Nifty may correct to 10,560 levels; buy Bharat Electronics for the short term

Jaydeb Dey

The Nifty ended Monday 0.63 percent lower at 10,628.50. It opened in the green, fell from the day’s high of 10,770 before ending the session below its critical support placed around 10,680 levels.

A close below 10,680 indicates it may continue to oscillate on the negative side and may retest its 30-day exponential moving average (EMA) on the daily chart placed around 10,610 and next support at 10,560 levels.

The bearish engulfing candle on the daily chart indicates that the correction might deepen towards 10,610 and 10,560 levels. Hence, sell on a rise is advised. Cluster of resistances are placed around 10,680 and 10,700 levels.

On the hourly chart, the Nifty touched its 200 EMA placed around 10,620 levels and ended the session on a weaker note. 10,700 may continue to act as a pivotal resistance.

Nifty patterns on multiple timeframes show that it nosedived from the day’s high before ending the session with a bearish engulfing pattern. The pattern on the daily chart implies that the correction might deepen. Immediate support is placed around 10,610 levels.

The Bank Nifty ended Monday 1.63 percent lower at 26,257.55. It may continue to trade on the negative side as long as it trades below 26,500 levels and may re-test its mid-term upward trendline support placed around 26,100.

Based on a thorough technical study, the house recommends Bharat Electronics for the short term:

Bharat Electronics | Rating: Buy | Target: Rs 120, stop loss: Rs 105, Return: 9%

The stock is trying to rebound from the 50 percent Fibonacci retracement of the entire corrective leg from 30 to recent all-time high around Rs 190 levels. 50 percent Fibonacci retracement placed around Rs 110 is going to play a critical role in coming session while the RSI on daily as well as the weekly charts has reached its oversold zone.

Based on above mentioned observations, the firm recommends BEL as buy on dips for the short term target of Rs 120.

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.