Sacchitanand Uttekar
Since last few sessions the crucial level of 11,300 has been defended well by the index as it hovers around the same irrespective of continued weakness in global indices. Despite of slippages below the same, the index saw a smart recovery to close confidently around 11,300 mark by forming a 'Spike; on its daily scale which occurred on Monday's session. The long bar formation range on August 31 remains a crucial head wind for the coming days as the action could remain constrained within the same.
Nifty needs to hold above 11,250-11,350 range which could again give an upper hand to bulls to drive the move towards 11,650-11,700 zone. A decisive close below this critical support of 11,250 could lead to a further drag towards 11,000-11,050 zone. Momentum oscillator RSI_14 is showing loss in momentum as RSI_14 is near to 50 making lower high and lower low after reaching overbought zone but above its crucial 50 mark.
Hence short-term traders should avoid fresh longs in case 11,300 is violated on consecutive basis during the week as up move, too, could be restrictive & short-lived in nature.
Here is the list of three stocks which can be considered for short term:
BPCL: Buy
BPCL had been hovering near its 200-day EMA since last 4 weeks now but Tuesday's occurrence of a Bullish Engulfing pattern formation supported with significant volume breakout is a good indication for fresh momentum. Option data saw strong open interest built-up at 400 PE strike which compliments the bullish setup. While the oscillation since last 6 weeks has resulted into a Triangular formation with an apex placed around Rs 409 zone. A decisive breach above Rs 418 would open the gateway towards the triangle pattern target area around Rs 435-440. Hence fresh longs could be added with a stop below Rs 404 for a move towards Rs 435-440.
Pfizer: Buy
Positive sector outlook & breakout from its 'Cup & Handle' formation on its daily scale indicates momentum to continue further towards Rs 5,640 (Pattern Target). The stock has been in a secular uptrend while its daily ADX also saw a sharp rebound from 27 level as it is now placed at 32. As the setup looks healthy despite of the stock quoting near its life high level. The risk reward opportunity is still more favourable for aggressive longs which could be deployed with a stop below Rs 4,640 for an initial upmove towards Rs 5,640.
RBL Bank Futures: Sell
Dark Cloud cover on its weekly scale followed by a convergence of its short term averages around Rs 186 is a sign of fresh weakness. Breakdown below Rs 190 is well supported with fresh open interest additions which could be warranted as fresh shorts. Trading positions could be added upto Rs 180 with a stop around Rs 182 for a move towards the next support zone placed around Rs 162.
The author is DVP – Technical (Equity), Tradebulls Securities.
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