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Podcast | Hot stocks: Nifty could retest 11,400 as oscillators are in overbought zone

A sustained move above crucial resistance of 11,730 will push prices higher towards previous swing high of 11,950, and can extend towards a life high of 12,103 too.

October 22, 2019 / 08:07 AM IST
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Todays L/H

Shabbir Kayyumi

After the announcement of a Brexit deal, the Nifty crossed the major resistance zone of 11,450-11,480 and trading near strong psychological levels of 11,600.

The sharp bounce towards 11,666 levels also achieved the target of Relative Strength Index pullback buy pattern, as the recent RSI is almost near the previous high (70).

The Nifty is trading higher above all the popular moving averages (20/ 50/100/200), indicating strong bullish bias.


However, the majority of the oscillators are in the overbought zone and hence the possibility of a price retracement towards a breakout point placed around 11,400 cannot be ruled out, which can even extend towards the line of parity placed at 11,300.

The index level of 11,680 is also the target of inverse 'Head & Shoulders' pattern on the lower time frame. Previous months high is placed around 11,694, at the same time the descending trend line connecting the previous two swing tops is standing around 11,680. This indicates a major resistance zone around 11,680-11,730.

A sustained move above the crucial resistance of 11,730 will push prices higher towards previous swing high of around 11,950 and it can extend towards a life high of 12,103 too, whereas a retracement towards 11,400 can be used as a bargain buying opportunity.

A list of top three stock recommendations which could give 7-13% return in the next three-four weeks:

Bharat Heavy Electricals Limited: BUY | LTP: Rs 54.45| Buy around: Rs 52.50 |Target Rs 61| Stop Loss Rs 47.50| Upside 12 percent

The stock has witnessed a decent erosion from the peak of Rs 78 and has currently bottomed out at around Rs 41. The appearance of a bullish candle near support levels along with RSI bouncing off oversold region infers immediate floor near 59-61 zone.

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 to the price pattern. Looking at all these technical factors, we suggest buying in the scrip around Rs 52.5, with a stop loss below Rs 47.50 on a closing basis for the target of Rs 61.

Power Grid Corporation of India Limited: Buy| LTP: Rs 202| Buy above: Rs 205 |Target Rs 230| Stop Loss Rs 191| Upside 13 percent

Power Grid is undergoing consolidation in the longer time frame and is on the verge of resuming its prior trend. The consolidation was in the form of a re-test of the breakout it did in June 2019.

The momentum indicator MACD has crossed the signal line, indicating the start of a trend. The RSI, too, is above its key 50 mark, indicating positive momentum.

We recommend going long in Power Grid above Rs 205, with a stop loss of Rs 191 and a target of Rs 230.

Hexaware Technologies Ltd: Buy| LTP: Rs 378| Buy around: Rs 370 |Target Rs 405| Stop Loss Rs 350| Upside 7 percent

Bargain hunting is seen at lower levels in the scrip from where it formed a strong base. Currently, it has given a breakout from its double-bottom pattern, with decent volume on the hourly chart.

Moreover, it formed a Bullish Belt Hold on the daily chart, which indicates further upsurge. It also took support from its 200-DMA while bouncing back on upside.

Indicators and oscillators are also lending support to the price action. A trader can take the entry from Rs 370 for the target of Rs 399 and keep a stop loss of Rs 350.

(The author is Head of Technical Research, at Narnolia Financial Advisors Ltd)

Disclaimer: The views and investment tips expressed by investment experts on are his own and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.
Moneycontrol Contributor
first published: Oct 22, 2019 08:07 am
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