The NSE Nifty 50 index crossed the psychological level of 8,700 in the early trade on Monday after oscillating in a capped range on Friday and ending with minor gains. Domestic equity markets suffered a dismal week post geopolitical tensions and ended the week with net loss of 2.5 per cent. Even if we speak purely on technical terms, the technical structure remains week. The effect of relatively weak technical factors may also be aggravated by geopolitical tensions in the region which would also be closely monitored. This week, we may see some minor technical pullbacks but will overall remain tilted with a negative bias with the zone of 8,750-8,800 acting as sacrosanct resistance levels. The levels of 8,690 and 8,750 will act as immediate resistance levels whereas the supports may be expected at 8,550 and 8,510 levels.
Mahindra & Mahindra Financial Services (Buy)
Why Buy: The stock formed a high of 364 in July and thereafter tested these levels thrice then. It has formed higher bottoms during each retracements and therefore it has formed a Ascending Triangle Pattern on the Daily Charts. The Daily MACD has reported a positive crossover since 4 days and the RSI rests at multiple pattern support and has inched upward. A breakout can be anticipated above 368. Shares of the company can be brought at or above 368 with short term target of 415 while maintaining a strict stop loss at 340 levels.
Godrej Consumer Products (Buy)
Why Buy: The stock retraced after marking a high of 1715 and currently tested its 100-DMA support at 1551.55. On Friday, it formed a long lower shadow on the Candles. This candle also resembles a not-so-classical hammer-like formation as well. This formation has coincided with a major support at 100-DMA. While maintaining 1545 as a strict stop-loss, Godrej Consumer Products qualifies for a swing trade and may be bought above 1590 with short term target of 1690.
Tata Motors (Buy)
Why Buy: The stock retraced after marking a high of 598.40 and has currently tested its 50-DMA support level of 525.80. The level of 50-DMA also coincides with another pattern support on the Daily Charts. The lead indicators have shown multiple supports at current levels at has attempted to inch upwards. Tata Motors qualifies for a swing trade. While maintaining strict stop-loss at 512, the stock may be bought at or above 536 with short term target of 575-585.
(The author is CMT, Consultant Technical Analyst at Gemstone Equity Research & Advisory Services)