Nandish Shah, Senior Technical & Derivative Analyst, HDFC Securities
The Nifty plunged by 468 points amid broad-based selling across all sectors to close at 17,149 levels, lowest since December 27, 2021. In the last five sessions, the Nifty fell 1,350 points from a high of 18,350. Short-term trend turned bearish as the Nifty has closed below its 20, 50 and 100 day EMAs (exponential moving average).
If we were to consider the entire upswing seen from 16,410 (bottom made on December 20, 2021) to 18,350 (top registered on January 18, 2022), Nifty has retraced more than 50 percent and 61.8 percent of the swing which is considered bearish sign. Indicators and oscillators on the Nifty have turned bearish, which confirms the downtrend.
In the derivatives, we have seen aggressive Call writing at 17,500-17,600 levels. Moreover, 5 and 20 day EMA is now placed at 17,600 levels. Therefore, unless the Nifty closes above the 17,600 level, short-term trend will remain bearish.
The Nifty Smallcap and Midcap indices have registered Bearish Engulfing pattern on the weekly chart. It is recommended to remain cautious and reduce long positions in Small cap and Midcap Segment.
To sum it up, we believe that the short-term trend of the Nifty is weak. Therefore, advice is to remain bearish till the Nifty closes above the 17,600 levels. On the lower side, we expect the Nifty to find an immediate support around 16,800 levels. If the benchmark closes below 16,800 levels, the next downside targets are placed at 16,413 and 16,000.
Here are one buy and two sell recommendations for the next 2-3 weeks:
ABB India: Buy | LTP: Rs 2,408.4 | Stop-Loss: Rs 2,250 | Target: Rs 2,650 | Return: 10 percent
The stock price has broken out on the daily chart to close at all-time high. The stock price is forming bullish higher top higher bottom formation on the daily and weekly chart.
Primary trend of the stock is positive where it is trading above its all-important short-term and long-term moving averages. Daily RSI (relative strength index) oscillator is placed above 60 and rising upwards, indicating strength in the current uptrend of the stock.
Berger Paints: Sell | LTP: Rs 713.45 | Stop-Loss: Rs 745 | Target: Rs 640 | Return: 10 percent
The stock price has broken down from an upward slopping trendline, adjoining the lows of October 25 and December 6, 2021. The stock price has also broken down on the daily chart where it closed at lowest level since May 2021 with higher volumes.
Short-term trend of the stock is negative as it is trading below its 20 and 50 day EMA. Daily RSI and MFI (money flow index) lines are sloping downwards and placed below 40, indicating weakness in the stock.
DLF: Sell | LTP: Rs 372 | Stop-Loss: Rs 390 | Target: Rs 340 | Return: 9 percent
The stock price has also broken down on the daily chart where it closed at lowest level since December 20, 2021. It has also broken down from the upward slopping trendline, adjoining the lows of August 25 and December 20. Daily RSI and MFI line has witnessed trend line breakdown, which is bearish development for the short term.
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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