Shabbir Kayyumi
The correction in stocks that started with rising oil prices and a falling rupee was accelerated by rising bond yield and now credit default issue is creating selling climax in the market.
India VIX is trading at the highest level of the week around 15.36 and gained almost 10 percent on September 21, which along with fall of prices, implies higher volatility in the market with a bearish bias. Although Nifty bounced back to its 5-DMA (11,309) on the day, it closed below it, around 11,143 marks, which suggests weakness in the benchmark index in the short term.
Strong indicator 100 DMA is around 11,025 mark, decisive closing below it will take the index towards 200-DMA, which is trading around 10,740 levels. However, a fall should halt around the 10,700 levels, where the previous swing high/low and the strong support trend lines confluence zone exists.
Looking at the Open Interest (OI) front, the highest in Put is seen around 11,000 strikes, followed by 11,100 strikes whereas maximum OI in Call is around 11,500 levels, followed by 11,400. Moreover, options data indicates an immediate trading range between 11,000 and 11,400 marks.
For Nifty, we expect strong support to emerge from 100 DMA at 11,025 and 200 DMA at 10,740. Although, the current panic may continue for few more days due to margin calls triggered post heavy sell-off on September 21. On the other side, a lower time frame downward sloping trend line breakout will be above 11,320 levels, which indicates the Nifty’s close above 11,320 levels will lead the rally towards 11,550/11,600.
Tata Global | Buy above Rs 240 | Target: Rs 275 | Stop Loss: Rs 220 | Upside 15%
Tata Global has given falling wedge breakout after giving short term consolidation on daily charts. From the last few days, it has been trading in its congestion zone and formed a pole and flag pattern on daily charts, which creates buying opportunity in the scrip again. Moreover, sustainability of relative strength index (RSI) above nine days exponential moving average (EMA) giving cues for upside momentum. Strong support is seen near 220 marks. By looking all these factors, trader and investor can buy this scrip above 240 with the stop loss 220 for the target of 275.
Bharti Infratel | Buy Range: Rs 270 - 280 | Target: Rs 317.50 | Stop Loss: Rs 262 | Upside 14%
Bharti Infratel bottomed out near the levels of 263-265 and formed double bottom on daily chart. Breakout is expected above 293 marks from where buying momentum will increase Double Series of long-legged doji and tweezers bottom at lower levels showing upside swing in coming sessions.
Moving average convergence and divergence (MACD) histogram started trading in positive territory and positive divergence of RSI adds the conviction of going long for the target of 310 and 325 with stop loss of 262 marks.
Tata Motors | Buy Range: Rs 245-250 | Target: Rs 285 | Stop Loss: Rs 228 | Upside 14%
After hitting the peak of 282, Tata Motors slipped lower levels at 228 then it turns back after forming congestion zone on lower time frame of charts. As of now, it double bottom pattern on line chart which is showing stability in the stock. Declining histogram in MACD below central line is creating optimism in coming sessions. Sustainability of RSI near 40 marks also providing strength. As long as it sustains above 228, possibility of moving on upside is higher and it can hit our target of 285 with an ease.
Axis Bank | Buy Range: Rs 590-600 | Target: Rs 680| Stop Loss: Rs 562 | Upside 13%
Since long, Axis Bank has been forming an ascending triangle pattern which suggest an upside movement. Although, it gave breakout on upside but slipped on the back of domestic and global news but as price started retracing towards the neckline of this ascending pattern which gives buying opportunity at its lower levels. Currently, stock is trading above its 100 and 200 DMA moving averages which shows positive trend in the scrip. Monthly RSI gave trend line breakout which is also conducive for the price pattern.
Based on the above technical structure, we are expecting an upside momentum in the stock in coming sessions. Buy around 590-600 for the target 680 level, keeping a stop loss of 562 levels.
Titan Company | Buy Range: Rs 790-800 | Target: Rs 890 | Stop Loss: Rs 751 | Upside 12%
Titan rebounded from a low of 779, and started showing pullback on upside. This bounce back rally and contraction took the form double bottom price pattern from last few days. Currently, it is waiting for the breakout on upside where buying momentum is expected to accelerate further. Emergence of positive divergence on daily time frame of chart suggesting bulls can take a charge. Indicator and oscillators are also showing favourable scenario in the coming sessions.
So based on the mentioned technical structure we expect that price may see a rally on upside till 800 and 900 mark. Buy around 800 with stop loss of 751 for the target of 890.
Disclaimer: The author is Head - Technical & Derivative Research at Narnolia Financial Advisors. 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.
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