdle could open the next upside target of about 15200-15300 levels in the close to term.
Nifty has bounced back as per weekly timeframe chart and formed a lengthy bull candle so far. After the formation of doji candles in the prior 3 weeks through decline, one may well now count on a formation of lengthy bull candle as per weekly timeframe chart, by week’s close.
The brief term trend of Nifty continues to be positive. After the show of strength to move above the hurdle, one may well count on present upside resistance (14900) to be broken decisively on the upside in the brief term. Any intraday consolidation or minor weakness from close to the hurdle could be a purchase on dips chance. Immediate assistance is placed at 14750.
Stock Picks:
Buy JK Tyre & Industries Ltd- (CMP Rs 116.60)
The broader downward trend in this Tyre stock (JKTYRE) of the last handful of months appears to have reversed on the upside as per the weekly timeframe chart. After shifting into a consolidation pattern lately, the stock value witnessed sustainable up-move in the last handful of sessions. The stock value is at present placed to show a decisive upside breakout of the downward sloping trend line resistance about Rs 118-119 levels. Hence, a sustainable move above Rs 119 levels could open a sharp trended up-move in the stock value in close to term. Weekly 14 period RSI shows a positive indication.
Buying can be initiated in JKTYRE at CMP (116.60), add more on dips down to Rs 112, wait for the upside target of Rs 130 in the next 3-4 weeks. Place a stoploss of Rs 109.
Buy Heritage Foods Ltd – (CMP Rs 377.50)
After displaying a bigger variety bound action in the last handful of weeks, the stock value (Heritage Foods Ltd) has witnessed a sharp upside bounce from the last week. The stock value was moving in a bigger triangle kind pattern in the last several months and has witnessed an upside breakout of the triangle at Rs 355 levels lately. This is a positive indication and one may well count on sharp up-move in the close to term. Weekly 14 period RSI moved above 60 levels and volume has began to expand although the stock value shows upside breakout of the hurdle.
Buying can be initiated in Tata at CMP (377.50), add more on dips down to Rs 360, wait for the upside target of Rs 420 in the next 3-4 weeks. Place a stoploss of Rs 348.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed are the author’s personal. Please seek advice from your monetary advisor prior to investing.)