“We expect the Nifty to trend sideways for the next few trading session. On the flip side, the index has to close below 10,550 to change this sideways movement thesis,” says Shabbir Kayyumi of Narnolia Financial Advisors
Bulls capitulated against bears as the Nifty continued to tumble below its 50-day daily moving average on expiry day (Thursday). However, it bounced back in Friday's session. Selling was seen across all sectors last week, while the carnage in the mid and smallcap space continued.
In the medium term, the Nifty is likely to trade rangebound as long as it trade above 10,550 levels. Its relative strength index (RSI) near the 50 mark suggests sideways movement in coming sessions.
Confluences of Fibonacci retracement and 100-day exponential moving average (EMA) around 10,570 levels implies robust support. The Nifty will remain strong till it holds above this level.
Nifty VIX continues to trade in the range of 13.94 and 12.02, suggesting that market participants are not seeing a major rise in volatility at least for the Nifty.
The downward sloping trend line connecting the two major tops of 11,121 and 10,929 suggests resistance at 10,850 levels. The regression line is flat around 10,750 levels.
We expect the Nifty to trend sideways for the next few trading session. On the flip side, the index has to close below 10,550 to change this sideways movement thesis.
Bank Nifty too is expected to remain rangebound between 26,800 and 26,200 levels. It would start trending only if it decisively closes below its 50-day moving average currently placed at 26,130 levels.
Here is a list of 5 stocks that could return 10-21 percent in the short-term:
Petronet LNG: Buy | Range: Rs 212-215 | Target - Rs 260 | Stoploss - Rs 199 | Return - 21%
Petronet stock price has formed double bottom around Rs 202 which is price reversal pattern in nature. The double bottom formation is also near the consolidation made in July-August 2017 from where last rally has emerged taking stock price to the high of Rs 275.
During making of this double bottom RSI has spurted in the middle to high of 84.7 suggesting possibility of strong follow through post making of the double bottom.
Moreover, emergence of Morning stars on daily chart is indicating up move in coming sessions. Sustainability of RSI above 50 also provides strength.
Buying acceleration will increase above Rs 230 mark after that it should give spurt towards Rs 260 mark. View remains intact as long as it sustains above Rs 199 mark.
Jindal Steel & Power: Buy | Range - Rs 216-219 | Target - Rs 250 | Stoploss - Rs 204 | Return - 15%
Jindal Steel & Power is in a correction mode since early 2018. A bullish Sea-pony harmonic pattern visible on the chart of Jindal Steel is a bullish reversal pattern based on various Fibonacci ratios and one which marks the end of a price decline.
Low of Rs 208 made by Jindal Steel on 28th June is the inflection point D of this harmonic pattern that started getting built when Jindal Steel had hit of yearly high of Rs 294 in January 18.
Price is expected to find a bottom here and potentially reverses to the upside. Formation of Morning star on daily chart is likely to set stage of bottoming out around Rs 215-220 zone.
Price can be expected to head higher in the days ahead, potentially towards Rs 235 and Rs 250 marks. View will invalidated if it closes below Rs 205 mark.
Axis Bank: Buy | Range - Rs 505-510 | Target - Rs 565 | Stoploss - Rs 480 | Return - 11%
A bullish Gartley harmonic pattern is a bullish reversal pattern that is based on various Fibonacci ratios and one which marks the end of a price decline.
By definition, point D is the inflection point as it is around this point, prices is expected to find a bottom and potentially reverses to the upside.
Formation of Bullish long legged doji on daily chart is likely to set stage of bottoming out around this support zone.
Hidden negative divergence is seen in RSI as it is forming lower lows and prices are forming higher lows. Price can be expected to head higher in the days ahead, potentially towards Rs 550 and Rs 570 marks. View will invalidated if it will get close below Rs 480 mark.
Larsen & Toubro: Buy | Range - Rs 1,260-1,270 | Target - Rs 1,400 | Stoploss - Rs 1,205 | Return - 11%
L&T after making recent low of Rs 1,206 on June 28, 2018 gave a good pullback rally in last couple of trading days. The stock has made a ‘Hanging man’ pattern on daily candlestick chart.
The ADX line is tilting downward from 40 levels. A positive divergence also formed on stochastic. All these technical parameters are suggesting some fresh up move from the current level.
Wipro: Buy | Range - Rs 260-261 | Target - Rs 287 | Stoploss - Rs 253 | Return - 10%
While many IT stocks are hitting 52-week high, Wipro continues to trade lower. Recently it has made double bottom near Rs 253 and thereafter have given a good pullback.
RSI and Stochastic after reaching over sold zone has shown higher lows formation. Positive crossover in MACD is showing positive sign.
Therefore some strong pullback rally is expected from the current level.Disclaimer: The author is Head - Technical & Derivative Research, Narnolia Financial Advisors. The views and investment tips expressed by investment experts 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.