Shabbir Kayyumi
Nifty has bounced by more than 1,000 points and has managed to close above crucial resistance and swing high of 9,040. The weekly candlestick has formed a bullish pattern by closing above the last three weeks high (9,040) and now it can trade towards previous swing high standing around 9,600 mark.
Nifty is forming ‘ABCD’ harmonic pattern and currently, its ‘D’ leg is in progress which can either be equal to ‘A’ leg which comes to 9,600 marks or it can extend to 1.618 of ‘A’ which is near 10,000 marks suggesting index can trade higher with positive sentiments towards pattern targets.
Also, the index has given a breakout of inverse head and shoulders pattern on a lower time frame by giving decisive close above 9000 levels and target as this pattern is also around 9,600 levels.
Furthermore, the benchmark index has managed to close above important moving averages 5 DMA (8,600) and 20 DMA (8,720) suggests one should opt for buy on the dip. On a flip side, a decisive close below strong psychological levels of 8,500 can push index towards crucial support and line of parity standing around 7,800 marks.
Banking Index has managed to close around crucial psychological levels of 20,000 and 5 day’s highest high is suggesting a reversal of short term trend and relief rally towards 25,000 levels cannot be ruled out, conversely, any decisive trading below 18,500 will be a sign of active bears.
Trade Recommendation
Tata Motors | Rating: Buy around Rs 73 | Target: Rs 85 | Stop Loss: Rs 66 | Upside: 13 percent
It has formed a double bottom pattern on the daily chart, which should resolve on the upside after its brief consolidation. The momentum oscillator RSI is in positive territory and entering into a trending phase.
The MACD too indicates good momentum-trend follow through. We recommend buying Tata Motors around Rs 73 with a stop loss of Rs 66 and a target price of Rs 85.
HCL Technologies | Rating: Buy around Rs 458 |Target: Rs 528 | Stop Loss: Rs 428 | Upside: 12 percent
IT as a sector is expected to outperform in the current scenario. Weaken strength in rupee against the dollar could also help this sector to remain strong in the coming week. Recently, the stock gave double bottom breakout and still consolidating above the neckline of the breakout suggest upside move will continue in the near term also.
The momentum oscillator also exited the oversold zone on the daily chart. We recommend buying HCL Tech around Rs 468 keeping a stop loss of Rs 428, for the target of Rs 528.
Just Dial | Rating: Buy around Rs 318 | Target: Rs 350| Stop Loss: Rs 298 | Upside: 10 percent
After hitting the peak of RS 623, the stock gave a sharp fall towards till Rs 250-260 zone from where the chances of developing demand are higher. As of now, the appearance of bullish Harami on the daily chart is giving cues to accumulate this stock at lower levels. The momentum oscillator RSI which is currently overbought took a turn on the north side.
As long as it sustains above the mentioned zone, the possibility of moving on the upside is higher and it can hit our target with ease. We suggest buying Just Dial around Rs 318 with the stop loss of Rs 298 and target Rs 350.
(The author is Head of Technical Research at Narnolia Financial Advisors Ltd.)
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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