The benchmark Nifty50 index has now sneaked below the key swing low of 18,350 on a closing basis. Ideally looking at the price structure, the development does not augur well for the bulls. A close below this support opens the possibility of extended correction in the coming week.
We may be biased, but we are still not convinced with this close. Only a follow through selling may lead to further weakness towards 18,130 - 18,000 - 17,900 in coming sessions. Even if this scenario pans out, we do not expect the correction to aggravate below the lower end of this support range.
The higher degree uptrend remains intact as long as we manage to hold this. Since market was deeply overbought, we must consider this as a running correction.
On the flipside, 18,450 - 18,600 are to be treated as immediate hurdles. If bulls have to regain their strength, 18,450 needs to be surpassed with some authority, which will negate the breakdown from small ‘Head and Shoulder’ pattern on daily time frame chart.
Traders are advised to stay light for a while. Let either market complete its correction first or reclaim key levels on the upside to resume the bullish trend.
Here are two buy calls for next 2-3 weeks:
Balrampur Chini Mills: Buy | LTP: Rs 393.90 | Stop-Loss: Rs 380 | Target: Rs 415 | Return: 5 percent
It has seen a strong breakout in the last trading session on the back of robust volumes and has surged above the 200 SMA (simple moving average, indicating inherent strength in the counter.
The price configuration on daily time frame chart can be termed as a ‘Bullish Cup and Handle’, which unfolds the next leg of the rally.
Hence, the stock is likely to witness a strong follow-up move in the comparable period. Thus, we recommend buying for a near term target of Rs 415. Traders can participate by following strict stop-loss at Rs 380.
Sterlite Technologies: Buy | LTP: Rs 186.65 | Stop-Loss: Rs 176 | Target: Rs 200 | Return: 7 percent
The stock prices have been consolidating for many months. It made several attempts to come out of this congestion phase, but due to lack of follow up buying, it failed miserably. Last week in the latter half, the bulls gathered all their energy to finally go past this long consolidation range.
We can see a breakout happening from a ‘Contracting Triangle’ on daily chart. Importantly the price movement is backed by huge volumes. Hence, traders are advised to buy for a near term target of Rs 200. The strict stop-loss needs to be placed at Rs 176.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
