Rajesh Palviya
The Nifty had a flat start to the week ended December 6, but profit booking at higher levels led the index to close at lowest point of the week. The Nifty closed at 11,922, with a loss of 135 points on a weekly basis.
On the weekly chart, the index formed a long bearish candle, forming a lower high-low compared to the previous week and closed below its low indicating weakness at current levels.
For the past four-five weeks, the index is consolidating within 12,150-11.850 levels, indicating a short-term consolidation. Hence, any either side breakout will indicate further direction. The chart pattern suggests that if the Nifty breaks and sustains below 11,850, it will witness selling, which will lead the index towards 11,750-11,680. If the index, however, go above 12,100, it will witness buying, which will take the index towards 12,160-12,250.
The Nifty is trading below the 20-day simple moving average (SMA), an important short-term moving average, indicating negative bias in the short term. However, it managed to sustain above 50 and 100-day SMA, which supports bullish sentiments in medium to long term.
The 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 the Nifty to trade in the range of 12,100-11,700, with a negative bias.
The weekly strength indicator RSI is moving upwards and is quoting above its reference line, indicating a positive bias. However, the momentum oscillator Stochastic has turned negative from the overbought zone, pointing to a possible consolidation or a down move in the near term.
Bank Nifty
The Bank Nifty, too, started on a flat note and witnessed extreme volatility for most of the week. Profit booking in the last couple of days, however, dragged the index lower to close at the lowest point of the week. The Bank Nifty closed at 31,342, with a loss of 605 points on a weekly basis.
On the weekly chart, the index formed a bearish candle and remained restricted within the previous week's high-low range, indicating a lack of strength on either side.
On the daily chart, the index decisively broke its two-month Up-sloping Trendline support around 31,800 on a closing basis, which signals a short- term shift to the downside.
The chart pattern suggests that if the Bank Nifty crosses and sustains above 31,900, it will witness buying, which will lead the index towards 321,30-32,450. However, if the index breaks below 31,050, it will witness selling, which will take the index towards 30,850-30,500.
The Bank Nifty is trading below 20-day SMA, indicating a negative bias in the short-term, but it managed to sustain above 50 and 100-day SMA, which supports bullish sentiments in medium to long term.
The 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 the index to trade in the 31,800-30,850 range with a negative bias.
The weekly strength indicator RSI is moving upwards and is quoting above its reference line, indicating a positive bias. However, the momentum oscillator Stochastic has turned negative from the overbought zone, indicating a possible consolidation or a down move in the near term.
Here is the list of 4 stocks for 5-13 percent return in the short term:
Kotak Mahindra Bank | Buying range: Rs 1,660-1,645 | Stop loss: Rs 1,600 | Target: Rs 1,720-1,740 | Return: 4-5 percent
On the weekly chart, the stock price has broken out from a consolidation range of Rs 1,560-1,640 on a closing basis and has made fresh high on a closing basis. The stock continues to make a series of higher tops and higher bottoms. This breakout was accompanied by rising volumes, indicating increased participation.
The weekly strength indicator RSI and the momentum indicator Stochastic both are in a positive territory, which supports upside momentum to continue in the near term. The stock price is sustaining well above its 20 and 50 and 100-day SMAs, which support bullish sentiments.
EID Parry India | Buying Range: Rs 192-188 | Stop loss: Rs 180 | Target: Rs 210-215 | Return: 11-13 percent
On the daily chart, the stock price has bounced from the prior support of Rs 180 and is moving towards the swing high of Rs 204. It has also bounced after retesting the 20-day MA. The daily strength indicator RSI and the momentum indicator Stochastic both are in a positive territory, which supports upside momentum to continue in the near term. The stock price is sustaining well above its 20 and 50-day SMAs, which support bullish sentiments.
Balkrishna Industries | Buying Range: Rs 900-880 | Stop loss: Rs 857 | Target: Rs 960-976 | Return: 8-10 percent
On the weekly chart, the stock price continues to make a series of higher highs and higher lows. This rising trend is accompanied by reasonably good volumes that support bullish sentiments ahead. The weekly strength indicator RSI continues to trend higher, which supports upside momentum in the near term. The stock price is sustaining well above its 20, 50 and 100- day SMAs, which support bullish sentiments ahead.
Coromandel International | Buying Range: Rs 495-487 | Stop loss: Rs 475 | Target: Rs 523-534 | Return: 7-9 percent
On the daily chart, the stock price has decisively broken out from multiple resistances of 480-485 levels and is sustaining above the same. It also continues to make a series of higher Tops and higher Bottoms. The daily strength indicator RSI and the momentum indicator Stochastic both are in a positive territory, which supports upside momentum to continue in near term. The stock price is sustaining well above its 20 and 50-day SMAs which support bullish sentiments ahead.
(The author is DGM - Research (Head Technical & Derivatives Research) at Axis Securities.)
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