The short-term trend for the Nifty50 remains bearish till the resistance of 11,800 is crossed decisively where we have seen aggressive call writing
Nifty plummeted 253 points or 2.11 percent on July 8 as it continued to react negatively on the budget fine print. This is the highest single-day fall in percentage term since October 11, 2018.
From the high of 11,982 made on the day of the budget, Nifty has witnessed a fall of nearly 450 points to close at the lowest level since May 17, 2019 at 11,559.
Nifty has fallen below its 5 and 20-day simple moving average (SMA) on July 5, indicating a short-term trend which has now turned bearish.
Moreover, on July 8, Nifty also closed below its 50-DMA, placed at 11,725, which has been acting as strong support for the last 1-month. The momentum indicators and oscillators have been showing negative setup on the charts.
In the derivatives market, we have seen a short build up in the Nifty Futures on July 8. Amongst the options, we have seen Call writing at 11,700-11,800 strike prices, indicating Nifty to find strong resistance around 11,800.
Unless Nifty closes above 11,800, the trend is considered bearish for the markets. On the other hand, Bank Nifty plunged 2.77 percent on July 8, highest single day fall since Feb 2, 2018.
To conclude, the short-term trend for the Nifty50 remains bearish till the resistance of 11,800 is crossed decisively where we have seen aggressive call writing.
On the downside, support is seen in the vicinity of 11,400-11,500. Going forward, any close below 11,400 would lead to an extension of the fall towards 200-day SMA, which is placed at 11,110.
Here are three stocks that could give 5-9 percent return in the next 3-4 weeks:
Mahanagar Gas: Sell| LTP: 792| Target: Rs 755| Stop loss: Rs 815| Downside: 5 percent
The stock price gave a breakdown on the daily chart by closing below the support of Rs 806. The momentum indicators and Oscillators like MACD and RSI are showing weakness on the daily charts.
The short-term trend of the stock is bearish as the stock price slipped below its 5, 20 and 200-day SMA. In the derivatives, we have seen a short build up in the MGL Futures.
We recommend selling MGL at CMP of Rs 792 and average at Rs 800 for the target of Rs 755 and keep a stop loss placed above Rs 815.
Ujjivan: Sell| LTP: Rs 274| Target: Rs 250| Stop loss: Rs 288| Downside: 9 percent
The stock price gave a breakdown on the daily chart by closing below the 200-day SMA that is placed at Rs 285 odd levels. The stock price closed at a five-month low on July 8 indicating weakness in the stock.
The short and medium term trend of the stock is bearish. The stock is trading below its 5, 20 and 200-day SMA.
Oscillators and Momentum indicators are showing weakness on the daily and weekly charts. Therefore, we recommend selling Ujjivan at CMP of Rs 274 and average at Rs 280 for the target of Rs 250, and keep a stop loss at Rs 288.
ONGC: Sell| LTP: 152| Target: Rs 142| Stop loss: Rs 159| Downside: 7 percent
In the derivatives segment, we have seen a short build up in the ONGC Futures on July 8. The stock price gave a breakdown on the daily chart by closing below the 200-day support level of Rs 156 with higher volumes.
The momentum indicators and Oscillators like MACD and RSI are showing weakness on the charts. Therefore, we recommend selling ONGC at CMP of Rs 152 and average at Rs 155 for the target of 142, and keep a stop Loss placed above Rs 159.
The author is AVP - PCG HDFC Securities Ltd.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.The Great Diwali Discount!
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