We won’t initiate short in the index and rather be on sidelines for next couple of sessions, Jay Purohit, Technical & Derivatives Analyst, Centrum Broking Limited, said in an exclusive interview with Moneycontrol’s Kshitij Anand.
A small correction from current levels cannot be ruled out in Nifty and we won’t initiate short in the index and rather be on sidelines for next couple of sessions, Jay Purohit, Technical & Derivatives Analyst, Centrum Broking Limited, said in an exclusive interview with Moneycontrol’s Kshitij Anand.
The Nifty closed above 10300 on Friday and closed the week on a bearish note. What is the way ahead and how are markets looking at weekly and daily charts?
The week kick-started on a positive note as our market hit the new all-time high on Monday. But, the index failed to hold at higher levels and started correcting to end the session on a flat note.
This was followed by a gap-up opening on Tuesday; but, bears took this as a selling opportunity and as a result, the Nifty washed out the entire work done by Bulls in previous four sessions and formed a ‘Bearish Engulfing’ pattern on the daily chart.
For the next two sessions too, Nifty's opening level proved to be the highest point of the day as we witnessed profit-booking on gap-up openings.
However, due to marginal gains on Friday, the Nifty managed to conclude the week a tad above 10300 mark, with a loss of 1.25 percent over its previous week’s close.
Due to decent correction in last few sessions, the Nifty is approaching its strong support zone of 10170 – 10250. This zone is a confluence of ‘Gap’ area on a daily chart, previous breakout level of ‘Rectangle’ pattern, ‘Super Trend’ indicator on the daily chart and 38.20 percent retracement level of the recent rally from 9687.55 to 10482.64.
Since multiple supports are placed in the same zone and there is no structural damage seen on higher degree chart, we are anticipating reversal from the mentioned support zone.
How is the momentum oscillator placed on daily?
The momentum oscillator ‘RSI’ on a daily chart is showing positive hidden divergence, which generally takes place when the Oscillator makes a lower low, but Price makes higher lows. This is a positive sign for the index and shows a possibility of a resumption in the uptrend in coming sessions.
What should be the strategy -- buy on dips or sell on rallies in the 3rd week of November?
Though a small correction from current levels cannot be ruled out in Nifty, we won’t initiate short in the index and rather be on sidelines for next couple of sessions.
At the current juncture, we would be looking for the reversal signs around the support zone of 10170 - 10250 to initiate fresh long positions. Thus, buy-on-dips would be a prudent strategy for the coming week.
Any stocks which are looking attractive at current levels based on technical?
Despite a corrective move in the market, below are a couple of stocks which are showing strength and may continue to outperform the benchmark indices.
In the end of October month, UltraTech gave a breakout from the ‘Channel’ pattern with healthy volumes. But, follow-up buying was missing and the stock started moving in a sideways direction.
The consolidation phase of last ten sessions has resulted in formation of a ‘Bullish Flag’ pattern on daily chart. On Friday, we witnessed a breakout from the mentioned pattern with decent volumes.
Since momentum oscillator ‘RSI’ is placed positively along with a set of moving averages, we are expecting a rally towards 4700–4750 levels in the counter. Thus long positions can be taken with a stop-loss of 4320.
Bajaj Auto is moving in a strong uptrend by maintaining ‘Higher Highs Higher Lows’ on the weekly and monthly chart. The uptrend is so strong that all the small corrections get bought into quickly.
Recently, the stock corrected by around six percent and started rebounding from its support of ‘Super Trend’ indicator on the daily chart. Also, ‘RSI’ oscillator turned northwards and moving in a bullish territory above 60 levels on both daily and weekly chart, indicating strength in the counter.
Considering current chart structure, we are anticipating a rally in the counter. Thus, traders are advised to buy the stock at current juncture and on declines to 3220 for a target of Rs3550 – 3600 in coming weeks. The stop-loss for the trade can be kept at Rs3095.
What is your call on NiftyBank?
The BankNifty retested its previous breakout zone of 25100 – 25200 on the daily chart and formed a ‘Harami Cross’ pattern on the daily chart on Thursday. This was followed by a Bullish Candle on Friday, which is a positive for the banking index.The target of the range breakout on the daily chart comes to 26300 – 26500 levels and till the time, BankNifty sustains above 25100, traders should use the intraday declines to initiate fresh long positions. The bullish view on the BankNifty will negate on a close below 24790 level.