The Nifty50 corrected by more than 400 points from its highs recorded of 10,137 earlier in the month of August, but the fall may not be over yet.
The Nifty50 corrected by more than 400 points from its highs recorded of 10,137 earlier in the month of August, but the fall may not be over yet. Technical chartists see the decline getting deeper which could extend towards 9,600-9,500 levels.
In the week gone by, Nifty50 posted biggest weekly fall in this calendar year, down 3.5 percent for the week ended August 11. The market collapsed in a few trading sessions after it hit a record high last week.
We are back to 9700 which means the entire rally in the previous three weeks has now been completely snapped in merely four trading sessions.
Investors are advised to stay light and trade with strict stop losses as the decline could extend further, suggest experts.
“At the current juncture, the index is hovering around its strong support around 9710 levels, which is 61.80 percent retracement level of the recent rally from 9448.75 to 10137.85, which also coincides with the ‘Trendline’ support on the daily chart,” Jay Purohit, Technical & Derivatives Analyst at Centrum Broking Limited told Moneycontrol.
“Thus, 9650 – 9710 zone will be a last hope for the Bulls. If they’re able to defend that, then a pullback move towards its resistance zone of 9870 – 9900 cannot be ruled out. While, on a sustainable move below 9650, the ongoing move may extend up to 9500 – 9450 levels,” he said.
On the weekly chart, the ‘RSI-Smoothened’ has confirmed a negative crossover along with the big bearish candle. This certainly calls for an extended correction in the market.
“For the coming week, 9600–9580 levels are likely to be tested and since it’s a major support zone in the near-term, the market may respect it for a while. But in the case of a bounce back, 9770–9852 are likely to act a strong resistance for the index,” Sameet Chavan, Chief Analyst- Technical and Derivatives, Angel Broking told Moneycontrol.
“Traders are repeatedly advised to stay light and avoid taking undue risks as the market seems to have entered a corrective phase. Hence, the possibility of breaking this mentioned support zone is quite high now,” he said.
We have collated a list of top five trading ideas for the short-term which can give up to 19 percent return:
Analyst: Sameet Chavan, Chief Analyst- Technical and Derivatives, Angel Broking
Tata Communications: BUY| Target Rs632| Stop Loss Rs570| Time 6-8 sessions| Return 7%
Recently, this stock underwent a strong corrective phase as we saw a massive price erosion of more than 20 percent in merely two months. Now, the stock has reached its multiple historical support zone of 580–585.
This coincides with the weekly ’89 EMA’ level and hence, can be considered as a major support in the near term. In last two sessions, the stock prices have been bouncing back from lows and have formed two narrow range candles.
Considering this we expect the stock to give a bounce-back rally soon. Hence, we advise traders to buy this stock at current levels and on declines at Rs 580 for a target of Rs 632 over the next 6-8 sessions. The stop loss now should be fixed at Rs.570.
Engineers India Ltd: SELL| Target Rs131| Stop Loss Rs159| Time 5-10 sessions| Return 12%
Due to Thursday’s fall, the stock prices went on to breach its ‘200-SMA’ support level of '152. As a result, a ‘Lower Top Lower Bottom’ structure on the daily chart has been formed, which is a negative sign for short-term.
The ‘RSI’ oscillator too has given a breakdown from its long-term support. On Friday, the stock managed to give a decent pullback move, which should ideally be used as a selling opportunity.
Thus, we recommend selling this stock at current levels and on a bounce up to Rs 150.50 for a target of Rs 131 over the next 5–10 sessions. The stop loss should be fixed at Rs.159.
Shriram Transport Finance: SELL| Target Rs 895| Stop Loss Rs 974| Time 5-10 sessions| Return 6 percent
If we look at the daily chart, the stock prices have sneaked below the support level of ‘Upward Sloping Trend Line’, which provided decent support in last two months.
This confirms a bearish reversal pattern known as ‘Head N Shoulder’. In addition, The ‘RSI’ oscillator has given a bearish crossover with its smoothened moving average which does not augur well for the bulls.
Thus, we recommend selling this stock at current levels and on a bounce up to Rs 960 for a target of Rs 895 over the next 5–10 sessions. The stop loss should be fixed at Rs 974.
Brokerage: SMC Global
Petronet LNG: BUY| Target Rs 240-250| Stop Loss Rs 185| Time 1-2 months| Return 19 percent
The stock closed at Rs 210.95 on August 11, 2017. It made a 52-week low at Rs 156.30 on August 12 2016 and a 52-week high of Rs 229.50 on May 22, 2017. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at Rs 198.95
The stock is continuously trading in higher highs and higher lows on weekly charts, which is bullish in nature. Despite the fall in the broader markets, the stock still is holding the trend and trading above the important levels of 185, which may act support for coming days.
Therefore, one can buy in the range of Rs 204-208 levels for the upside target of Rs 240-250 levels with a stop loss below Rs 185.
Pidilite Industries: BUY| Target Rs 860-880| Stop Loss Rs 730| Time 1-2 months| Return 11 percent
The stock closed at Rs 790.30 on August 11, 2017. It made a 52-week low at Rs 567.75 on February 26, 2016 and a 52-week high of Rs 838.55 on June 23, 2017.
The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at Rs 734.20. The short term, medium term, and long term bias is positive for the stock as it is continuously trading above Rs 700 levels.
On charts, it is forming a “Bull Flag” pattern, which indicates that the old trend is intact and new up move is going to start.
Moreover, the technical indicators are also suggesting buying of the stock for the near-term. Therefore, one can buy in the range of Rs 780-785 levels for the upside target of Rs 860-880 levels with a stop loss below Rs 730.
(Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.)