Manali Bhatia
After two consecutive weeks of the up move, Nifty breached the psychological resistance of 10,000 levels and to some extent has shown the resilience to sustain above it.
However, bulls have placed the index near an important supply zone and a glimpse of overhead resistance was seen in Tuesday's trading season.
After a positive opening, bulls failed to hold on to the gains and a sharp fall was witnessed in the latter half of the day.
To have a birds-eye view on the index, we need to go back and analyse the “falling window” that emerged on the chart on March 12, 2020, where gap down opening had resulted in the formation of the pattern.
The range covered by the window is 10,334 - 10,040 approximately and it is likely to act as an important resistance level for the index in the coming days.
In Tuesday’s trading session market had given up all intraday gains and closed in the red after approaching the higher range of the window indicating that an ongoing rally might take a pause and minor correction can drag the prices towards 9,962 and 9,851 which is also a 38.2 percent and 61.8 percent projection level of the previous week range.
On the higher side, 10,334 - 10,351 will continue to act as a stiff resistance zone which needs to be taken out on a closing basis for the extension of the rally.
Traders need to adopt a stock-specific approach at the current juncture where lucrative opportunities are available. Here are three stocks that could outperform the index and offer decent gains in the short-term
Tech Mahindra | Buy | LTP: 585.80 | Target price: Rs 630 | Stop loss: Rs 558 | Upside: 7.5%
The stock has given a breakout from the rectangular pattern after two months of consolidation.
Positive crossover of short term and medium term moving averages are a ray of hope for bulls suggesting that the counter is getting ready for the trend reversal.
RSI has started trading in a bullish zone for the first time after March 2020.
Dr. Reddy's Laboratories | Buy | LTP: Rs 4,120 | Target price: 4,370 | Stop loss: 3,998 | Upside: 6%
The stock is in roaring uptrend and trading with the cycle of higher top and higher bottom.
After a mild consolidation, the stock seems to be getting ready for a fresh breakout.
“Marubozu” candle in the current trading session indicates that bulls are ready to get back in action and a short term rally can be expected in the counter.
Momentum indicators on intraday charts are in a bullish zone suggesting that long positions can be initiated in the stock for short term gains.
United Breweries | Buy | LTP: Rs 1,005 | Target price: Rs 1,120 | Stop loss: Rs 960 | Upside: 11%
After a fresh breakout, the stock is going through the phase of retracement which could eventually lay the foundation for fresh up move.
Positive moving averages crossover and short term range breakout suggests that the stock is poised for short term rally.
RSI and other momentum indicators are trading in a bullish zone.
The average directional index is developing a positive curve, indicating that trending move in the stock might shape up and this short term buying could also transcend into trend reversal buying in the medium term where much higher levels can be expected.
(The author is Senior Research Analyst at Rudra Shares & Stock Brokers)
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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