Nifty in wait-and-watch mode, 10 technical trading ideas for short term

Market Outlook

The level of 14,590 on the Nifty should act as strong support, below it, the correction is likely to continue to 14,500. A further downside till 14,390 is also possible, say experts.

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The benchmark indices closed with a loss of about 1 percent in a holiday-shortened previous week. The Nifty50 closed below 14,800, while the S&P BSE Sensex failed to hold on to 49,000 for the week ended May 14.

Technical experts are of the view that the Nifty is trading in a range and is in a wait-and-watch mode for now but stock-specific action will continue. A break below 14,600 can trigger a dip, while a move towards 14,900 can open the doors for 15,000.

Foreign institutional investors (FIIs) continue to remain net sellers in the cash segment. They have pulled out more than Rs 8,700 crore, so far, in May but domestic institutional investors (DIIs) have lent support and have been net buyers to the tune of nearly Rs 900 crore, data shows.

“We are of the view that the broader texture of the market is still into the bullish (zone) but due to weak global market conditions, the market may consolidate in the range of 14,500 -14,800 in the near future,” Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities said.

Technically, on daily charts, the market has formed a lower top kind of formation but at the same time, the Nifty is hovering near 20 and 50-day simple moving average with modest volume activity, which could trigger a bounce back.

“On the downside, 14,590 on the Nifty should act as a strong support level for traders, below the same, the correction wave is likely to continue up to 14500. A further downside may also continue which could drag in the index up to 14,390,” he said.

For the bulls, 14,800 should be the sacrosanct level above which the uptrend is likely to continue to 14,950-15,100, Chouhan said.

Here is a list of 10 technical trading ideas from experts for the next one-four weeks:

Expert: Sumeet Bagadia, Executive Director at Choice Broking

Britannia Industries: Buy| LTP: Rs 3500| Target: Rs 3700| Stop Loss: Rs 3399| Upside 6%

On the weekly chart, the stock has formed a Hammer Candlestick pattern with the support of its horizontal trend line that can be considered a bullish reversal formation and indicates an upside movement in the counter.

Moreover, the stock has taken support at 3,400, which is a 78.60 percent Fibonacci Retracement (FR) level of its previous upmove that shows a northward movement towards its upside level of 38.20 percent FR level.

The true strength indicator has given a positive crossover on the upside, indicating the stock has the strength to move up.

On an hourly chart, the stock has been trading with a positive crossover of 21, and 50-day moving average, which can be considered a bullish crossover that shows a bullish movement in the counter.

Biocon: Buy| LTP: Rs 388| Target: Rs 420| Stop Loss: Rs 370| Upside 8%

On the weekly chart, the stock has confirmed the Doji candlestick pattern at the bottom that suggests an upside rally in the upcoming sessions.

On an hourly chart, the stock has been trading with a positive crossover of 21 & 50-day moving averages that can be considered a bullish crossover,  which shows a bullish movement in the counter.

The 14-day RSI has risen to 47 levels approximately from below 40, which indicates a clear strong buy for the stock and an upside movement is expected from the current levels.

The 10-day momentum indicator is pointing towards an upside, indicating a good positive price action for the stock.

L&T: Buy| LTP: Rs 1415| Target: Rs 1520| Stop Loss: Rs 1340| Upside 7%

On the weekly chart, the stock has formed an Open Bullish Marabozu Candlestick that suggests buyers are active and any upside momentum can be seen in the upcoming session.

The stock has also given a breakout from its upper band of Falling Wedge formation, a reversal pattern that signifies a bull run in the counter.

The stock has been trading above its 21-day moving average that suggests that it can move further up.

Additionally, the daily momentum MACD indicator is reading with a positive crossover and has given a close above the zero line that suggests a positive rhythm along with strength in the counter.

Expert: Mehul Kothari, AVP – Technical Research at AnandRathi

Indiabulls Real Estate: Buy| LTP: Rs 81| Stop Loss: Rs 75| Target: Rs 92| Upside: 13%

Indiabulls Real Estate has been consolidating in a tight range of 84–75 for a month. During this period, the stock found support at the placement of 200-day EMA.

This support coincides with the flat line of Ichimoku on the weekly scale as well. The stable price action above such strong support indicates accumulation and a fresh upside.

Hence, traders are advised to buy the stock near 81 with a stop loss of 75 for the upside potential target of 92 in the next three-four weeks.

RIL: Buy| LTP: Rs 1,936| Stop Loss: Rs 1,875| Target: Rs 2,040| Upside: 5%

Since November 2020, RIL has made almost three bottoms between 1,830 and 1860,  indicating multiple support for the stock near the 1,830-mark.

Even in the recent corrective move, the stock made a low of 1,876 and then rallied towards 2,050. It seems the stock is turning from those supports.

Traders are advised to buy the stock in the range of 1,940 – 1,920 with a stop loss of 1,875 for the upside potential target of 2,040 over the next three–four weeks.

Ramkrishna Forging: Buy| LTP: Rs 648| Stop Loss: Rs 575| Target: Rs 770| Upside: 18%

Ramkrishna Forging has been consolidating in a broad range of 610–490 since January 2021. Recently, the stock broke out from the five-month consolidation pattern, which indicates strength.

On the larger degree scale, the breakout resembles a bullish FLAG pattern. In addition, the stock has also broken out from the Ichimoku cloud on a monthly scale.

Traders are advised to buy the stock in the range of 650 – 630 with a stop loss of 575 for a potential target of 770 in the next three–four weeks.

Expert: Sameet Chavan is Chief Analyst – Technical & Derivatives at Angel Broking

ITC: Buy| LTP: Rs 212: Target: Rs 222| Stop Loss 202| Upside 5%

This is one of the most loved stocks of investors as well as traders but has failed miserably to live up to its expectations.

The overall price action starting from November 2020 to the early part of February 2021 has been excellent but since then, we have been witnessing a complete lull in the stock.

After some correction from recent highs, the stock went into a consolidation mode and spent some time around its cluster of key moving averages.

On May 14, we unexpectedly witnessed a surge in prices along with sizable volumes. Thus with the hope, it will continue its momentum, we recommend going long on a minor dip towards 209–207 for a target of Rs 222 in the coming days. The strict stop loss can be placed at Rs.202.

Dr Lal PathLabs: Sell| LTP: Rs 2721| Target: Rs 2600| Stop Loss: Rs 2792| Downside 4%

This pathology stock seems to have lost its sheen as we are seeing consistent corrective moves over the past few weeks. The daily chart shows the price sliding below key support of 2,800 on a closing basis.

Price-wise, it confirmed a ‘Lower Top Lower Bottom’ on the daily chart, which is a sign of short-term weakness. Since it has already come off quite a lot from recent highs and is approaching its strong support zone, we recommend selling for a conservative downside move.

Momentum traders can look to go short for a target of Rs 2,600 in the coming days. The strict stop loss can be placed at Rs 2,792.

Brokerage: SMC Global Securities Ltd

Central Depository Services (India) Limited (CDSL): Buy| LTP: Rs 832| Target: Rs 950| Stop Loss: Rs 770| Upside 14%

CDSL made a 52-week low at Rs 214.10 on May 12, 2020, and a 52-week high of Rs 834 on May 14, 2021. The 200-day exponential moving average of the stock on the daily chart is at Rs 545.42.

The stock is trading in higher highs and higher lows on charts, which is bullish. Apart from this, it has formed a “Bullish Pennant” pattern on daily charts and has given the breakout of the same last week and ended around 4 percent higher with high volumes.

Buying momentum may continue in the coming days. One can buy in the range of 815-820 for an upside target of 930-950 with stop loss below 770.

Tata Consumer Products Limited: Buy| LTP: Rs 645| Target: Rs 720| Stop Loss: Rs 590| Upside 11%

The stock made a 52-week low of Rs 343.40 on May 18, 2020 and a 52-week high of Rs 698 on April 20, 2021. The 200 DEMA of the stock on the daily chart is at Rs 563.26.

The short, medium and long-term bias are looking positive for the stock as it is trading in higher highs and higher lows sort of “Rising wedge” on weekly charts, which is bullish in nature.

In the previous week, the stock found support at around 620, which is the support line of the pattern and has started moving higher, so further upside is expected from current levels.

One can buy in the 635-640 range for an upside target of 700-720 with a stop loss below 590.

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