A sustainable move below 17,700 (which seems likely) would activate the pattern and as a result of this, we could see a fresh leg of correction in coming days, says Sameet Chavan of Angel One.
Sunil Shankar Matkar
November 22, 2021 / 09:31 AM IST
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Bears have tightened their grip over Dalal Street, pulling down the benchmark indices nearly 2 percent in a truncated week ended November 18. All the leading sectors, barring auto, closed in the red.
The Nifty50 has broken the crucial 18,000 mark last week and settled at 17,764.80 on Thursday. The index managed to defend the 17,700 levels, but experts feel, if the said levels get broken, then there could be a sharp correction in the coming days.
“A sustainable move below 17,700 (which seems likely) would activate the pattern and, as a result of this, we could see a fresh leg of correction in the coming days. After this, the next levels to watch out for would be 17,450 and 17,200, where one needs to reassess the situation,” said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One.
On the flipside, “if the Nifty manages to hold 17,700 and move higher first, then 18,000–18,200 are to be considered as strong hurdles which, as of now, we do not expect to get surpassed in the near future”, he said.
“We advised traders to remain light which we have been advocating of late and even if one wants to accumulate stocks with a broader perspective, one needs to be a bit patient as we expect some reasonable prices to come in next few days,” Chavan said.
Here are 10 trading ideas by experts for the next 3-4 weeks. Returns are based on November 18 closing prices:
Expert: Karan Pai, Technical Analyst at GEPL Capital
Apollo Hospitals Enterprises: Buy | LTP: Rs 5,588.60 | Stop Loss: Rs 5,130 | Target: Rs 6,520 | Return: 16.7 percent
Apollo Hospitals for the past couple of weeks has been forming a higher high-higher low pattern after testing the low of Rs 3,955. This up move pushed the prices higher towards fresh 52-week highs and was backed by good volume build-up, indicating participation in the up move.
On the indicator front, the Bollinger bands on the weekly chart can expand, indicating a rising volatility as the prices move higher. The RSI (relative strength index) can be seen moving higher after forming a bullish hinge near the 50 mark, indicating a bullish momentum in the prices.
The price action on the medium and the short term charts points towards the possibility of prices moving higher towards Rs 6,030 and eventually towards Rs 6,520.
Investors can accumulate Apollo Hospitals at this point and hold with a target of Rs 6,030 and Rs 6,520 and maintain a stop loss of Rs 5,130 on closing basis.
Asian Paints: Buy | LTP: Rs 3,226.85 | Stop Loss: Rs 3,100 | Target: Rs 3,626 | Return: 12.4 percent
On the weekly chart, we can see that Asian Paints is moving higher after a fair bit of correction. For the past four weeks, the stock has been forming a higher high-higher low pattern. In the week ending, November 18, the stock managed to close above the 20-week SMA (simple moving average). This up move was backed by highest volume in the past three weeks, indicating participation in the up move.
On the indicator front, the RSI plotted on the weekly chart can be seen moving higher after finding support near the 50 mark, indicating increasing bullish momentum in the prices.
Price action suggests that the stock is heading higher towards the previous swing high of Rs 3,505. If the prices manage to sustain above the Rs 3,505 mark, we might see an increase in the bullish momentum and the prices might move towards Rs 3,626 mark. The stop loss for this set-up would be Rs 3,100 on closing basis.
BSE: Buy | LTP: Rs 1,603.40 | Stop Loss: Rs 1,500 | Target: Rs 1,891 | Return: 17.9 percent
BSE Limited has been forming a higher high-higher low pattern since March 2020. In the week ended November 18, the prices gained momentum and not only breached but also closed above the previous swing high of Rs 1,478.
On the weekly chart, we can see the prices moving between the 20-week SMA and the upper Bollinger bands, indicating presence of bullishness in the medium-term charts.
The RSI on the weekly charts can be placed above the 50 mark since March 2021. It can be seen moving higher towards the overbought level, indicating increasing bullish momentum in the prices.
Going ahead, we expect bullish momentum to accelerate and take the prices higher towards Rs 1,705. If the prices breach and sustain above Rs 1,705, we might see the prices move higher towards Rs 1,891. The stop loss for this trade set-up would be Rs 1,500 of closing basis.
Finolex Cables: Buy | LTP: Rs 585.90 | Stop Loss: Rs 540 | Target: Rs 750 | Return: 28 percent
Finolex Cables has been forming a higher high-higher low pattern since March 2020. On the weekly chart, we can see that the prices have been moving higher after forming a double-bottom like pattern near the Rs 440 mark. In the week ended November 18, 2021, the prices gained momentum and moved and closed above the previous swing high of Rs 557. This up move was backed by good volume build-up, indicating participation in the breakout.
The RSI can be seen moving higher towards the overbought level as the prices move towards fresh 52-week high, indicating increasing bullish momentum in the prices.
Going ahead, we expect bullish momentum to take the prices higher towards Rs 684 mark. If the prices sustain above the Rs 684 mark, we might see an up move towards Rs 750. The stop loss for this trade set up would be Rs 540 levels of closing basis.
Expert: Subash Gangadharan, Senior Derivative & Technical Analyst at HDFC Securities
Birlasoft: Buy | LTP: Rs 469.25 | Stop Loss: Rs 418 | Target: Rs 580 | Return: 23.6 percent
Birlasoft has been consistently rising over the last several months and making higher tops and higher bottoms in the process. This week, the stock broke out of the Rs 384-458 trading range on the back of above-average volumes. This augurs well for the uptrend to continue.
With the stock trading above key moving averages like the 20 and 50-day SMA and the 14-day RSI in rising mode and not overbought, the technical indicators are supporting more upsides.
With the intermediate technical setup too looking positive, we recommend a buy in the Rs 465-473 levels. CMP is Rs 469.25. Stop loss is at Rs 418 while target is at Rs 580.
Greaves Cotton: Buy | LTP: Rs 153 | Stop Loss: Rs 139 | Target: Rs 181 | Return: 18.3 percent
Greaves Cotton is in an intermediate uptrend as it has been consistently making higher tops and higher bottoms for the last several months.
Over the last few weeks, the stock has been consolidating in a range of Rs 126-147 levels with the 50-week SMA providing support. This week, the stock broke out of this range on the back of above average volumes.
With the intermediate technical setup looking positive and momentum readings like the 14-day RSI in rising mode and not overbought, this augurs well for the uptrend to continue.
We, therefore, recommend a buy between the Rs 151-155 levels. CMP is Rs 153. Stop loss is at Rs 139 while target is at Rs 181.
Shipping Corporation of India: Buy | LTP: Rs 140.65 | Stop Loss: Rs 130 | Target: Rs 166 | Return: 18 percent
SCI has been consolidating in a range of Rs 123-139 levels for the last few weeks. On Thursday, the stock broke out of this range on the back of above average volumes.
Technical indicators are giving positive signals as the stock is trading above the 20-day and 50-day SMA. Momentum readings like the 14-week RSI too are in rising mode and not overbought, which implies potential for further upsides.
We therefore expect the stock to move up further and test its previous intermediate highs in the coming sessions. Buy in the Rs 139-142 levels. CMP is Rs 140.65. Stop loss is at Rs 130 while target is at Rs 166.
Expert: Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities
ONGC: Sell | LTP: Rs 154.30 | Stop Loss: Rs 160 | Target: Rs 146 | Return: (-5.4) percent
For the past three weeks, the stock has been moving upwards but slowly gaining momentum, which ended with a sharp fall on Thursday. Technically, it is negative for the stock.
It has created another lower peak of Rs 162.25 compared to Rs 173.25 and Rs 163.95 in October 2021. Further weakness is likely and for that reason, it is advisable to sell at Rs 154-153 and protect short positions with stop loss at Rs 160. The stock may fall to Rs 146 or Rs 150 in the near term.
Vedanta: Buy | LTP: Rs 309.55 | Stop Loss: Rs 280 | Target: Rs 350 | Return: 13.1 percent
Following the flow of news specific to the company, shares of Vedanta quickly plunged into the major support zone between the Rs 290 and Rs 280, however, closing at Rs 310 levels. It has shown huge price volatility with above-average volume.
Technically, this type of price pattern helps positional traders to trade with specific stop losses. Positional traders should be buyers at the current level and try to put more emphasis on the decline around Rs 290. However, to hold long positions keep the final stop loss at Rs 280. On the upside, Rs 335 and Rs 350 seem to be achievable based on technical analysis.
State Bank of India: Buy | LTP: Rs 503.80 | Stop Loss: Rs 485 | Target: Rs 530 | Return: 5.2 percent
The stock is above the 50-day SMA support and above the equilibrium level of Rs 490-495. The performance of the stock is good compared to the weakness of the index. The stock trend is positive and has been building a series of higher top higher bottoms since April 2021.
Depending on the short and medium-term charts, traders and investors should buy stocks at current levels. Keep the final stop loss at Rs 485 for that. On the upside, the chances of going to Rs 520 and Rs 530 are bright.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
