From the all-time high of 14,653, Nifty has witnessed a correction of almost 3 percent towards 14,222.
In the week ended January 15, 2021, Nifty formed a Doji candlestick pattern on the weekly chart. Doji indicates indecision and also the reversal in the trend if the low of the candle is breached decisively.
In the first session of this week, we have seen Nifty breaking the crucial support of 14,357, which confirms the bearish trend reversal.
Nifty has been trading in the upward sloping channel. It took resistance on the upper trendline of the channel and reversed south.
The lower trendline of the channel projects the support around 14,150, below which medium-term trend could go in favour of the bears.
RSI oscillator on the daily charts has exited the overbought zone with negative crossover on its signal line.
The MACD indicator has also shown a bearish crossover on the daily chart. These technical developments confirm the downtrend in the short-term.
India VIX is trading near its 6-month high which shows the high level of fear in the market after a prolonged uptrend.
Bank Nifty has witnessed significant build-up on the short side. Bank Nifty has formed a bearish double top formation near its previous all-time high of 32,613.
The weekly chart of the banking index has also formed a Doji candlestick after a sharp rally.
The 20-day MA support for the Nifty is currently placed at 14,088. Support of 20-day MA has not been violated on a closing basis since November 4, 2020.
This support also coincides with the support of the upward sloping channel. So a close below 14,088 would result in the medium-term down-trend for Nifty and in that case, the recent top of 14,653 would remain as an intermediate top.
Here are three sell calls for the next 2-3 weeks:
Mahindra & Mahindra Financial Services January Future | Target price: Rs 160 | Stop loss: Rs 185
This stock has breached the crucial support of 8, 13 and 21 days EMA.
It has also broken down from the upward sloping trendline. Indicators and oscillators have turned bearish on the short term charts.
Moreover, the NBFC sector has started showing weakness.
IndiGo January Future | Target price: Rs 1,500 | Stop loss: Rs 1,670
Bearish double-top formation at Rs 1,780 odd levels is formed on the daily chart.
An ascending triangle breakdown is seen on the daily chart.
The stock has breached the crucial support of its 50 days EMA. It has been forming a lower top and lower bottom formation on the hourly charts.
The stock is trading below its 5, 10, 20 and 50 days EMA. Indicators and oscillators like RSI, DMI and MACD have turned bearish on the short-term charts.
Bajaj Finserv January Future | Target price: Rs 7,950 | Stop loss: Rs 8,650
This stock has recently violated the crucial support placed near Rs 8,630 levels.
Lower top and lower bottom formation have taken shape on the daily chart after a long time.
The short-term moving averages have given negative crossover on medium to long-term moving averages, which indicates the downtrend for the stock.
Indicators have turned bearish on the daily and weekly charts.
(The author is a technical research analyst at HDFC 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.