Nifty likely to consolidate around 10,420; BPCL a good buy for short term

Jaydeb Dey Stewart & Mackertich Wealth Management Ltd.

The Nifty yesterday ended 0.22 percent up at 10,402.25. The index continues facing resistance around 10,420 as discussed in our previous post, day’s high was 10,424.85. Positive opening failed to sustain above 10,420, 38.2 percent  Fibonacci retracement level of the entire correction from Nifty all time high to its recent low around 9950 levels, despite positive European markets cues might be an early indication of a short-term correction within current uptrend.

Also, traders and investors may find attractive opportunities in terms of risk-reward ratio on dips. Downside supports are placed around 10,370 and 10,320. On the flipside, successful breaking out immediate resistance placed around 10,420 brightens the possibility of next leg of up-move towards 10,470. However, Nifty getting into a consolidation in the price band of 10,420 to 10,320 before up-move towards 10,470 is likely.

On the Nifty hourly chart; flattening RSI while Nifty facing resistance around 10,420 is intact. Hence, intermediate correction is likely. However, considering the broader chart pattern we still prefer Buy-on-dips around critical supports. Downside critical support is placed around 10,320.

Nifty patterns on multiple time frames show; it filed to breakout 38.2 percent Fibonacci retracement level, placed around 10,420, of the entire correction from the all-time high to its recent low around 9950. Hence, the possibility of a correction towards 10,320 is still alive. We still recommend buy-on-dips strategy as long as critical supports are intact.