The glittering rally in the market has pushed indices to life-high levels. Sustainability above 13,000 psychological mark indicates directional wave in progress and as per the wave characteristic, it is impulse wave 3 which has the potential to reach extended targets of 1.618 standing near 13,400 marks in the near term.
OBV (On-Balance Volume) indicator on Nifty future is making higher high and higher low formations and until last week’s low 12,962 is not taken out, one can trade on the long side.
On the other hand, bearish Wolfe Wave pattern formation in the recent up move is a sign of cautiousness. Additionally, overbought oscillators & indicators also suggest PRZ (Harmonic Pattern Potential Reversal Zone) standing near 13,450-13,500 can act as a strong resistance.
Nevertheless, though markets are trading with bullish bias one can stay alert near PRZ placed around 13,400-13,500 marks whereas crucial supports are standing around 12,980-13,000 levels for the coming week.
Bank Nifty
Bank Nifty continued its stellar rally during the last week and managed to close above 30,000 marks. Moreover, the flat bottom pattern on Heikin-Ashi candlestick and continuation of higher high and higher low formations suggest markets may continue to soar higher; however one need to be careful below the line of parity standing around 29,300 marks.
Here are the three trade recommendation:
TV18 Broadcast | Rating: Buy around Rs 32 | Target: Rs 40 | Stop Loss: Rs 27 | Upside: 25 percent
The scrip gave falling channel breakout on the weekly chart with a long bull candle. Sustainability above significant moving averages on the daily chart can push it further higher. Daily RSI indicator also moving above 9 EMA suggests upside move. Trend following indicator ADX also started crawling upside with +DMI pointing strength in the breakout.
Strong support lies near Rs 27 marks (200 DMA). One can take a long position around Rs 32 with stoploss of Rs 27 (closing basis) for an upside target of Rs 40 levels.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Biocon | Rating: Buy around Rs 435 |Target: Rs 490 | Stop Loss: Rs 405 | Upside: 13 percent
On the daily chart, the stock price has decisively broken out from its ascending triangle pattern and sustaining above the same. On the daily and weekly chart, the stock has witnessed a shift of trend to the upward forming base with congestion.
The stock price is sustaining well above all its significant moving averages which supports bullish sentiment ahead. One can buy Biocon around Rs 435-440 with a stop loss of Rs 405 for the target of Rs 480 & 500.
Axis Bank | Rating: Buy above Rs 620 | Target: Rs 680 | Stop Loss: Rs 580 | Upside: 12 percent
The stock is expected to give Pennant breakout on the daily chart with decent volume. Bullish crossover in Stochastic and MACD are looking supportive for this upside breakout. Positive crossover of 20 & 50 DMA's is also indicating strength.
Key support lies at Rs 584-580 zone until this break decisively, long position can be held. Investors can take entry above Rs 620 levels with stoploss of Rs 585 on a closing basis for the target of Rs 680.
The Author is Head of Technical Research at Narnolia Financial Advisors.
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