Rohan Patil
The benchmark index Nifty on April 1 witnessed a smaller degree upward rising trend line breakdown.
The index, on the daily chart, has given a pennant pattern breakdown. Pennant pattern normally acts as a continuation pattern of the prevailing trend.
The Indian stock market witnessed one of the steepest monthly falls and shut the shop in deep red with a fall of more than 23 percent in March 2020 on a monthly closing basis.
Momentum Oscillator RSI (14) seems to have flattened out in an oversold zone and looks least concerned to spike on weekly charts.
Nifty confirmed its closing below a 100-month exponential moving average (EMA), which is placed at around 8,850 level on the monthly time frame.
Previously, 100-EMA on the monthly chart was breached during the period of November 2008 to February 2009, and their aftermarket witnessed a sharp reversal and since then it never revisited its 100-EMA on a monthly interval.
Bank Nifty is underperforming the benchmark index Nifty on the weekly chart which is observed by relative strength (RS) indicator.
In the banking sector, state-run banks are underperforming private sector banks. In the majority of banking stocks, technical indicators and oscillators are in oversold zone and are not in any hurry to spike up.
Current chart formation suggests a sustained rise above 7,900 will surely create a demand zone for the benchmark index.
A break below the said level will make Nifty test 7,341 in the coming weeks which is supported by Fibonacci retracement level. However, on the higher side, the index may continue to face hurdles around 9,000 level.
Here are three stock recommendations for the next 3-4 weeks:
The stock price seems to have hit its intermediate bottom on the weekly chart and has formed two consecutive green candles.
The 200-week exponential moving average (EMA) is acting as an anchor point and is one of the main reasons for the likely short-term bottom in the stock.
The counter is forming a base near Rs 1,350 levels since the last couple of days, which is supported by momentum oscillator RSI (14) which has rebounded from the oversold zone with positive crossover on the daily interval.
Traders can accumulate the stock in a range of Rs 1,385-1,400 for the target of Rs 1,575 with a stop loss below Rs 1,290 on a daily closing basis.
Voltas | Sell | LTP: Rs 472.55 | Target: Rs 420 | Stop loss: Rs 505 | Downside: 11%
Voltas has breached its almost 30-month long horizontal trendline and is currently trading below its support level on the weekly timeline.
The majority of Indicators and oscillators are negatively poised and looking week to drift further.
The stock has drifted below its 50 and 100-day exponential moving average (EMA) on the weekly time frame, which indicates bears are in full control to push price lower.
The counter is likely to underperform the benchmark index which is visible on the Relative Strength Indicator (RSI).
Traders can short the stock in a range of Rs 470 - 475 for the target of Rs 420 with a stop loss above Rs 505 on a daily closing basis.
Larsen & Toubro (L&T) | Sell | LTP: Rs 775.55 | Target: Rs 690 |Stop loss: Rs 825 | Downside: 11%
A recent pullback in the stock was capped around Rs 890 and it was unable to fill the gap which was created by the gap-down opening of March 23.
The current chart formation suggests prices are likely to form an inverse V-shape bearish pattern on the daily interval.
The monthly chart clearly indicates long-term bearishness in the counter, as prices have witnessed rising channel pattern breakdown.
RSI (14) is in the oversold zone, but the current bear market flow indicates the indicator may stay in the oversold zone for a longer period.
Traders can short the stock in a range of Rs 771-777 for the target of Rs 690 with a stop loss above Rs 825 on a daily closing basis.
(The author is Technical Analyst, Bonanza Portfolio)
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.
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