Rohan Patil
Since the gap down opening on Feb 28, the benchmark index Nifty has continued to trade below its 'continuation gap' and is looking weak at the current juncture.
In the last three out of four trading days, despite a gap-up opening, the Indian benchmark index could not hold on to the gains and witnessed negative closing with long red candles. This structure indicates bears are dominating bulls.
Nifty on March 4 slid almost 200 points during the day but witnessed a sharp recovery in the second half of the session.
For the time being, the index has managed to close above the 100-week exponential moving average on the weekly chart, but on the daily chart, there is an altogether different story as Indian bourses are nicely settled below their medium and long-term exponential moving averages.
The contagious nature of coronavirus is more concerning, and it would be difficult to predict a bottom, but at the same time, a bounce-back would also be equally fierce.
The overall market at the current stage is reacting sharply to coronavirus as it increases the fear of global slowdown.
So, prices are not respecting any technical and fundamentals levels at this juncture. But, this situation will be short-lived and the market will resume to normal soon.
As long as the index trades below 11,550, the probability of retesting the lows of 10,800 remains high. Some reliefs for bulls can be expected on a close above 11,550. For the time being, it looks prudent on the part of the traders to refrain from creating directional bets on the index.
Here are three stock recommendations for the next 3-4 weeks:
Apollo Hospitals Enterprise | Buy | LTP: Rs 1,753.05 | Target: Rs 1,850 | Stop loss: Rs 1,700 | Upside: 5.53%
Since the last week of July 2019, Apollo Hospitals is trading in a higher high higher bottom formation on the weekly time frame.
Since the first week of January 2020, the stock is outperforming the benchmark index on the week-on-week basis on Relative Strength (RS).
In the current bearish scenario, the stock has been able to outperform the benchmark index and is currently trading above its smaller degree horizontal trendline on the daily structure.
It is nicely poised above its 21 and 50-day exponential moving average, which is positive for the stock in short to medium-term.
Traders can accumulate the stock in a range of Rs 1,748–1,759 for the target of Rs 1,850 with a stop loss below Rs 1,700 on a daily closing basis.
Alembic Pharmaceuticals | Buy | LTP: Rs 643.60 | Target: Rs 730 | Stop loss: Rs 600 | Upside: 13.42%
After multi-years prolonged consolidation, Alembic Pharmaceuticals has given a breakout of its 'falling channel pattern' on the weekly timeframe.
After witnessing a breakout above the trendline, the stock was in consolidation mode for the last few weeks. And during the consolidation mode, the stock has completed its throwback near its trendline support.
The current spurt in prices has witnessed a follow-up buying in the stock.
A strong reversal in momentum oscillator RSI (14) from 30-level has set up a rounding formation and is currently reading above 60-level with positive crossover on the weekly chart.
By observing Relative Strength (RS) on the weekly horizon, one can observe that the stock has been outperforming the benchmark index since January 20.
Traders can accumulate the stock in a range of Rs 644 -653 for the target of Rs 730 with a stop loss below Rs 600 on a daily closing basis.
HDFC Bank | Sell | LTP: Rs 1,149.15 | Target: Rs 1,080 | Stop loss: Rs 1,190 | Downside: 6%
HDFC Bank has breached its eighteen-month upward rising channel and is currently trading below its support level on a weekly timeline.
The majority of Indicators and oscillators are negatively poised and are looking week to drift further. The stock is trading below its 50-week exponential moving average and sharp fall in the stock has forced the prices to breach its horizontal trendline support.
Traders can short the stock in a range of Rs 1,145-1,153 for the target of Rs 1,080 with a stop loss above Rs 1,190 on a daily closing basis.
(The author is a technical analyst at 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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