Bulls went through a rough time in the last two trading sessions of the week after an initial rally.
We have witnessed 10 weeks breakout on the back of positive Interim Budget but market failed to hold on to the initial strength and register a gain of 0.45 percent only on weekly basis with Nifty50 closing below 11,000 mark at 10,943.60.
In the coming week, for maintaining the upside momentum Nifty 50 needs to hold 10,830 level.
Nifty has formed the Doji candlestick pattern on daily chart at 61.8 percent retracement level of September-October fall (from 11,760.2 to 10,004.55) which was followed by large red candle. The pattern suggests that next few days are going to be quite difficult for traders.
Though there is indecisive candlestick pattern at important levels but the fact cannot be ignored that we witnessed a range breakout last week.
Technical setup suggesting that two scenario could emerge in coming days and traders need to be flexible enough to deal with it.
1) If 10,830 trades on lower side then we can expect the market to go back again in a range of 11,000-10,590 and the current breakout will be considered as false.
2) Nifty could remain in range of 10,830 and 11,119 for few days and then gradually move forward to make new highs, in such case we could see a pre-election rally towards 11,380 and 11,500.
On option front also, indecisiveness is creeping in among traders as 11,000 Call and Put option both holds significant open interest. Immediate support for the week exists at 10,880 and 10,830 and until 10,830 holds bullish bias is likely to intact.
NTPC: Sell | CMP: Rs 131.55 | Target: Rs 124 | Stop Loss: Rs 136 | Return: 6%
Stock has been in a prolonged downtrend and recently made new 52-week low.
Momentum indicators on monthly chart indicating fresh weakness and trading below all major moving averages. On weekly chart, there is bullish reversal failure pattern and such scenario is indicating that bears still have upper hand.
On daily chart, the stock has formed rounding top kind of a pattern and now breaking out of it. Price is tagging the lower Bollinger band. Thus selling positions can be initiated with the short term perspective.
NIIT Technologies: Buy | CMP: Rs 1,309.15 | Target: Rs 1,440 | Stop Loss: Rs 1,240 | Return: 10%
After an initial upmove stock went sideways and a fresh round of buying is expected in days to come. Monthly RSI is suggesting a reversal after retracement and any dips in stock are likely to be bought into.
Weekly momentum indicators have started trading in positive zone and prices are tagging the upper bollinger bands. On daily time frame stock is trading above all major moving averages. Stock can be bought at CMP and on any dip till Rs 1,260 for short term gain.
Kotak Mahindra Bank: Buy | CMP: Rs 1,299.4 | Target: Rs 1,405 | Stop Loss: Rs 1,255 | Return: 8%
Stock is forming higher tops and higher bottoms for the past few weeks and recently formed bullish candle after a phase of consolidation near 20-week moving average. Setup is suggesting that fresh leg of rally is likely to begin.
Daily RSI is trading in a positive zone and MACD also trading in positive territory and recently witnessed positive crossover. Long positions can be initiated in the counter for short term gain.
Maruti Suzuki: Sell | CMP: Rs 7,157.05 | Target: Rs 6,800 | Stop Loss: Rs 7,350 | Return: 5%
After a sharp sell-off, the recent upmove is facing resistance at 20-week moving average on weekly chart and momentum indicators in all time frame is favoring the bears.
On daily time frame, stock has formed a negative candlestick pattern at 50-Day Exponential Moving average. Apart from this, RSI has reversed from important resistance zone and formed a reversal pattern and hence decent opportunity on downside is available in the stock for the short term gain.
The author is Senior Research Analyst at Rudra Shares & Stock Brokers Ltd.
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