Bullish exuberance has faded and profit booking was witnessed in Nifty50 in the trading week gone by. After hitting the weekly high of 11,794.25, prices lost the bullish momentum and the index closed with the weekly loss of more than 300 points at 11,333.85.
The bearish Marubozu candle formed on August 31 has engulfed the previous five candles indicating that bulls are losing strength and the ongoing uptrend might get abated for the time being. The prices have breached the rising trend line support originated by joining the recent low of March 24 and May 18.
The 20-day simple moving average has also been traded on the lower side and range shift can be seen in RSI where it has shifted from bullish zone to sideways zone, but the indecisive small body candlestick pattern formed on Friday's trading session is putting a question mark on further fall.
In the forthcoming trading week, traders can expect the market to trade sideways with negative bias. The selling pressure might not be ruled out on any rise as there is formation of 'Bearish Engulfing' candlestick pattern on weekly chart. The low of Friday's trading session (11,303.65) will act as an immediate support level which could strengthened the bears further till 11,140 level, if breaks on lower side.
The overhead resistance for the coming days is expected to be at 11,574 level which is a 38.2 percent Fibonacci projection level based on the previous week trading range and any rise in price up to this level is likely to face a supply pressure. The expected trading range for the forthcoming trading week is likely to be in between 11,140 to 11,574 levels.
As per the advanced Fibonacci theory, the 'key low' of August 3 (10,882.80) is likely to act as a major support level and the medium-term bullish trend will remain intact, until the level holds. Though the negative bias is expected in the short term but the stock specific opportunities are likely to keep the traders in high spirits. We have identified three trading ideas that could fetch 10 to 15 percent return in the short term and are likely to outperform Nifty.
Pfizer: Buy | CMP: Rs 4,774.50 | Target: Rs 5,280 | Stop Loss: Rs 4,560 | Return: 10 percent
After breaking out of rounding bottom formation, the stock has retraced till its 20-day moving average and showing signs of life again. Prices are trading above all its short term and medium term moving averages ribbon and momentum indicators are trading in a bullish zone. The short term moving averages are developing a positive curve after a phase of mild correction suggests that reversal after retracement can be expected in the counter. There is a formation of higher top and higher bottom on weekly as well as monthly charts. The daily RSI is bouncing back from important support levels indicates that short term up move can be expected in the counter. Traders can accumulate it at the current market price (CMP) and on any dip till Rs 4,650 with the short term perspective.
Venkys India: Buy | CMP: Rs 1,520.05 | Target: Rs 1,760 | Stop Loss: Rs 1,390 | Return: 15 percent
The stock has broken out of a falling trend line resistance and started trading above its major medium term moving averages. The short term moving averages in the weekly time frame has developed a positive curve indicating the initial sign of trend reversal buying. The weekly RSI has started trading in a bullish zone for the first time after April 2018 suggests that momentum is building up in the stock and the short term rally might not be ruled out. On the daily chart, the lower top and lower bottom cycle has reversed indicating the worst is over and bulls are likely to take the charge again. The average directional index (ADX) is trading with a positive slope suggesting the trending move in the stock. Traders can initiate buying positions at CMP and on any dip till Rs 1,490 for the short term gain.
Blue Dart Express: Buy | CMP: Rs 2,289 | Target: Rs 2,564 | Stop Loss: Rs 2,140 | Return: 12 percent
The stock has been consolidating in the trading range since March 2020 and seems to be poised for the fresh breakout. The RSI has bounced back from the important support area and is trading in a bullish zone. Recently, the bullish crossover of short and medium-term moving averages ribbon has been witnessed on daily chart suggesting that bulls are likely to have upper hands in the coming days. Bullish crossover in momentum indicators and volatility breakout in the hourly chart suggests that a decent move can be expected in the counter in short term. Traders can initiate long positions at CMP and can add more once the stock starts trading above Rs 2,320 for short term gain.
The author is Senior Technical Analyst (Equity & Currency) at Rudra Shares & Stock Brokers Ltd. (SEBI Reg.No.INH100002524) (RA).Disclaimer: 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.