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Last Updated : Jun 25, 2019 09:33 AM IST | Source: Moneycontrol.com

'Market breadth weak, but a close above 11850 could push Nifty towards 12,100'

In the Bank Nifty, one can remain long with the stop loss of 30,200. The target for the Bank Nifty is seen around 31,500

Moneycontrol Contributor @moneycontrolcom
 
 
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Nandish Shah

During last week, Nifty took support in the range of 11,625-11,640 for three times and bounced back. Moreover, for Nifty options, we have seen Put writing at 11,600-11,700 during the last few days, indicating the level to act as a support for the coming days.

Bank Nifty found support in the range of 30,220-30,250 last week and bounced back to 30,600. During the last week, we have seen long build in the Bank Nifty Futures’ from lower levels where Open Interest (OI) rose 15 percent with Bank Nifty rising nearly 400 points from the intra-week low.

Close

Nifty and Bank Nifty have been taking support at 50-days EMA recently. Nifty has been trading in a downward sloping channel on daily charts. Any level above 11,850 would result in a breakout. Above 11850, we can expect Nifty to extend the gains towards the next resistance of 12,100.

Considering the technical and derivative evidence discussed above, we believe that Nifty is in a consolidation phase and is likely to breakout only above 11,850. Long positions should be held with the stop loss of 11,600 in Nifty.

In the Bank Nifty, one can remain long with the stop loss of 30,200. The target for the Bank Nifty is seen around 31,500.

However, the real problem is the breadth of the market. The advance to decline ratio on the BSE has been negative for the last 14 out of the 15 trading sessions of the June.

Here are two stocks that could return 8 percent in the next 3-4 weeks:

BEL: Buy| LTP: Rs 115| Target: Rs 124| Stop loss: Rs 110| Upside: 8 percent

The stock price has given a breakout on the daily chart on June 24 with higher volumes by closing above the resistance level of Rs 113.

The primary trend of the stock is positive where the stock price is trading above its 5, 20 and 200-day simple moving averages (SMA).

The stock price has closed at a 10-month high, suggesting strength in the stock. In the F&O segment, we have seen long build up in the stock. Therefore, we recommend buying BEL for the upside target of 124 and keep a stop loss at Rs 110.

Canara Bank: Buy| LTP: Rs 273| Target: Rs 295| Stop loss: Rs 260| Upside: 8 percent

Canara Bank has given a bullish breakout from the downward sloping trend line, adjoining the high of April 27 and June 4, 2019.

During the last few days, the stock price has formed a strong base by forming multiple bottoms around 200-day SMA.

In the F&O segment, we have seen an aggressive long build up in the stock. Oscillators and momentum Indicators like RSI and MACD is showing strength in the stock on the weekly charts.

Therefore, we recommend buying Canara bank for the target of 295 and keep a stop loss at Rs 260.

The author is senior technical & derivatives analyst, HDFC Securities.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Jun 25, 2019 09:33 am
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