Occurrence of a ‘Bullish Hammer’ on weekly scale near the confluence zone of a multi support area of its 200 week EMA reconfirm the strength of its ongoing channel support zone in Zensar Technologies. Trend strength indicator RSI too exhibits a positive crossover along with a likely trend break
Sunil Shankar Matkar
June 06, 2022 / 09:26 AM IST
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The market extended gains for the third consecutive week ended June 3 with the Nifty50 decisively crossing the resistance of 16,400 and holding the same levels throughout week. In fact, the index climbed close to 16,800 mark but profit-booking on Friday dragged it down a tad below 16,600 levels, indicating doubts over the bullish bias of the market.
The 50-share index finally settled at 16,584, up 232 points or 1.42 percent during the week and formed a bullish candle which resembles Spinning Top kind of pattern formation on the weekly charts.
On Friday, the index lost third of a percent and formed a bearish candle on the daily charts. Hence, experts feel that unless and until the index closes decisively above 16,800, the robust bullish bias is unlikely in the market, with crucial support at 16,400 levels.
“Now from a technical perspective, the Nifty has finally managed to surpass the recent sturdy wall of 16,400; but it struggled as we approached the next barrier around 16,700–16,800,” Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, said.
In fact, the way overall things panned out on Friday, it’s a reflection of how traders are a bit wary and are skeptical of carrying positions over the weekend, the market expert believes. Although the markets around the world witnessed some relief, they are still not completely out of the woods, he said.
For the coming week, he said, one needs to keep a close tab on global developments and price-wise, 16,400 is the level to watch out for. “Till the time we remain above it, we can continue with a buy on decline strategy. However, the higher side is till capped where 16,800 is to be seen as immediate hurdle after which 17,000 is to be considered as key psychological level.”
He advised traders not to trade aggressively and should ideally be very selective in stock specific trades also.
Here are the top 10 trading ideas by experts for the next three-four weeks. Returns are based on the June 3 closing prices:
Shrikant Chouhan, Head of Equity Research Retail at Kotak Securities
SRF: Buy | LTP: Rs 2,374 | Stop-Loss: Rs 2,200 | Target: Rs 2,700 | Return: 14 percent
It was trading at Rs 2,700-2,750 in April 2022, which was an all-time high for the stock, however, in the month of May 2022, due to widespread weakness in the market, we saw the stock falling. The level of Rs 2,100 was its previous low.
Technically, we consider that the stock is forming a corrective pattern in which it will consolidate between a wider trading range. It may retest Rs 2,200 level, which will be a buying opportunity with a medium-term outlook.
The strategy should be to buy 50 percent at current levels and balance at Rs 2,200. For the same place a stop-loss at Rs 2,100. The target would be at Rs 2,700.
NOCIL: Buy | LTP: Rs 258.4 | Stop-Loss: Rs 240 | Target: Rs 320 | Return: 24 percent
It is on the verge of completing an inverted head and shoulders formation. The shoulders were at Rs 220 and the head was at Rs 190. Neckline resistance is at Rs 260.
Technically, it is a bullish consolidation and on continued trading above Rs 260 level, it could extend to Rs 300-320 in the medium term. It is a buy between Rs 260 and Rs 250, however, place a stop-loss at Rs 240.
JSW Steel: Sell | LTP: Rs 562.45 | Stop-Loss: Rs 580 | Target: Rs 520 | Return: 7.5 percent
It has seen the most selling pressure in the last 30-32 days. After hitting the all-time high of Rs 790, it fell to the level of Rs 520 without any pullback. Recently, with a rebound in the metals sector, we saw the stock bouncing back to the minor resistance at Rs 580, however, again it was rejected higher and returned to Rs 560 level.
Technically, such type of pattern invites further weakness. Technically, the stock is weak and may fall back towards Rs 520 or Rs 490 levels in the near term. The strategy should be to sell at Rs 560, however, to protect short positions in volatile markets, the stop-loss should be at Rs 580.
Nagaraj Shetti, Technical Research Analyst at HDFC Securities
Advanced Enzyme Technologies: Buy | LTP: Rs 297.25 | Stop-Loss: Rs 275 | Target: Rs 330 | Return: 11 percent
After showing a sharp weakness in the early-mid part of May 22, the stock price has shifted into a sustainable upside bounce in the last few weeks. The stock price is now placed in a negative sequence like lower tops and bottoms on the weekly chart. But, the sustainable upside bounce so far could indicate that the negative chart pattern could be reversed soon.
The stock price is now facing hurdle at weekly 10 and 20 period EMA (exponential moving average) Rs 305 levels and a decisive move above this area could open further upside for the short term.
Volume has started to move up and weekly 14 period RSI (relative strength index) indicate possibility of further strengthening of upside momentum for the stock price ahead.
Buying can be initiated in stock at CMP (Rs 297.25), add more on dips down to Rs 287, wait for the upside target of Rs 330 in the next 3-4 weeks. Place a stop-loss of Rs 275.
Aegis Logistics: Buy | LTP: Rs 223.55 | Stop-Loss: Rs 210 | Target: Rs 247 | Return: 10.5 percent
After showing sharp weakness in early-mid part of May 22, the stock price has shifted into a sustainable upside bounce in the last few weeks. The weekly candle pattern indicate formation of higher bottom and the stock price is now placed at the hurdle of Rs 228 levels.
The formation of recent higher bottom could be an early indication of negation of previous broader negative pattern like lower tops and lower bottoms. This is positive indication. Volume has expanded in this week and the weekly 14 period RSI shows positive indication.
One may look to buy Aegis at CMP (Rs 223.55), add more on dips down to Rs 217 and wait for the upside target of Rs 247 in the next 3-4 weeks. Place a stop-loss of Rs 210.
Century Textiles & Industries: Buy | LTP: Rs 889.1 | Stop-Loss: Rs 830 | Target: Rs 965 | Return: 8.5 percent
The downtrend of the last few months seems to have reversed up in the stock. The stock has witnessed a decisive upside breakout in this week and closed higher. The weekly chart pattern indicate a possibility of faster retracement on the upside.
The stock has also moved above the hurdle of weekly 10 and 20 period EMA around Rs 800 levels and closed higher. Currently placed at the edge of upside breakout of crucial down sloping trend line resistance around Rs 900 levels. The volume has started to expand and weekly 14 period RSI and weekly ADX/DMI (average directional index/direction movement index) signal chances of further strengthening of upside momentum for the stock price ahead.
One may look to buy Century Textiles at CMP (Rs 889.1), add more on dips down to Rs 855 and wait for the upside target of Rs 965 in the next 3-4 weeks. Place a stop-loss of Rs 830.
Ajit Mishra, VP-Research at Religare Broking
ICICI Prudential Life Insurance Company: Buy | LTP: Rs 549.20 | Stop-Loss: Rs 520 | Target: Rs 600 | Return: 9 percent
We’re seeing noticeable traction in the insurance space and ICICI Prudential is also participating in the move. It has witnessed a breakout from a consolidation range of late and surpassed the resistance barrier of long term moving average (200 EMA) as well.
All indications are in the favour of a steady up move. We thus suggest initiating fresh longs within Rs 545-550 levels.
Mahindra & Mahindra Financial Services: Buy | LTP: Rs 186.45 | Stop-Loss: Rs 174 | Target: Rs 204 | Return: 9 percent
In line with the recovery in the financials space, M&M Financial has also rebounded strongly in the last two weeks. It formed a strong base around Rs 160 levels while holding firmly above the support zone of multiple moving averages.
The chart pattern is pointing towards the breakout from a prevailing channel on the weekly chart. We recommend initiating fresh longs within Rs 182-186 levels.
RBL Bank June Futures: Sell | LTP: Rs 106 | Stop-Loss: Rs 116 | Target: Rs 95 | Return: 10 percent
RBL Bank has been trading in a steady downtrend and currently trading closer to its record low. Despite the recent rebound in the banking pack, it hardly witnessed any traction, which indicates bears are in control.
We recommend creating fresh shorts within the 108-110 zone.
Sacchitanand Uttekar, Deputy Vice President – Research Technicals (Equity) at Tradebulls Securities
Zensar Technologies: Buy | LTP: Rs 308.2 | Stop-Loss: Rs 260 | Target: Rs 400 | Return: 30 percent
Occurrence of a ‘Bullish Hammer’ on its weekly scale near the confluence zone of a multi support area of its 200 week EMA reconfirm the strength of its on-going channel support zone. Trend strength indicator RSI too exhibits a positive crossover alongwith a likely trend break.
The setup provides a good opportunity to accumulate the stock for a rebound back to its pattern resistance placed at Rs 400. A close only below Rs 260 from hereon would negate the reversal setup & hence serves as an ideal level for placing ones stop-loss order.
Uttam Sugar Mills: Buy | LTP: Rs 290.75 | Stop-Loss: Rs 235 | Target: Rs 370 | Return: 27 percent
Uttam Sugar after almost a year-long accumulation formation now seems matured for a price breakout. On its daily scale a rounding bottom formation is awaiting for a confirmation. Its recent rebound from its 200 DEMA support zone of Rs 205 looks affirmative as a fresh bullish sequence in form of an impulse wave is clearly progressing.
Its 5 days perpendicular price rise was well supported with volumes & hence after this on-going brief consolidation a breakout above Rs 320 should unlock fresh momentum. We advise to accumulate Uttam Sugar upto Rs 280 with a stop-loss below Rs 235 for an initial target upto Rs 370 followed by 430.
Sun Pharma: Sell | LTP: Rs 865.10 | Stop-Loss: Rs 905 | Target: Rs 780 | Return: 10 percent
Rising Wedge formation looks mature for a price breakdown as its weekly close also got registered below its 20 weeks EMA. Its trend strength indicator has already collapsed below its pattern base level around its 50 mark, complimenting the bearish trends emergence.
Pullbacks if any towards Rs 880 zone should be utilised to form bearish strategies with a stop-loss above Rs 905 for a pattern target upto Rs 780.
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.
