A word of caution, India VIX has cooled to 18.62 but it still remains high. So, traders should initiate long positions while keeping strict stop losses
After a sharp selloff for nearly a month, last week’s price movement is encouraging for the bulls. Not only has it brought respite, but it has formed a strong chart pattern suggesting that the selloff has ended for now.
The Bank Nifty on the weekly chart has shown strong bullish engulfing pattern and RSI on the daily chart is exhibiting breakout after positive divergence that augurs well for this beaten down sector.
Nifty too is showing RSI divergence on its daily chart and has shown the formation of a double bottom in the lower timeframe.
A word of caution, India VIX has cooled to 18.62 but it still remains high. So, traders should initiate long positions while keeping strict stop losses. Also, on the way down, Nifty has made strong resistance patterns and levels where one needs to be cautious again.
As of now, the Nifty has to sustain above 10,500 to witness its bounce towards 10,700 and then 10,800, while on the downside, the 10,290 (on closing basis) could act as a support, below which it may see a fresh decline due to distress selling.
A downward sloping trend line on lower time frame is likely to provide resistance to prices around 10,600 also in a very short term too. Since Nifty has closed above its 5 DMA (10,363) almost after a month suggests strength in benchmark index in very short-term. Sustaining above 10,500, it can extend towards its immediate resistance of 20 DMA (10,875) and an unfilled gap around 10,747-10,822.
We expect the current bounce back to continue in the market.
The occurrence of positive divergence and support on lower levels pushed Banking Index higher and it closed at 25,395 which is almost near to previous week’s high suggests strength in the very short term. We expect range-bound movement with a positive bias for coming sessions in the range of 26,000-24,800.
BEL | BUY | Buy Range: Rs 81-84|Target: Rs 101.5| Stop Loss: Rs 77| Upside: 21 percent
The stock has corrected from the peak of Rs 124 and now it shows signs of bottoming out around Rs 74-77 levels. Formation of the double bottom on the daily chart is showing positive moves on the upside. Long bullish candle after the formation of doji on the weekly chart shows the possibility of a bounce-back further on the upside. With decent volume participation witnessed, we recommend a buy in this scrip for an upside target of 101.5 levels.
Petronet LNG| BUY | Buy Range: Rs214-218| Target: Rs 255| Stop Loss: Rs 190| Upside: 17 percent
Selling seems to be absorbed by buyers after giving 25 percent correction from the peak of 275 marks. The stock has bottomed out near 38.2 percent Fibonacci retracement of the entire upward swing from Rs 87 to Rs 275 which is supportive for the Bulls. The emergence of tweezer bottom near the same suggests a reversal in the coming sessions.
Strong support is seen in the Rs 195-200 zone due to point of polarity. A positive divergence in RSI and declining histogram in MACD also indicate buying. Once can long Petronet around Rs 214-218 with SL of Rs 190 for the target of Rs 255.
Century Textiles| BUY | Buy Range: Rs 790-800| Target: Rs 875| Stop Loss: 760| Upside: 9.3 percent
The stock has witnessed an erosion from the peak of Rs 992 to currently bottom in the Rs 740-750 zone. It gave double bottom breakout in an hourly chart which suggests positive momentum. As of now, it indicates a bullish candle to signify strength and has the potential to carry on the momentum further on the upside.
Indicators and oscillators are looking conducive for the price pattern. Looking at all the technical factors, we suggest buying the scrip around Rs 790-800 with a stop loss below Rs 760 on closing basis for the target of Rs 875.
BEML| BUY | Buy Range: Rs 580-585 |Target: Rs 640| Stop Loss: Rs 550| Upside: 9 percent
This stock has seen a correction from the peak of Rs 870 to Rs 534 and takes support at its lower levels. Now it has regained strength indicating a positive bias. Double bottom breakout in RSI from its oversold zone also shows strength.
The emergence of the Hammer on weekly chart further shows strength. We anticipate the stock to rise further in the coming days with strength in volume. One can take a long position at Rs 580-585 levels for the target of Rs 640 with the stop loss of Rs 550 on the closing basis.
Dabur| BUY | Buy above Rs 412 |Target: Rs 448| Stop Loss: Rs 388 | Upside: 8 percent
The occurrence of the Morning Star at bottom levels shows an upsurge move on the higher side. RSI has tajen a flip on positive side from its oversold levels creating the positive sentiment. Moreover, declining histogram of MACD also looks conducive for the scrip.
Furthermore, strong support is seen near Rs 390 where 200 DMA is seen. Breakout is expected to come above Rs 412 from where buying momentum in the stock will increase in the coming sessions. Considering these mentioned factors, we recommend buying Dabur above Rs 412 for the target of Rs 448 with the stop loss of Rs 388 on the closing basis.Disclaimer: The author is Head — Technical & Derivative Research at Narnolia Financial Advisors. 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.The Great Diwali Discount!
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