On the weekly chart, Nifty has formed a bearish candle with long upper shadow indicating selling pressure as well as resistance at higher levels. Since past 6-7 weeks, the index continues to consolidate in a broad trading range (12,000-11,650) representing sideways trend. The chart pattern suggests that if Nifty crosses and sustains above 11,860 it would witness buying which would lead the index towards 11,980-12,100.
However, if the index breaks below 11,750, it would witness selling that can take the index towards 11,650-11,500. Nifty is trading below 20-day SMAs indicating negative bias in the short term.
Nifty continues to remain in short term sideways trend hence buying around major support zone and profit booking around resistance zone is advisable. For the week, we expect Nifty to trade in the range of 11,900-11,600 with negative bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have both turned negative and are below their respective reference lines indicating negative bias.
Bank Nifty
On the weekly chart, the index formed a small bullish candle with shadows on either side indicating indecisiveness amongst participants regarding the direction. Since past 5-6 months, the index is consolidating within a broad range of 31,700-30,300 representing sideways trend, hence any either side decisive breakout will indicate further strength.
The chart pattern suggests if Bank Nifty crosses and sustains above 31,660, it would witness buying that can lead the index towards 31,800-31,950. However, if the index breaks below 31,200, it would witness selling that can take the index towards 31,050-31,780.
Bank Nifty is trading above 20, 50 and 100-day SMAs that are important short term moving averages, indicating negative bias in the short to medium term. Bank Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 31,800-30,900 with mixed bias.
Here are three stocks that could return 4-9 percent in near term:
L&T Finance Holdings: Buying range: Rs 124-120 | Stop loss: Rs 115 | Target: Rs 130-133 | Return: 7-9 percent
On the weekly chart, the stock price has turned around after taking support at its multiple support of Rs 115 on a closing basis and sustaining above the same. This turnaround has accompanied with an increase in volumes that supports bullish sentiments ahead.
RSI and Stochastic have turned positive that supports upside momentum to continue in near term. The stock price is sustaining well above its 20 and 50-day SMAs that supports bullish sentiments ahead.
Bank of Baroda: Buying range: Rs 129-125 | Stop loss: Rs 120 | Target: Rs 135-139 | Return: 6-9 percent
On the weekly chart, the stock price is moving in 'upsloping channel' that indicates strength in the near term. On daily charts, the stock price has decisively broken out from its consolidation range of Rs 125-115 on closing basis and is sustaining above the same. This breakout is accompanied by an increase in volumes that supports bullish sentiments ahead.
RSI and Stochastic have turned positive that supports upside momentum to continue in near term. The stock price is sustaining well above its 20 and 50 and 100-day SMAs that supports bullish sentiments ahead.
RBL Bank: Selling range: Rs 638-644 | Stop loss: Rs 653 | Target: Rs 616-604 | Return: 4-6 percent
On the daily chart, the stock price has broken down after retracing 61.80 percent Fibonacci levels of its previous fall (Rs 717-603) on closing basis and sustaining below the same. This breakdown is accompanied with increase in volumes that support bearish sentiments ahead.
RSI and Stochastic have turned negative that supports downside momentum to continue in near term. The stock price is sustaining well below its 20, 50 and 100-day SMAs that supports bearish sentiments ahead.
The author is DGM - Research - Head Technical & Derivatives Research at Axis Securities Limited.
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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