The Nifty has been consolidating in a narrow range from the past two trading sessions after the negative breakdown on June 13.
In the previous rally, the Nifty moved from 15,800 to 16,800 but still was not able to fail its lower high lower low formation which is formed on the daily chart. The index is already three percent down for this week and continuous FII selling is being witnessed in blue-chip stocks.
The index is trading below its 21 and 50–day exponential moving average (EMA) placed at 16,250 and 16,523. The overall slope of the moving average has also moved lower and indicates a continuation of the downtrend.
The momentum oscillator relative strength index (RSI -14) on the daily chart has broken its upward rising trend line, which was placed at 45 levels and is below 40 levels with a bearish crossover. The moving average convergence divergence (MACD) indicator faced a strong resistance near its centre point and moved lower.
Normally after such a steep fall in the index, a pullback rally is expected. The immediate support for the Nifty is placed near 15,550 and below that 15,300 will act as major support. The immediate resistance is at 16,000 and 16,250.
Here are two buy calls for next 2-3 weeks:
Oil India: Buy | LTP: Rs 271 | Stop-Loss: Rs 255 | Target: Rs 298 | Return: 10 percent
In the previous week, that the prices gave a breakout of a trend line on the weekly chart which was placed at Rs 260 levels and post-breakout, the stock completed its throwback, which is close to its trend line support.
The stock is trading above its 21 and 50–day EMA placed at Rs 259.8 and Rs 246 levels, respectively. Previously, when the price retraced its 21-DEMA it witnessed a strong reversal on the upside.
Looking at the broader time frame, prices have given 28 weeks consolidation breakout and the counter is sustaining above its trend line support. In addition, the breakout was witnessed with above-average volumes.
Polycab India: Buy | LTP: Rs 2,218.6 | Stop-Loss: Rs 2,100 | Target: Rs 2,410 | Return: 8.6 percent
Prices are taking steep support near the horizontal trendline, which is placed at Rs 2,200 on the daily time frame. On June 15, it formed a Bullish Harami candlestick pattern near its trendline support, which indicates the possibility of reversal.
The RSI (14) is also showing the signs of reversal from oversold levels on the daily time frame. On a couple of occasions, prices have shown a strong rebound from Rs 2,200. If the stock sustains above Rs 2,400, it is likely to move further up.
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