Shabbir Kayyumi
The Nifty crossed the crucial psychological levels of 11,000 on the back of strong short covering. The relative strength index's (RSI) positive divergence on the daily time frame at around 10,800. A close above three-day high confirms 10,782 as a significant swing low.
The Nifty’s 5-week exponential moving average (EMA) is falling and placed around 11,300 levels, which imply strength can come only on crossing above crucial resistance of 11,300 levels.
Recently, the Nifty concluded its CD leg of bearish cypher harmonic pattern near its price reversal zone at around 10,782 levels. Minimum retracement after completion of harmonic Fibonacci pattern is 38.2 percent retracement of entire CD leg which comes near the 11,287 mark.
Momentum indicator, too, is suggesting further upside to 11,250-11,300. RSI on the daily time frame is trading near 42, it has reversed from 25 marks, forming reversal pattern and currently trading above its 9 MA indicating correction has further leg.
Bank Nifty
The Bank Nifty took reversal from 27,400 levels after forming positive divergence in RSI on daily time frame signify that 27,390 can be marked as a strong short-term bottom. Moreover, the sharp downswing appears to have brought the index into the oversold zone, suggesting some cooling-off of oscillators in the near term.
As long as the banking index is trading above 28,000, we suggest trading with buy on dip strategy. Moreover, the banking index can continue to trade in a range of 27,600-29,000 for the coming week.
Trade Recommendation
Camlin Fine Sciences| Rating: Buy around Rs 55 | Target: Rs 70 | Stop Loss: Rs 50 | Upside: 27 percent
The stock has formed a 10 month-long rectangle price pattern after a steep fall from its all-time high level of Rs 155. The stock looks poised to breakout out of the upper boundary of the rectangle, which gives us a price target of Rs 77-80. Multiple momentum oscillators are also favouring a move on the upside. Therefore, we recommend buying around Rs 55, with a stop loss of RS 50 for higher target of Rs 70.
TVS Motor Company | Rating: Buy around Rs 380 | Target: Rs 430 | Stop Loss: Rs 357 | Upside: 13 percent
The stock bottomed out near the levels of Rs 372-375 and has been consolidating for the last few days on the daily chart. Line of parity near the support line on the daily chart indicates up side movement in the coming sessions.
Positive crossover in moving average convergence divergence (MACD) on the daily chart is also creating positive rhythm in the scrip. Furthermore, the sustainability of RSI above its oversold zone adds the conviction of buying the scrip around Rs 380 for the target of RS 430 with a stop loss of RS 357 marks.
DFM Foods | Rating: Buy around Rs 665 | Target: Rs 740 | Stop Loss: Rs 625 | Upside 11 percent
In this market carnage, DFM Foods showed relative outperformance and continued to form a strong base. It has formed an inverse head and shoulder on the weekly scale and it is on the verge of a breakout.
Currently, it has retraced its first leg of the uptrend from Rs 220-290 and is resting above its moving averages, ready to begin its next leg of the trend. We suggest buying DFM Foods around Rs 260 levels, keeping stop loss of Rs 242 for higher targets of Rs 300.
Glenmark Pharmaceuticals | Rating: Buy around Rs 417 | Target: Rs 455| Stop Loss: Rs 398 | Upside: 9 percent
In Glenmark Pharma, bargain hunting is seen at lower levels in the scrip from where it formed a strong base. It has given breakout from its double bottom price pattern with decent volume. Moreover, the formation of bullish belt hold with long bull candles suggests upside move.
Positive divergence in RSI is also lending support to the price action. Traders can take the entry from the level of Rs 417 for the target of Rs 455, while keeping a stop loss of Rs 398 marks.
ICICI Bank | Rating: Buy around: Rs 415 | Target: Rs 440 | Stop Loss: Rs 398 | Upside: 6 percent
ICICI Bank has seen a sharp rebound after hitting a low of Rs 395 levels. The emergence of three long bull candles on a daily chart is giving the possibility of a pullback at the higher side. Moreover, positive crossover in MACD and positive divergence in RSI imply upsurge move.
Breakout is expected to come above Rs 423 levels from where it will increase its velocity. Sustainability of prices above the bullish belt-hold candle pattern supports bullish bias in the stock. We suggest buying ICICI Bank around Rs 415, with a stop loss of Rs 398 for the target of Rs 440 levels.
(The author is Head of Technical & Derivative Research at Narnolia Financial Advisors)
Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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