So far, the week has been challenging for the bulls as the domestic market remained volatile in the absence of any conclusive triggers.
The benchmark index Nifty remained under pressure on February 10 to retest 12,000-mark on the downside. However, it recovered sharply in the next couple of sessions to clear the previous week’s high.
At this juncture, Nifty is trading with a gain of 0.63 percent. Nifty Bank index has underperformed Nifty with a change of 0.09 percent so far during the week.
The ongoing pullback in Nifty has taken a halt near 12,230-mark, which is exactly the 78.6 percent Fibonacci retracement level of the correction from 12,389 to 11,615.
From there, we witnessed some selling during Wednesday’s session. On the weekly chart, Nifty still has a lower bottom formation after August 2019.
Even the Nifty Bank index has been an underperformer since the last few sessions. Thus, we are of the opinion that the ongoing upward move is just a pullback rally of the fall.
Yet again, the higher levels like 12,200–12,300 could be used to exit longs or create short positions.
On the downside, the intermediate support is placed at 12,100. A breach of the same in the coming week could bring the bears back in action. In case of further upside, 12,300–12,350 could be strong resistance for the coming week.
Here is one buy and two sell calls for the next 2-3 weeks:
ONGC | Buy | Target: Rs 116 | Stop-loss: Rs 98 | Upside: 10%
ONGC has been in a corrective mode since May 2019 and has corrected almost 42 percent from the peak of Rs 178.
Recently, the stock found support near Rs 100 mark, which is the 100 percent extension of the move from the peak of Rs 198 to the trough of Rs 121.
This can also be called a bullish harmonic AB=CD pattern, which indicates the possibility of a bounce.
Traders are advised to buy the stock on a dip near Rs 104.
Bank Nifty Futures | Sell | Target: Rs 30,300 | Stop loss: Rs 31,800 | Downside: 3%
The recent crack dragged the index towards Rs 29,600, which was very close to its head-and-shoulders breakdown target of Rs 29,500.
Now, the index is back above Rs 31,000 mark. Since the last couple of months, the index has been underperforming the benchmark index Nifty, which indicates a lack of strength.
The overall monthly and weekly structure has turned feeble for the medium-term. At this juncture, the index is hovering between its 61.8 percent and 78.6 percent Fibonacci retracement levels of the previous fall.
Moreover, we are witnessing a bearish candlestick pattern on the daily chart, which indicates further selling.
Traders are advised to sell the index near Rs 31,300.
Aurobindo Pharma Futures | Sell | Target: Rs 490 | Stop-loss: Rs 555 | Downside: 7%
Last October, Aurobindo Pharma confirmed a multiyear breakdown below Rs 545 mark, which dragged the stock below Rs 400 mark.
Thereafter, the stock underwent a sharp recovery and retested the Rs 545 mark. The stock found resistance at the placement of its 200-days simple moving average.
Now, the stock has again turned downwards with a bearish candlestick pattern on the daily chart and negative placement of oscillators. This indicates that the downside is likely to resume again.
Traders are advised to sell the stock on the rise near Rs 535.
(The author is Senior Technical Analyst, IndiaNivesh Securities)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.