Chartist Talks | Coal India charts extremely bullish, PFC deeply overbought, says Milan Vaishnav of Gemstone

ONGC: The stock is in a secular uptrend. There is a minor breakout on a short-term pattern but on the weekly charts, the stock has seen a multi-month double-top breakout as it crossed above Rs 198 levels.

JK Cement: The stock has been consolidating over the past several weeks. A move above Rs 3,470 will lead to a breakout from short-term congestion; however, a move above Rs 3,600 will lead to a multi-month breakout on their higher timeframe charts.

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Max Financial Services: The stock is under corrective consolidation after testing highs of Rs 1,148 in May 2021. It has attempted a trend reversal after finding a base at Rs 600-630 zone. A cross above Rs 940 will confirm this trend reversal and this may take the stock higher.

IDFC FIRST Bank: The stock has seen testing its long-time extended trend line support. A trend line drawn from the lows of Rs 19 seen in March 2020 extended itself after joining a higher bottom of Rs 41.60 formed in August 2021. The corrective move from the highs of Rs 100 has found support on this extended trendline near Rs 80 levels.

All these stocks have strong and improving relative strength against the broader markets and have an upside potential of at least 18-23 percent from the current levels.

Do you see cup-and-handle kind of a pattern formation in CSB Bank?

No. I will term it a major double-top near Rs 370-372 levels. The handle is not big enough to be classified as one and I would prefer to call this a major double-top formation.

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Do you expect the Nifty50 to get back to its record high in the coming weeks?

The Nifty remains in a primary uptrend with major support at its throwback levels of 18,900-19,000 levels. So long as it manages to keep its head above this level, there are possibilities of it inching towards its high point.

However, the high point may not be taken out too soon even if the index manages to mark any small incremental high.

What's your outlook on the Bank Nifty after reading charts and patterns?

Bank Nifty is evidently weaker than the Nifty on relative terms. It has a major pattern resistance in the 44,000-44,200 zone. A sustainable move on the upside would occur only after this index manages to cross above and close above 44,200 levels.

On the lower side, it has support at its 200-DMA on a closing basis and remains largely in a defined range. Any violation of 200-DMA which is placed at 43,253 will invite significant weakness. Over the immediate short-term, Bank Nifty's price behaviour vis-a-vis the levels of 44,250 should be closely watched.

Which are the most important things that you suggest for new traders?

The most important thing I would suggest to new traders would be to stay with largecaps. The possibilities of exponential returns while investing in mid and small caps may look attractive but going on from here, we will see large caps relatively outperforming the small and midcap stocks.

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So, my biggest piece of advice would be to look for stable returns from good quality large cap stocks.

Do the charts look strong for Coal India? Will it hit its record high in the coming weeks?

The charts are extremely bullish, however, at the same time, they are a bit overextended, too. Those who are invested in the stock should stay put and remain invested while trailing the stop-loss levels higher to Rs 322 levels.

Does Power Finance Corporation look overbought now?

PFC looks much overextended on the charts. It is also trading deeply overbought. The stock is overbought on both daily and weekly charts. It is important to note that it is perfectly okay for a stock to stay overbought while it is in a strong uptrend.

However, the RSI (relative strength index) has seen mildly diverging negatively on the weekly charts. So, one can certainly stay invested in the stock but should trail their stop-losses higher to Rs 277 levels below which they must book and protect their profits.

Do you think the Nifty FMCG will consolidate till the end of this calendar year and have a good rally next year?

Nifty FMCG is inside the lagging quadrant of the RRG (Relative Rotation Graphs), however, it is seen sharply improving in its relative momentum. It is on the verge of rolling inside the improving quadrant and when this happens, it will begin a phase of its strong relative outperformance against the broader market Nifty 500 Index.

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