According to Milan Vaishnav, the Founder and Technical Analyst of Gemstone Equity Research and Advisory Services, MCX India may extend its decline.
"It may test a major support that is placed at Rs 6,900 level. This was the point from where the stock broke out and this point is now expected to act as support," he said in an interview to Moneycontrol.
He has picked Escorts Kubota, and Bikaji Foods International for the current week. "Both the stocks trade above their key moving averages and have shown golden crossover before the actual price breakout," he reasoned.
Do you think the Shooting Star pattern formed in previous week has been confirmed in the week gone by, given that the Nifty 50 lost 1.8%? Do you now see limited downside, with the possibility that the August low could hold as strong support?
No, I do not think there was a Shooting Chart pattern at all. If one looks at the candle in isolation, it does look like a Shooting Star. However, for a candle to be a valid Shooting Star, it must emerge following an uptrend. In the present case, it has emerged after six weeks of a prior downtrend with just one week that ended in the positive. Therefore, best thing to do is to disregard the formation as it is not a valid Shooting Star candle.
As of now, I see a limited downside with strong support emerging in the 24,000-24,175 zone. We have 50-week MA placed at 24,172 and 200-DMA at 24,071. Therefore, so long as this zone stays protected, the primary trend would remain intact. In event of violation of 24,000 level, we will become vulnerable to incremental weakness and downside.
Which two stocks are currently on your buy radar for current week?
Escorts and Bikaji Foods International are the two stocks that are on my radar.
Escorts Kubota has been a resilient stock exhibiting strong relative strength over the past days. While the stock has relatively underperformed over the past months, it is now set to outperform which is evident looking at its emerging relative strength. This stock makes a good portfolio addition as well.
Bikaji, on the other hand, is consolidating near the upper edge of the trading range that it has been trading over the past couple of months.
It is important to note that both the stocks trade above their key moving averages and have shown golden crossover before the actual price breakout.
Are you a buyer in Eternal given its healthy chart setup?
Personally, we have certain compliance to respect before buying or selling the stocks that we discuss in the public domain. I am not holding Eternal in my personal capacity at present.
From a technical perspective, the stock may have put a temporary top for itself in place at Rs 331. The reason is presently the stock is under a corrective retracement and the most immediate phase of its upmove came with a negative divergence on the RSI. This may not directly result in any major decline, but the stock is now vulnerable to measured corrective retracement and some consolidation.
Based on the weekly charts, do you see further downside in MCX India?
Yes, I do see that. I see that MCX may extend its decline. It may test a major support that is placed at Rs 6,900 level. This was the point from where the stock broke out and this point is now expected to act as support.
Will the Bank Nifty take support at its 50-week EMA and rebound, or is the decline likely to extend toward the 52,000 level?
Bank Nifty is witnessing weak Relative Strength against Nifty and the broader Nifty 500 Index as well. I feel that if the Nifty fails to rebound soon, Bank Nifty may test the 50-EMA and remains vulnerable to violating it as well.
Do you observe a Tweezer Top-like pattern forming on the weekly chart of the Nifty Auto index? If so, do you anticipate further correction that could fill the bullish gap created last week?
Nifty Auto had witnessed a breakaway gap. Generally breakaway gap are not easily filled. I expect minor consolidation in Nifty Auto space, but, in the same breadth I expect not the sector to not only outperform the broader markets, but also improve its Relative Strength further over the coming week.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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