Rohan Patil, Technical Analyst at Bonanza Portfolio
The Nifty50 on May 25 witnessed a gap-up opening but couldn't hold on to its initial gains and began trading lower within the first few ticks and continued to trade in the lower low lower high formation within the falling wedge pattern which is formed on the intraday (15 minutes) time frame.
From the last more than 10 days, the Nifty has been consolidating within the flag pattern formation and trading within a range of 600 points. The upper band of the pattern is placed near 16,300–16,400 and the lower band of the pattern is placed at 15,800–15,750 on the daily interval.
The momentum oscillator RSI (relative strength index - 14) has shown a rebound from the oversold zone but the prices are not showing any strength, henceforth the oscillator is finding resistance at every small rise. Previously, when the index consolidated for the more than 10 days after prices witnessed a negative breakdown and continued its bearish trend formation.
The structure for the Nifty remains bearish as prices are well sustained below its - 21, 50 and 100 days exponential moving averages. The next fresh round of selling will come below 15,800 levels and the breakout above 16,300 – 16,350 levels will initiate a trend change in the index. Till then prices will continue to trade within this narrow range and will initiate a false breakout or breakdown in stocks.
Here are two buy calls for next 2-3 weeks:
ICICI Prudential Life Insurance: Buy | LTP: Rs 520.65 | Stop-Loss: Rs 501 | Target: Rs 550 | Return: 5.60 percent
The prices were trading in a basing pattern formation since last one month and formed a base support near Rs 490 levels. Prices have formed a falling channel pattern formation on the daily chart where upper and lower band are locked within the range of Rs 40.
Counter on May 25 has given a falling channel pattern breakout above its trend line resistance which is placed at around Rs 512 levels on the daily time frame.
In this recent, uptrend from Rs 500 to Rs 515 prices closed above its 21 & 50 – day exponential moving averages on the daily scale. Indicators and oscillators are also indicating an uptrend for the short to medium term in the counter.
Balkrishna Industries: Buy | LTP: Rs 2,161.50 | Stop-Loss: Rs 2,050 | Target: Rs 2,310 | Return: 7 percent
After completing bullish ABCD Harmonic pattern near Rs 1,700 levels, the stock has continuously shown the strength and has taken an anchor support near its 100 – week exponential moving average on the weekly time frame.
The counter has consolidated for more than two months and has outperformed the Nifty Midcap index on the relative basis. The Midcap 100 index was in the bearish mode and the stock on the other hand kept consolidating and has given a breakout above its downward sloping trend line.
Overall the Oscillator has also shown the reversal from the oversold zone and currently reading marginally above the 50 levels with bullish crossover on the cards.
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.
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