The market never discounts the same news twice – a very important principle in market analysis. Last week's market movement stood by this principle. With the announcement of poll results, both the indices gave away the early gains of that day, only to close at their respective day's lows. The next day was albeit a weak follow up to the previous day's highs.
Momentum indicators for Nifty and Sensex are diverging from their previous highs – a sign of high caution, especially upon the indices breaking their lows formed on May 23.
While a majority of the sectoral indices were upbeat in consensus with the general market, particular attention can be drawn to the Nifty PSU Banks. While State Bank of India gave a strong close at an all-time high, other banks such as Canara Bank, Union Bank, Syndicate Bank and Oriental Bank were a few others that formed bullish patterns over the last week. The charts of a few of these are given below.
Notice the bullish candle pattern formed by Canara Bank last week. The price is into the higher-top, higher-bottom zone. The momentum also mirrors the same pattern. The set-up provides a good opportunity to go long on a dip to Rs 265 with a stop below Rs 247 for a target of Rs 315.
Union Bank formed a Bullish Harami Pattern last week, with above average volumes. The RSI has taken support at Rs 40 levels. One could consider going long at CMP with a stop loss below Rs 69 for higher targets of Rs 88 and Rs 93.
Replicating a similar Bullish Harami Pattern, Syndicate Bank is also poised for an upmove in the coming trading sessions, upon price confirmation. Once could go long upon the price crossing Rs 37 level with a stop loss below Rs 33 for a target of Rs 46.
The author is author/trading coach at Malkans View.
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