Stay cautious, Nifty likely to struggle around 10,780 levels; Short Cipla

The Nifty ended Thursday 0.23 percent lower at 10,716.55. It trended lower from the day’s high of 10,785.55 before ending the session near the day’s low of 10,705. It ended the session with a bearish candle.

Chart patterns suggest it may continue facing resistance on a rise around 10,780 levels. Hence, staying cautious on a rise is advised. However, breaking out 10,780 brightens the possibility for the next leg of upmove towards 10,820. Downside supports are placed around 10,690 and 10,640 levels.

On the Nifty hourly chart, it ended the session just above the 50-day exponential moving average (EMA) placed around 10,700. The relative strength index (RSI) and average directional index (ADX) both leading indicators do not favour aggressive bulls.

Nifty patterns on multiple timeframes show it failed to breakout from its critical resistance placed around 10,780 levels. It ended the session with a bearish Marubozu candle. Hence, staying cautious on a rise is advised.

The Bank Nifty on Thursday ended 0.09 percent lower at 26,131. It ended the session with a bearish Marubozu candle. Upside critical resistance stands around 26,200 while downside pivotal support is placed around 25,950.

Cipla | Rating: Sell | Target: Rs 555, stop loss: Rs 595, Return: 4%

The stock ended the session with an upward trending channel breakdown. Closing below the 200 daily EMA placed around Rs 585 coupled with rising negative open interest makes the bear case even stronger. Sharply declining RSI coupled with –DI +DI bearish crossover suggests, the stock is likely to fall further.

Based on the above mentioned observations, the house recommends Cipla as a sell on rise for the short term down side target of Rs 555.

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.