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Buy on dips, 12,050-11,950 likely to act as good support for Nifty

Buy on dips, 12,050-11,950 likely to act as good support for Nifty
February 17
01:28 2020

Rajesh Palviya

Nifty Outlook:

On the weekly chart, the index has formed a “Doji” candlestick formation indicating indecisiveness among market participants regarding the direction.

The index is moving in a Higher Top and Higher Bottom formation on the weekly chart indicating sustained up trend.

The chart pattern suggests that if Nifty crosses and sustains above 12,250 levels it would witness buying which would lead the index towards 12,350-12,400 levels. However if index breaks below 12,000 level it would witness selling which would take the index towards 11,900-11,850. Nifty is trading above 20, 50 and 100 day SMA’s which are important short term moving average, indicating positive bias in the short to medium term.

Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Nifty to trade in the range of 12,400-11,900 with a positive bias.

The weekly strength indicator RSI and momentum oscillator Stochastic have both turned negative and are below their respective reference lines indicating negative bias.

Bank Nifty outlook:

On the weekly chart index has formed a bearish candle however it manage to maintain higher High-low compare to previous session indicating positive bias. The index is moving in a Lower Top and Lower Bottom formation on the daily chart indicating short term down trend.

The chart pattern suggests that if Bank Nifty crosses and sustains above 31,300 levels it would witness buying which would lead the index towards 31,700-32,300 levels. However if index breaks below 30,600 level it would witness selling which would take the index towards 30,250-30,000. Bank Nifty is well placed above its 20, 100 and 200 SMA indicating sustained up trend in the short to medium term.

Bank Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 32,300-30,300 with a positive bias.

The weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias. However momentum oscillator Stochastic has turned positive from the oversold zone indicating a possible consolidation or an up-move in the near term.

Aarti Industries | CMP: Rs 1,003

The stock has broken out from a six month long “Rounding Bottom” on closing basis indicating good comeback by the bulls with high volumes.

The stock has closed above the upper Bollinger Band on the weekly chart indicating strong bullish strength.

On the weekly chart, the stock continues to make a series of higher highs and higher lows indicating further continuation of bullish trend.

Weekly strength indicator RSI and momentum oscillator stochastic have given a bullish crossover which supports upside momentum to continue in the near term. Stock price has bounced from the 20-day MA on the daily chart further confirming our bullish thesis.

Buy Aarti Industries at Rs 1,000-980 | Stoploss: Rs 950 | Target: Rs 1,070-1,100

Nilkamal | CMP: Rs 1,480

On the weekly chart stock price has given a breakout from a one year long “Inverted Head & Shoulder” formation indicating trend reversal. It has also recently bounced from the neckline support (1370) of the “Inverted Head & Shoulder” further confirming the pattern formation. This Inverted Head & Shoulder breakout is accompanied with high volumes indicating good participation by the bulls. The weekly strength indicator RSI continues to trend higher indicating upside momentum to continue in the near term. Stock price is sustaining well above its 20 and 50 and 100 day SMA which supports bullish sentiments ahead.

Buy Nilkamal at Rs 1,470-1,450 | Stoploss: Rs 1,380 | Target: Rs 1,620-1,650

Shriram Transport Finance Company | CMP: Rs 1,285

On the weekly chart, the stock price has decisively broken out its past one year “Descending Triangle formation” (1400-1000) indicating a trend reversal. It also continues to make a series of higher Tops and higher Bottoms indicating sustained up trend.

Weekly strength indicator RSI and momentum oscillator stochastic are in positive territory which supports upside momentum to continue in the near term. On weekly chart, high volumes are observed indicating good participation by the bulls. Stock price is well placed above its 20 and 50 day SMA which supports bullish sentiments in short to medium term.

Buy Shriram Transport at Rs 1270-1245 | Stoploss | Rs 1,190 | Target | Rs 1,385 -1,410.

Tech Mahindra | CMP: Rs 833

On the weekly chart, stock price continues to make a series if higher Tops and higher Bottom and has broken above a three months long consolidation range (750-800) around 790 levels indicating sustained uptrend.

The weekly strength indicator RSI and the momentum indicator Stochastic both are in positive territory which supports upside momentum to continue in the near term.

The stock continues to ride the upper Bollinger band indicating good confidence by the bulls. Stock price is well placed above its 20 and 50 day SMA which supports bullish sentiments in short to medium term

Buy Tech Mahindra at Rs 830-820 | Stoploss: Rs 800 | Target: Rs 875-890

(The author is Head – Technical & Derivatives Research, Axis Securities)

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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