Rohan Patil, Technical Analyst at Bonanza Portfolio
It was again a super volatile trading session for the benchmark index where prices witnessed a gap-up opening and kept consolidating and swinging like a pendulum for the entire day and finally given up all its gains and closed below 17,100 level, which is near the previous day's closing range.
The benchmark index has taken strong support near its lower band of the consolidation formation and for the third time prices have rebounded from 16,800 levels which are acting as strong support for the index.
On the daily chart, prices are trading below their 21, 50 and 100–day exponential moving averages. Momentum oscillator RSI (14) has become flattish since February 14, and it is hovering within the pre-defined range without giving a clear indication of the future momentum in the prices.
From here on, 16,800 levels will act as immediate support for the Nifty50 and if prices slip below this level, then 16,500 will be the next support zone for the index. The upper band is capped near 17,450 levels for the time being. And if prices break on the higher side, then the fresh breakout will ride the prices till 17,800 levels.
Bank Nifty is underperforming the benchmark index on the week-on-week basis and prices have formed a bearish head and shoulder pattern on the daily chart and the neckline of the pattern is placed near 36,900 levels. Prices are hovering within the band of 21 and 50-day exponential moving average with super volatility on the daily time frame.
The support for the banking index is placed at 36,900 levels and if a price breaks below this level then we may expect a strong round of selling, whereas else the upper band is capped near 38,500 levels.
Here are two buy calls and one sell call for next 2-3 weeks:
Salasar Techno Engineering: Buy | CMP: Rs 260.80 | Stop-Loss: Rs 247 | Target: Rs 281 | Return: 8 percent
The prices were trading in a lower high lower low formation since past seven months and have formed a falling channel pattern on the daily interval.
Salasar has broken out of a falling channel pattern at Rs 256.25 levels on February 22 and the prices have registered a decisive breakout that suggests a change in the trend from bearish to upside. Stock is trading above its 21, & 50-day exponential moving averages on the daily time frame, which is positive for the prices in the near term. The prices seem to complete its accumulation phrase and it is confirmed with its above average volume set up.
The moving average convergence divergence (MACD) indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 60 levels which indicates positive momentum will like to continue ahead.
Bharat Forge: Buy | CMP: Rs 704.35 | Stop-Loss: Rs 667 | Target: Rs 760 | Return: 8 percent
Bharat Forge has bottom out near Rs 650 levels and has formed a bullish Piercing candle stick pattern on the daily interval. The prices have also formed a double bottom formation near Rs 650 levels where first bottom was formed on October 20, 2021 and the second bottom formed on February 22, 2022.
On the weekly charts also, prices have formed a bullish Hammer candle stick pattern and if the prices close above the high of the candle then the validity of the pattern will be confirmed. The counter is firmly finding the support near its 50-week exponential moving average.
Oscillators are still reading below 50 levels but have managed to hook up from the lower levels indicates a rise in the momentum in the further trading session.
Natco Pharma: Sell | CMP: Rs 825 | Stop-Loss: Rs 858 | Target Rs 775 | Return: 6 percent
The prices were trading within the band of Rs 930 – 870 levels from last five months and have formed a descending triangle formation on the daily time frame.
On the February 22, prices witnessed a breakdown of a descending triangle pattern and closed below all its important averages. Majority of the indicators and oscillators are indicting a negative range shift in the prices.
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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