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Current chart formation suggests Nifty may find major support around 11,650 which is well-supported by a 21-day exponential moving average.
Oct 22, 2020 / 07:14 AM IST
 
 
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On October 21, Nifty witnessed a strong gap-up opening following its global peers and traded near 12,000-levels in the first half of the trading session.

Later in the afternoon session, the market slipped into the red and a sharp decline dragged Nifty below 11,950.

In the last hour, the market recovered from the day’s low point which helped the advance-decline ratio to close in the favour of advancers.

As the market is approaching 12,000 mark, and with just 430 points away from its lifetime high, volatility will tighten its grip and we can witness a high wave candle which normally swings both ways.

The benchmark index has almost retraced 100 percent from its bearish engulfing candle formed on October 15.

When such a strong red candle pattern gets failed, it strongly confirms that the 'buy on dips' scenario is likely to continue.

All up-moves will keep the market in a defined range and the market will remain vulnerable to sell off at higher levels.

Current chart formation suggests Nifty may find major support around 11,650 which is well-supported by a 21-day exponential moving average.

However, on the higher side, the index will continue to face hurdles around 12,050-12,100.

Here are three buy calls for the next 2-3 weeks:

DLF | LTP: Rs 172.25 | Target price: Rs 190 | Stop loss: Rs 161.50 | Upside: 10%

The stock has given an inverted head and shoulder pattern breakout on the daily charts.

Volumes have gone up along with the price rise in the recent past.

The stock has got strong support at Rs 165 which is the neckline support of the said bullish pattern.

Nifty Realty index is on the verge of breaking out from the crucial trendline resistance placed at Rs 238.

RSI and MACD are also showing strength in the current uptrend.

Tata Communications | LTP: Rs 922.05 | Target price: Rs 1,000 | Stop loss: Rs 875 | Upside: 8.5%

A recent spurt in prices has scooped the stock above its horizontal trendline resistance on the daily timeline.

The counter has also witnessed a classic rectangle pattern breakout on the daily timeline.

The rectangle pattern normally acts as a continuous pattern after a prolonged consolidation.

A spurt in prices has made the stock settle above its 50 and 100-day exponential moving averages on the daily timeframe, which is a positive sign for the stock.

Momentum oscillator RSI (14) has made itself settled in a range of 50 to 70, which is a bullish range shift for the indicator on the daily chart.

Pidilite Industries | LTP: Rs 1,489.95 | Target price: Rs 1,600 | Stop loss: Rs 1,450 | Upside: 7%

After consolidating in a broad range of Rs 1,465–1,495, prices have witnessed a breakout above the rectangle pattern on the daily timeline.

In the previous week, the broader market witnessed profit-booking but this counter gave a bullish breakout with above-average volume, which indicates optimism towards the prices.

Oscillators and momentum indicators like RSI and MACD are showing strength in the stock on the weekly as well as daily charts.

The stock is trading above its 20, 50, and 100-day exponential moving averages on the daily interval which is a bullish sign for the prices.

Weekly price action suggests the stock is getting ready for an uninterrupted rally as prices are moving ahead of the consolidation range.

(The author is a technical analyst at Bonanza Portfolio)

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.
Rohan Patil
first published: Oct 22, 2020 07:14 am

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