In the current scenario, traders need to follow the levels strictly as far as Nifty is concerned. The index should be held long with 10,628 stop loss.
On the upside 10,870 is acting as a crucial resistance level while and on the downside 10,700 is the crucial support, Vinay Rajani, Senior Technical Analyst at HDFC Securities, said in an interview with Moneycontrol's Kshitij Anand.
Q) It looks like the market is losing steam at higher levels. 10,850-10,900 levels are acting as a crucial resistance level for the index. Do you this as nervousness ahead of the interim budget?
A) For the last 9 weeks, the Nifty is moving in a schizophrenic manner. Every alternate week, it is moving in the opposite direction.
The Nifty ended this week with an "Inside bar" pattern on the weekly charts, indicating indecision in the trend and that is why rallies are getting sold off and corrections are bought in to.
The Nifty has been forming lower tops and higher bottoms on the daily charts, which has resulted in a symmetrical triangle. The index has reached a point that is very near to the breakout or breakdown level.
On the upside 10,870 is acting as a crucial resistance level while and on the downside 10,700 is the crucial support. A close below 10,628 would also confirm lower bottom preceded by lower tops.
However, a sustainable level above 10,870 would give fresh bullish breakouts on the charts, which could push Nifty towards 11,300. A close below 10,628 would drag the Nifty down towards 10,300 odd levels in the near term.
To conclude, we believe that, in the current scenario, traders need to follow the levels strictly as far as Nifty is concerned. The index should be held long with 10,628 stop loss.
However, sectors specific volatility would be different due to the possible industry-specific expectation from the upcoming budget.
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Q) What are charts of Bank Nifty suggesting?
A) BankNifty has been an outperformer so far. From the bottom of October 26, 2018, Nifty is up 8 percent, and BankNifty is up 13 percent at current levels.
BankNifty is still maintaining higher tops and higher bottoms on the daily charts. The index is placed above all important moving average parameters until date.
As far as short-term is concerned, the index has recently been moving in a rising wedge pattern on the daily charts. This week, BankNifty has formed "Doji" candlestick pattern, indicating indecision in the trend.
Support for the BankNifty is seen at 27,150, and it would advisable to hold long positions with that stop loss. The resistance for the index is seen at 27,755 and 28,400.
Axis Bank and ICICI Bank are looking strongest in the sector and we expect them to outperform in the coming days.
Q) Top three trading strategies for the coming week with an investment horizon of 1 month?
A) Here is a list of top three stocks which could give 5-12 percent return in the next 1 month:
ITC: Buy| CMP: 294.75| Target: Rs 330| Stop Loss: Rs 268| Return 12%
The stock price has reversed north from the long-term upward sloping trendline support on the weekly charts. The stock price has surpassed the resistance of its 20 and 50 week's exponential moving average.
The stock price has closed at the highest level since October 3, 2018. This indicates breakout from the consolidation that sustained in the last 3 months.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it at Rs 278, for the target of 330, and keeping a stop loss at 268 on a closing basis.
Axis Bank: Buy| CMP: 666| Target: Rs 704| Stop Loss: Rs 638| Return 5%
The stock witnessed a Symmetrical Triangle breakout on the daily charts. It formed higher tops and higher bottoms on the daily and weekly charts. The stock price has been trading above its 20, 50, 100 and 200-DMA.
Considering the technical evidence discussed above, we recommend buying the stock at CMP target of 704 and keeping a stop loss at 638 on a closing basis.
Titan Company Ltd: Buy| CMP: 959.50| Target: Rs 1020| Stop Loss: Rs 925| Return 6%
The stock price has given a breakout from the bullish inverse head and shoulder pattern on the weekly charts. The stock price is placed above all important moving average parameters.
Higher tops and higher bottoms on the weekly and monthly charts. Indicators and Oscillators setup is bullish on medium to long term charts.
Considering the technical evidence discussed above, we recommend buying the stock at CMP target of 1020, keeping a stop loss at 925 on a closing basis.
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