Bulls should get cautious if Nifty falls below 10,450 followed by 10,380 levels, writes Shabbir Kayyumi of Narnolia Financial Advisors
Nifty traded merely in a range of only 1 percent last week. However, the technical set up seems to have shifted to advantage bull’s mode, as it has been trading above the crucial psychological mark 10,500 convincingly for last 3-4 days.
Average Directional Index (ADX), the technical indicator is trading at 26.28 and Directional Indicator (+DI) is at 25.62 whereas Directional Indicator (-DI) is around 21.75. +DI has crossed -DI (bullish crossover) almost after one month, which indicates strength in current positive trend in the very short term.
Stochastic oscillator parameter has crossed parameter from below (positive crossover) on weekly time frame; imply further strength in bullish price action ahead. The probability of upside till 10,882 (38.2 percent to 50 percent retracement of the recent down move) certainly looks open on the cards if benchmark Index decisively trades above 10,620.
At the same time, ‘Parabolic SAR’ remains in sell mode and suggests buying only if prices cross its SAR level which is currently around 10,825. So, medium-term bullishness should be considered only above this level.
Moreover, options data indicates an immediate trading range between 10,700 and 10,450 marks. Bulls should get cautious if Nifty falls below 10,450 followed by 10,380 levels.
Banking index traded in a tight range entire last week; however it is taking a resistance from 25,900 levels on higher side and support near 25,500 on the lower side. Banking index is trading above all major short-term moving averages, indicating positive price action further; however, prices will surge higher after a daily closing above 25,900 levels only.
Here are the top stock trading ideas which can give good returns:
Rural Electrification Corporation: Buy around Rs 124 | Target: Rs 150 | Stop loss: Rs 106 | Upside: 21%
After hitting the peak of Rs 223.90 on May 2017, it showed sharp decline towards its lower level of Rs 89. Thereafter, it took a turn after finding bottom at lower level. Recently, the stock is consolidating above its 200-DMA which comes near Rs 119 levels which is giving cues for moving on upside.
Formation of Cup and Handle pattern on daily chart also showing bullishness in near term but breakout of the pattern is expected to come above Rs 123 level on closing basis from where stock can surge further higher.
Above parameter suggests taking long position above Rs 124 with stop loss of Rs 106 for the target of Rs 150.
Engineers India: Buy above: Rs 124 |Target: Rs 148| Stop loss: Rs 109| Upside: 19%
Engineers India has recently bottomed out around Rs 100 and then rallied over more than 25 percent after showing positive divergence in RSI. The MACD has given bullish crossover on weekly chart in negative territory implying strength. RSI also seems to be bottoming out from its oversold zone which further confirms its bullish bias.
Trend line breakout is expected to come above Rs 124 marks from where buying momentum will increase further. One can go long in the scrip above Rs 124 with stop loss of Rs 109 for the higher target of Rs 148.
Power Finance Corporation: Buy around Rs 101 |Target: Rs 120| Stop loss: Rs 89| Upside: 19%
After finding bottom near the levels of Rs 68-72 zones, the scrip took a flip for moving towards on north side. Currently, it gave breakout above its neckline of Inverted Head and shoulder pattern and also gave decisive closing above the neckline which indicate further strength in the pattern.
From last few days, it has been trading above its 200-DMA which is found around its Rs 88 levels also implying further strength. Moreover, momentum indicator RSI is also looking firm suggest further move on upside. Buy PFC around Rs 101 with stop loss of Rs 89 for the target of Rs 120.
Torrent Power: Buy above Rs 274 |Target: Rs 320 | Stop loss: Rs 182 | Upside: 17%
Prices of Torrent Power has seen a sharp rebound after hitting a low of Rs 211. Appearance of higher top and higher bottom move on upside suggest upswing will continue in coming sessions also. It has formed triple bottom pattern and breakout of the same is expected to come above Rs 274 levels from there it will catch momentum on up side further.
Sustainability of RSI above 60 is also implying upsurge move. Aforementioned rationale suggests buy in the scrip above Rs 274 for the target of Rs 320 with a stop loss of Rs 252.
Power Grid: Buy above Rs 192 | Target: Rs 210 | Stop loss: Rs 182 | Upside: 9%
Recently, Power Grid took support from 200 weekly SMA (near Rs 176 levels) and bounced back from there on upside. As of now, it formed Double Bottom pattern and got confirmation from its momentum indicator RSI as it also formed the same which is attributing further strength in it.
Moreover, bullish crossover in MACD showing support for bulls which can take it further higher. Once it will breach the levels of Rs 195 which is point of control in volume profile, prices will trade in new range.
Buy Power Grid above Rs 192 with stop loss of Rs 182 for the target of Rs 207.
The author is Head - Technical & Derivative Research at Narnolia Financial Advisors Ltd.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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