Nifty likely to remain rangebound with support at 10,330; Tata Steel can give up to 5% return in short term

By Jaydeb Dey

Stewart & Mackertich Wealth Management Ltd.

The Nifty yesterday ended 0.15 percent down at 10,410.90. Recovery from day’s low towards ending the session above 10,370 led to end the session with a hammer candle on the daily chart. Our second support 10,330 acted as the spring board, day’s low was 10336.30. Ending the session with a hammer implies strength.

However, buying spree does not look strong enough to break through the critical resistance of Nifty 30 daily EMA placed around 10,480. Needless to say 10,330 may continue to serve as the major support on the downside. Critical resistance of 10,480 may play the spoilsport and may lead to a pause in the current bullish momentum. On the flip side, breaking out 10,480 may unfold fresh leg of up move.

On the Nifty hourly chart; session end recovery above 100 hourly EMA may once again take the Benchmark index towards 200 hourly EMA placed around 10,480. Midway resistance is placed around 10,440.

Nifty patterns on multiple time frames show, Nifty may face difficulty breaking out the resistance placed around 10,480. Position of critical moving averages coupled with leading technical oscillators suggests, Nifty range bound movement is likely to continue in the price band of 10,480 to 10,330.

The Bank Nifty previous day ended 0.46 percent up at 24,851.65. It reacted up sharply from the 200 daily EMA placed around 24,480, day’s low was 24,487.00. Upside critical resistance of 25,000 is still intact.

Based on thorough technical study, Stewart & Mackertich Wealth Management Ltd. recommends Tata Steel which can give up to 5% return in the short term:

Tata Steel | Rating: Sell | Target: Rs 598, stop loss: Rs 645 | Return: 5%

The stock is currently trading below the previous multi rebound zone placed around Rs 630. Since last few sessions, being oversold on the hourly chart, it continues osculation around 200 daily EMA placed around Rs 620 levels. Broader chart pattern suggests, weakness may persist long as it trades below the recent breakdown zone of Rs 630.

Trend following indicator MACD has already entered the bear zone coupled with –DI +DI bearish crossover on the daily chart, which suggests the stock is in a strong bear grip and may again face selling pressure on rise around Rs 630 levels.

Based on the above mentioned observations, the research firm has recommended Tata Steel as a strong sell on rise for the near-term downside target of 598.

Disclaimer: The author is Technical Analyst, Stewart & Mackertich Wealth Management Ltd. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.