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Last Updated : May 25, 2018 08:21 AM IST | Source:

See 10,420 as critical support for Nifty; Buy Berger Paints for the short-term

“Pullback in the Nifty is likely to continue towards 10,560 and 10,600 levels,” says Jaydeb Dey, Technical Analyst at Stewart & Mackertich Wealth Management.

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Jaydeb Dey

The Nifty on Thursday ended 0.8 percent higher at 10,513.85 levels. It rose from its support of 10,420 and ended the day above the 10,500 mark. The day-long choppy movement was followed by a swift recovery in the latter half of the session, resulting in a bullish body candle. The structure of the candle pattern suggests this pullback is likely to continue further towards 10,560 and 10,600 levels. Hence, short-selling at this juncture is certainly not advised. On the Nifty, 10,420 may continue to act as critical support.

On the Nifty hourly chart, extreme positive divergence in the relative strength index (RSI) is seen, which may intensify this counter pullback. Immediate resistance is placed around 10,560 levels. Successive closing above 10,560 may initiate a quick recovery towards its 200-day exponential moving average (EMA) placed around 10,600 levels.

Nifty patterns on multiple timeframes show that it rebounded from the support of 10,420 before ending the session with a bullish body candle. The pullback from oversold zone is likely to continue beyond 10,560 levels. Its next critical resistance is placed around 10,600 levels.

The Bank Nifty on Thursday ended 1.29 percent higher at 26,016.80. It ended the session with a bullish Marubozu candle, which indicates the possibility of a counter pullback towards 26,100 and 26,200.

Based on a thorough technical study, the research firm recommends Berger Paints which can return up to 6 percent in the short-term:

Berger Paints | Rating: Buy | Target: Rs 310, stop loss: Rs 280, Return: 6%

The stock is currently is trading above previous multi-top area around Rs 280. Previous day it rebounded from that critical support and ended today’s session with a bullish engulfing pattern. Rising positive open interest in line with bullish pattern makes the bull case even stronger.

Based on above mentioned observations, the firm recommends Berger Paints India as a buy on dips for the short term upside target of Rs 310.

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.
First Published on May 25, 2018 08:21 am
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