The Nifty has been on a slump through the last four trading sessions. From the recent high of 18,096, it has witnessed a fall of more than 1,100 points towards 16,978. On September 26, by falling more than 300 points in a session, the benchmark has completed the 38.2 percent retracement of the entire upswing seen from a low of 15,183 in June to a high of 18,096 in September. It has breached the crucial support of the previous swing low of 17,166 and the same is expected to interchange its role as a resistance going forward.
Next support for the Nifty is seen at 50 percent retracement placed at 16,640. Positional resistance for the Nifty is seen at 17,500-odd levels.
Indicators and oscillators like RSI (relative strength index), MACD (moving average convergence and divergence) and DMI (directional movement index) have turned bearish on the daily charts. Daily RSI has reached the level of 37, which is still not at the oversold level and therefore we can expect some downside from the current levels.
Nifty Midcap and Smallcap indices have reached the level from where they gave a bullish breakout on the daily chart couple of weeks back. If the Midcap and Smallcap Indices continue to fall from here, then the previous bullish breakout will be negated.
Global markets, especially the US and Europe have been passing through a bearish momentum phase. Now, for the Indian equity market to stabilise, it is very important that the global markets stop falling.
Here are two sell calls and one buy call for next 2-3 weeks:
Coromandel International: Sell | LTP: Rs 969.55 | Stop-Loss: Rs 1,010 | Targets: Rs 915-880 | Return: 6-9 percent
The stock price has broken down below last 6 weeks' price consolidation. It has breached crucial support of its 50 days EMA (exponential moving average - Rs 1,019.90).
Indicators and oscillators have turned bearish on the daily charts. Fertilizers and chemical stocks have started underperforming.
Muthoot Finance: Sell | LTP: Rs 956.20 | Stop-Loss: Rs 1,000 | Targets: Rs 910-870 | Return: 5-9 percent
The stock price has breached previous swing low of Rs 960 with rising volumes. It has registered new 52-week low.
It is currently trading below its 50, 100 and 200 DMA (daily moving average), which indicates bearish trend on all time frames. NBFC sector especially gold finance companies have been underperforming for last one weeks.
Metropolis Healthcare: Buy | LTP: Rs 1,505.6 | Stop-Loss: Rs 1,429 | Targets: Rs 1,590-1,650 | Return: 6-9 percent
Diagnostic sector has shown resilient movement against the market weakness recently. The stock price has surpassed the previous swing high of Rs 1,504.
It has also closed above its 50 days EMA (Rs 1,468.94) after long time. RSI on the daily chart has been rising with positive divergence.
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