As long as banking index is trading above 28,000, we suggest trading with buy on dip strategy.
The Nifty last week failed to breach its 200-DMA placed at 11,177. The red body inside bar candlestick pattern on the weekly timeframe with confirms a halt in the recent fall.
Also, the cup and handle pattern is forming where the pattern breakout is expected above 11,170, which is also a resistance 1 pivot level. At the same time, 5-week exponential moving average (EMA) standing around 11,180 suggests a strong momentum will be seen once daily close is above last two weeks’ high placed at 11,181.
The conviction for a reversal also comes from the fact that during the week the Nifty concluded its CD leg of ‘bearish cypher harmonic pattern’ near its PRZ (price reversal zone) around 10,782 and minimum target of 38.2 % retracement of entire CD leg, which comes near 11,287.
For this bull thesis to play out, the index should maintain above the crucial support around 10,900 levels.
The Bank Nifty formed long leg inside bar candlestick pattern, indicating strong support at lower levels and an immediate breakout is expected above the last two weeks’ high placed around 28,602 levels. As long as banking index is trading above 28,000, we suggest trading with buy on dip strategy.
Bank of Baroda | Rating: Buy around Rs 100 | Target: Rs 116 | Stop Loss: Rs 89 | Upside: 16 percent
After hitting the peak of Rs 144, Bank of India slipped lower levels at Rs 97 then it turned back after forming congestion zone on the daily time frame of charts.
As of now, sustainability above downward sloping line on the daily chart shows stability in the stock. Declining histogram in MACD along with positive crossover below central line is creating optimism in coming sessions.
As long as it sustains above Rs 90, possibility of moving on upside is higher and it can hit our first target of Rs 116 with an ease. Buy Bank Baroda around Rs 100, with stop loss of Rs 89 for the target of Rs 116.
United Spirits | Rating: Buy around Rs 610 |Target: Rs 680 | Stop Loss: Rs 560 | Upside: 11 percent
United Spirits is expected to give falling trend line break out on the weekly, suggesting trend reversal is round the corner. For the last few days, it has been consolidating below the same which implies strength. Golden crossover is seen on the daily chart, where 50-DMA is crossing 200-DMA from down side further suggesting positive bias.
We suggest buying above Rs 610, with stop loss of Rs 560 for the target of Rs 680 levels.
Axis Bank | Rating: Buy around Rs 660 |Target: Rs 720 | Stop Loss: Rs 640 | Upside: 9 percent
The daily chart reveals that demand is increasing and supply is diminishing. Falling channel breakout at lower levels is showing trend reversal and creates buying opportunity at current juncture.
As of now, sustainability of RSI above 9-DMA indicate surge on upside. Apart from this, positive crossover in MACD signals optimism, suggest upside move in the counter in coming sessions.
We recommend buying Axis Bank around Rs 670, with stop loss of Rs 640 for the target of Rs 720.
GMM Pfaudler | Rating: Buy around Rs 1,320 | Target: Rs 1,440 | Stop Loss: Rs 1,249 | Upside: 9 percent
It is trading in the uptrend respecting the successive peak and trough formation on the weekly chart. A pullback would offer a good opportunity to enter at swing low for a ride within the larger time frame trend.
The RSI reading of 59 shows positive momentum indicating the trend should sustain on upside.
We recommend buying around R 1,320, with a stop loss Rs 1,249 and target Rs 1,440.
The Ramco Cements | Rating: Buy around Rs 710 | Target: Rs 780 | Stop Loss: Rs 670 | Upside: 9 percent
On the weekly chart, Ramco Cement has formed a cup and handle formation. It is forming a base in the form a sideways consolidation and further momentum acceleration would be seen above the Rs 770-level, which would be the handle breakout of the formation. The daily RSI has come out from the territory of bearish zone and should provide further impetus to the move on upside.
We suggest buying Ramco Cement around Rs 710, with stop loss of Rs 670 for the target of Rs 780.
(The author is Head of Technical & Derivative Research at Narnolia Financial Advisors)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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