The Nifty hit a fresh all-time high of 22,126 on February 2 but failed to sustain at higher levels. The benchmark has been trading in the expanding triangle on the weekly chart for the last four weeks, where a directional move is clearly missing. The Nifty has failed to register follow-ups on either side in the last four weeks.
On February 2, the Nifty formed a bearish Shooting Star candlestick pattern on the daily chart and on the next session follow-up selling was seen in the index. This move has also resulted in to a Double Top formation at an all-time high levels of 22,126. This definitely indicates caution for the bulls. However, Nifty is yet to confirm the bearish trend reversal as important support levels are not breached till now.
Upward sloping trendline adjoining the swing lows of October 26, 2023 and November 1, 2023 acted as a reversal point in the recent past and same can act as a support for the Nifty from here as well. Trendline projects the strong support at 21,500 odd levels and that should be kept as a stop-loss in trading long positions of Nifty.
Indicators have lost the momentum and moving downwards for the index on the daily chart and therefore it would be advisable to take aggressive longs only above the crucial resistance of 22,000-22,100 in the Nifty.
Technical setup of Bank Nifty is relatively weak on the chart. Any level below 45,600 could resume the downtrend in the Index. Below 45,600 Bank Nifty could slide down to 200 DEMA (day exponential moving average) support of 44,650 odd levels. On the higher side, unless we see index crossing 46,500 in spot, view should remain cautious.
Here are two buy calls and one sell call for short term:
NCC: Buy | LTP: Rs 217 | Stop-Loss: Rs 182 | Target: Rs 260 | Return: 20 percent
On January 10, 2024, the stock broke out from the upward sloping trendline on the daily chart. Price breakout was accompanied with jump in volumes. On January 18, 2024, the stock witnessed throwback fall and reversed north, resuming its primary uptrend.
The stock price is placed above all important moving averages, indicating bullish trend on all time frames. Indicators and oscillators like DMI (directional movement index) and RSI (relative strength index) have turned bullish on the daily charts.
Sonata Software: Buy | LTP: Rs 808 | Stop-Loss: Rs 762 | Target: Rs 880 | Return: 9 percent
The stock price has broken out from symmetrical triangle on the daily chart. Stock has registered fresh all-time highs with jump in volumes. It found support on its 20 DEMA and resumed it’s primary uptrend. Indicators and oscillators like DMI and RSI have turned bullish on the daily charts.
Bandhan Bank: Sell | LTP: Rs 223 | Stop-Loss: Rs 233 | Target: Rs 207 | Return: 7 percent
The stock price has broken down from bearish “Flag” pattern on the daily charts, which indicates continuation of a down trend. Stock has been trading below its important moving averages, which indicates bearish trend on all time frames.
Private banking stocks have been underperforming and same is expected to continue.
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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