Vinay Rajani
At the start of the week, Nifty plunged 1.25 percent, breaking previous three week low of 11,769.
Nifty has confirmed lower bottom preceded by lower top on the daily charts. The next support zone for the Nifty is seen at 11,450-11,500. Nifty has breached 20 days EMA and now is on the verge of violating 50 days EMA support placed at 11,655.
On May 20, 2019, when exit polls were announced for the Lok Sabha elections, Nifty opened with a huge gap of 245 points between 11,426 and 11,591. This gap can act as a short term support for the Nifty.
Bank Nifty has breached crucial double bottom support of 31,600, which could result in to further selling in the index. Support for the Bank Nifty spot is seen in the range of 29,700-29,900.
Indicators and oscillators like MACD and RSI have turned bearish on the daily charts, strengthening the chance of markets going down from here. Nifty Midcap and Smallcap indices lost their shine and most of the stock reached their two months low.
Currently, the index hides more than it reveals. Advance decline ratio of the BSE stocks has been negative for the last 13 sessions. This indicates that the breadth of the market is extremely weak. The performance gap between largecap and smallcap has widened again.
From the derivative side, Maximum OI is seen in Nifty 11,500 Put, indicating strong support going forward. As far as resistance is concerned, it has shifted downwards to 11,800. Short term view on market would remain bearish unless Nifty closes above 11,800 resistance.
Considering the technical evidence, we believe that Nifty is in a short term downtrend and can extend the fall towards 11,450-11,500 zone. One should remain bearish in Nifty with the stop loss of 11,800 on closing basis.
Here are the top stock trading ideas which can give good returns:
Exide Industries: Sell | Target: Rs 187 | Stop loss: Rs 212 | Return: 7 percent
The stock has been forming lower tops and lower bottoms on the daily charts. It is trading below all important moving averages. Auto sector has also been passing from the bearish phase. It has closed below crucial support of Rs 203 and has closed at the lowest level since February 2018.
Considering the technical evidence discussed above, we recommend selling the stock at current market price, for the target of Rs 188, keeping a stop loss at Rs 212 on closing basis.
India Cements: Sell | Target: Rs 86 | Stop loss: Rs 98 | Return: 8 percent
The stock price has broken down from the bearish “Flag” pattern on the daily charts. It has violated the crucial support of its 200 DMA. Cement sector has remained under pressure in the month of June. Upward sloping trend line has also been breached on the daily charts.
Considering the technical evidence, we recommend selling the stock at current market price, for the target of Rs 86, keeping a stop loss at Rs 98 on closing basis.
Piramal Enterprises: Sell | Target: Rs 1850 | Stop loss: Rs 2126 | Return: 8 percent
The stock price has violated the multiple bottom support placed at around 2020 levels. Bearish head and shoulder pattern is seen on the daily charts. Stock is trading below all important moving averages. Lower tops and lower bottoms formation is there on the short to medium term charts.
Considering the technical evidence, we recommend selling the stock at the current market price for the target of Rs 1850, keeping stop loss at Rs 2126 on closing basis.
The author is Technical and Derivative Analyst at HDFC Securities
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