Rohan Patil
Benchmark index Nifty witnessed sharp profit-booking on June 24 after claiming gains for four consecutive trading sessions.
It was again a volatile day for the Nifty as the market witnessed a gap up opening but failed to hold the gains and traded in both the directions.
During the second half of the trading session, Nifty witnessed selling pressure and closed below the opening of June 23 and formed bearish engulfing candlestick pattern.
Nifty, on the daily chart, is trading in a rising channel formation. On the weekly chart, the index has formed a rising wedge formation.
With the monthly F&O expiry this week, we expect the market to trade volatile with rollover movement in individual sectors and stocks and the geopolitical news flow could add more volatility.
On the technical front, the secondary oscillators suggest that volatility will grip the market in the coming sessions.
Indian bourses are currently capped under the 50-week exponential moving average which is placed around 10,600 odd levels.
The break of 10,550–10,600 level will open the gate for 11,000 level in the coming trading sessions. In case the index violates 10,000 level, a sharp decline will take place which could drag the index towards 9,700 – 9,500 levels.
In Bank Nifty, after almost three months of consolidation, prices witnessed a breakout of a triangle pattern on June 23 on a daily chart. A sharp profit-booking on June 24 formed a bearish engulfing candlestick pattern.
Outlook for Bank Nifty is also bullish and yesterday’s fall can be ruled out due to the monthly expiry ahead.
The banking index led the rally in the last couple of trading sessions and gained almost 2,000 points in four trading sessions.
Till the time 22,500 does not get broken, bulls will be under the shade with high volatility. Once we successfully jump above the hurdle, 24,000 will be on the cards.
In case the banking index violates 20,500 level, a sharp decline will take place which could drag the Bank Nifty towards 19,500 – 18,500 levels.
Here are three buy recommendations for the next 3-4 weeks:
Berger Paints | Buy | LTP: Rs 544.50 | Target price: Rs 590 | Stop loss: Rs 510 | Upside: 8%
On June 24, the stock finally managed to surpass the multiple resistance zones around Rs 520 – 530, which confirmed a symmetrical triangle breakout.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
Momentum oscillator RSI (14) is reading above 60 levels on the daily chart with positive crossover on the cards.
The stock is trading near its two weeks high, currently sustaining above its 21 and 50 days exponential moving average on the daily scale.
On the daily chart, the stock, after several days of consolidation, moved above from the range which suggests bullish strength in the counter.
Yesterday’s candles have cut the horizontal trend line resistance which is a positive sign for the stock.
On the weekly chart, MFSL has given a breakout of the “Consolidation Pattern”. Prices are firmly holding the support near the 21 and 50-days simple moving average which is formed around Rs 456.44 levels on
the weekly time frame.
Momentum Oscillator RSI (14) is reading above 60 levels with positive crossover, which is positive for the stock. The MACD indicator is reading above its line of polarity with positive sentiments.
DCM Shriram | Buy | LTP: Rs 327.50 | Target price: Rs 365 | Stop loss: Rs 305 | Upside: 11%
After the recent consolidation, the stock has witnessed a consolidation breakout which is placed above Rs 310 level.
The stock has crossed its short and medium-term averages with strong volumes and is expected to outperform from the current levels.
Weekly RSI has crossed from its average line, indicating a strong breakout and the sector is also in positive momentum.
The daily, as well as, the weekly chart looks extremely promising and hence, we expect outperformance from the current level.
(The author is Technical Analyst at Bonanza Portfolio)
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