After a sharp fall, Sudeep Shah of SBI Securities said 24,500-24,400 would act as crucial support for the Nifty 50 as it is the confluence of the 50-day EMA and 61.8 percent Fibonacci retracement level of its prior upward rally (23,894-25,334). On the upside, the resistance shifted lower in the zone of 25,050-25,100 level, he added.
On the stocks, he is bullish on Narayana Hrudayalay and Asian Paints. "Narayana Hrudayalay has given consolidation breakout on a daily scale, which is confirmed by above 50-day average volume, while Asian Paints has given Cup pattern breakout on a daily scale and the weekly RSI has witnessed a smart rebound, which indicates range has shifted to super bullish zone as per RSI range shift rules, said the Head of Technical and Derivative Research at SBI Securities with over 17 years of experience.
Considering the Bearish Engulfing pattern on the weekly charts, do you see further correction in Nifty? But will it defend a 10-week EMA on a closing basis?
During the last week, the benchmark index Nifty has marked a fresh all-time high of 25,333 level. However, it has failed to sustain at higher levels and thereafter witnessed profit booking. This resulted in the formation of a Bearish Engulfing candlestick pattern on a weekly scale. Bearish Engulfing is a reversal candlestick pattern, which usually occurs at the end of an uptrend.
Along with this bearish formation, the index has slipped below its 20-day EMA (Exponential Moving Average) level for the first time after August 16. The daily RSI (Relative Strength Index) and Stochastic have given a bearish crossover, which indicates a limited upside. Most noteworthy, among the constituents of the Nifty index, 56 percent of stocks are trading above their 20-day EMA level. Last week, 80 percent of stocks were trading above their 20-day EMA level. This indicates marked breadth has weakened significantly as compared to the prior week.
Talking about levels, the zone of 24,500-24,400 will act as crucial support for the index as it is the confluence of the 50-day EMA and 61.8 percent Fibonacci retracement level of its prior upward rally (23,894-25,334). If the index slips below the level of 24,400, then the next support is placed in the zone of 24,100-24,050 level. While, on the upside, the resistance shifted lower in the zone of 25,050-25,100 level.
Considering the long bearish candle on a weekly scale, are the bears in a strong position? Will the Bank Nifty break 49,650, the low of August?
On Friday, the Bank Nifty has slipped below its 20 and 50-day EMA level. These averages started edging lower, which is a bearish sign. Most noteworthy, during the recent pullback, the daily RSI has failed to cross the 60 mark and thereafter witnessed a sharp decline. This indicates that the range has shifted to the Bearish zone as per RSI range shift rules.
Going ahead, the 100-day EMA zone of 50,200-50,100 will act as immediate support for the index. Any sustainable move below the level of 50,100 will lead to further selling pressure in the index. In that case, it is likely to test the level of 49,600, followed by 49,100 in the short term. While, on the upside, the 20-day EMA zone of 51,050-51,150 will act as an immediate hurdle for the index.
What is your trading strategy for Nifty 50 and Bank Nifty for next week?
With the market sentiment turning into sell on the rise, we recommend initiating a Bear Spread in Nifty by buying a 24,800 strike Put at 128 and Selling a 24,600 strike Put at 65, entailing a net outflow of 63 points. The maximum profit in this strategy could be 137 points in case the Nifty slips below the 24,600 level on weekly expiry. The maximum risk is 63 points in case Nifty doesn't witness a down move from hereon and consolidates at the current level.
Will ICICI Bank break the August low?
The stock of ICICI Bank has marked a high of Rs 1,250.95 during the last week. It has failed to cross its prior all-time high of Rs 1,257.80 level. On Friday, it witnessed a sharp correction and formed a sizeable bearish candle. Along with this correction, it has slipped below its 20-day EMA level. Further, the daily RSI and Stochastic have given a bearish crossover.
These technical factors indicate a limited upside for now. Talking about levels, the zone of Rs 1,195-1,190 will act as immediate support for the stock as 50-day EMA and 61.8 percent Fibonacci retracement level of its prior upward move (Rs 1,153-1,250) are placed in that region. If the stock slips below the level of Rs 1,190, then it is likely to test the August low. On the upside, the resistance shifted lower in the zone of Rs 1,220-1,230 level.
Your top 2 bets for next week?
The stock has given consolidation breakout on a daily scale. This breakout is confirmed by the above 50-day average volume. In addition, it has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. The momentum indicators and oscillators also support the overall bullish chart structure. Most noteworthy, the weekly RSI has surged above the 60 mark for the first time after March 2024. Hence, we recommend accumulating the stock in the zone of Rs 1,350-1,340 level with a stop-loss of Rs 1,300. On the upside, it is likely to test the level of Rs 1,410, followed by Rs 1,450 in the short term.
In the past few trading sessions, paint stocks have been significantly outperforming the frontline indices. The decline in crude oil prices has provided a notable benefit to paint companies, contributing to their recent strength in the market. The stock of Asian Paints marked a low of Rs 2,670 in May 2024, and thereafter, it started marking the sequence of gradual higher tops and higher bottoms along with volume. Recently, it has given Cup pattern breakout on a daily scale. Most noteworthy, the weekly RSI has taken support near the 60 mark and witnessed a smart rebound, which indicates the range has shifted to the Super Bullish zone as per RSI range shift rules. These technical factors are aligned in favour of bulls. Hence, we recommend accumulating the stock in the zone of Rs 3,280-3,240 level with a stop-loss of Rs 3,160. On the upside, it is likely to test the level of Rs 3,420, followed by Rs 3,500 in the short term.
Will ITC break more than a month-long consolidation upwards?
The Nifty FMCG has been outperforming the frontline indices since the last couple of trading sessions. ITC is oscillating in the zone of Rs 515-496 levels since the last couple of trading sessions. The ratio chart comparing ITC to Nifty shows the stock has established a solid base near its 200-day EMA and appears poised to begin its upward movement.
Hence, we believe it is likely to outperform the frontline indices in the next couple of trading sessions. Talking about level, the zone of Rs 510-520 will act as an immediate hurdle for the stock. Any sustainable move above the level of Rs 520 will lead to a sharp upside rally upto the level of Rs 550, followed by Rs 570 in the short term. On the downside, the zone of Rs 495-490 is likely to provide a cushion in case of any immediate decline.
Are you the buyer in Divis Laboratories?
Yes, the stock has been strongly outperforming the frontline indices. Also, it has strongly outshone the Nifty Pharma index by a decent margin in the last couple of trading sessions. This strong relative performance indicates positive momentum, making it a favourable buy. As the stock is trading at a 52-week high, all the moving averages and momentum-based indicators are suggesting strong bullish momentum in the stock. The daily and weekly RSI is in a super bullish zone as per the RSI range shift theory. Further, the daily and weekly MACD stays bullish as it is quoting above its zero line and signal line.
Talking about levels, the zone of Rs 5,020-5,000 will act as immediate support for the stock. As long as it is trading above Rs 5,000 level, it is likely to continue its northward journey and test the level of Rs 5,250, followed by Rs 5,400 in the short term.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
