Since Nifty could not sustain opening level and traded below the weekly pivot point (11,670), which acted as a stiff resistance through the last week, it must sustain above 11,670 for further upside action
Nifty opened higher at the start of last week around 11,700; however, it consolidated in a tight range of 11,700-11,550 throughout the last week. The index made a lower high, lower low formation on the weekly time frame almost after seven weeks of continuous up trend suggesting cautiousness on the higher side.
Benchmark index is under formation of descending triangle on a lower time frame that implies weakness below 11,550 and breakdown of the pattern will push prices lower towards 11,440.
Also Nifty has formed Morning Doji Star in daily time indicating bullish bias while nifty weekly is suggesting pressure on the higher side as it has formed hanging man type of candlestick pattern. Moreover, an indecisive indication from candlestick patterns suggests new trading range only above previous high or below 11,550.
Since Nifty could not sustain opening level and traded below the weekly pivot point (11,670), which acted as a stiff resistance through the last week, it must sustain above 11,670 for further upside action.
However, the index if trades below strong psychological marks of 11,500, it will extend prices lower towards crucial support of 11,420 and below that towards monthly pivot point level (11360).
Bank Nifty could not sustain on higher levels and closed below the psychological level of 30,000 suggesting a correction is in progress as a retracement of the last rally. Sustained trade above 30,000 will only take it to a life high whereas a close below 29,000 will change the current trend.
Here are the top stock trading ideas that can give good returns in the near term:
Vedanta: Buy around: Rs 180 |Target: Rs 200 | Stop Loss: Rs 167| Upside: 11 percent
After hitting the peak of Rs 195, the stock slipped around 8 percent from where chances of developing of demand are higher and prices took support from its 100-DMA on the daily chart. As of now, formation of inside bar on daily chart is giving cues to accumulate this stock at lower levels.
The RSI is also about to bounce from the oversold zone and it has taken a northward turn. As long as it sustains above Rs 167, possibility of moving on the upside is higher and it can hit our target of Rs 200 with an ease. Buy Vedanta around Rs 180 with a stop loss of Rs 167 and a target of Rs 200.
Tata Steel: Buy around: Rs 530 |Target: Rs 570 | Stop loss: Rs 507| Upside: 8 percent
The counter appears to have formed a short term bottom near the lower base of rising channel line from where it attracts buying interest around Rs 530. Buying momentum will accelerate above Rs 540 where pattern breakout is expected and it can attempt to retest its interim top in coming sessions. Declining histogram of MACD also suggests upside momentum.
Positional traders can create fresh long position around Rs 530 with a stop below Rs 507 on a closing basis for an initial target of Rs 570.
Hindalco Industries: Buy around: Rs 206 |Target: Rs 220 | Stop loss: Rs 197| Upside: 7 percent
The scrip took a sharp rebound on the upside after hitting the low of Rs 182 and rose upwards. Rising trend line near 20 and 100-DMA creates buying opportunity on daily chart in coming sessions.
Currently, it formed a strong base due point of polarity which comes near Rs 202-206. Positive crossover of MACD in negative territory is showing firmness that indicates support at current levels.
One can go long in Hindalco around Rs 206 for the target of Rs 220 with a stop loss of Rs 197.
ICICI Bank: Buy around: Rs 382 |Target: Rs 400 | Stop loss: Rs 372| Upside: 5 percent
The stock has maintained its uptrend on the long term after bottoming out at Rs 382. Before a few days, it gave breakout and thereafter started consolidation. At the current juncture, the stock has formed a pole and flag pattern on the medium term interval and it is waiting for the breakout above the same.
Moreover, declining histogram of MACD in negative territory suggests buying in the scrip. Buy ICICI Bank around Rs 382 with stop loss of Rs 372 for a target of Rs 400.
Mahindra & Mahindra: Buy around: Rs 670 |Target: Rs 700 | Stop loss: Rs 650| Upside: 5 percent
Emergence of green candles near the support line of 20-DMA on daily chart indicates upside movement in the coming sessions. Positive crossover in MACD on the daily chart is also creating positive rhythm in the scrip. Sustainability of RSI above its oversold zone adds the conviction of buying the scrip around Rs 670 for the target of Rs 700 with stop loss of Rs 650.
The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.