By Jaydeb Dey Stewart & Mackertich Wealth Management Ltd.
The Nifty, previous Friday ended 1.59 percent down at 10,195.15. Negative opening and follow-through sell off led the Benchmark index below 10,290 mark.
Violent selloff got intensified in the latter half of the session and the Nifty continued making lower lows towards ending the day with a huge bearish candle. In our previous communication, we disused about the possibility of trend reversal and we witnessed a brutal sell off since the beginning of the session towards ending the week on an extreme bearish note.
Needless to say, we expect this bearish momentum to get carried into the coming week as well and the Nifty to challenge recent rebounding zone placed around 10,140. Midway support is placed around 10180. Nifty 200 daily EMA placed around 10,110 might be the next destination.
On the Nifty hourly chart; -DI +DI bearish cross over while MACD declined below the zero line suggests, this bearish trend is likely to sustain. Further, sharply falling RSI is also another argument. Hence, sell on rise is the strategy to be followed. Upside pivotal resistance is placed around 10,290.
Nifty patterns on multiple time frames show, Nifty may continue to trade on the weaker side as long as it trades below 10,290. Downside supports are placed around 10,180, 10,140 and 10,110.
The Bank Nifty previous Friday ended 1.22 percent down at 24,489.55. It closed at the 200 daily EMA placed around 24,490. Leading indicators suggests, it may continue to trade on the weaker side as long as it trades below 24,850 and may well again challenge critical support of 24,000.
Based on thorough technical study, the research firm has recommended ONGC which can give up to 5% return in the near short term:
ONGC | Rating: Sell | Target: Rs 170, Stop loss: Rs 185 | Return: 5%
The stock finished off the week with a bearish candle below the 200 daily EMA placed around Rs 182 levels. This bearish momentum is backed by rising volume. Also, rising negative open interest in previous three sessions makes the bear case even stronger.
Hence, based on the above mentioned observations, we recommend ONGC Ltd as a strong sell on rise for the near-term downside target of Rs 170.
Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision.
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