By Nagaraj Shetti
After showing a sustainable upmove in the last three sessions, Nifty shifted into a consolidation on Wednesday amidst volatility and closed the day higher by 10 points. A small red candle was formed on the daily chart with minor upper and lower shadows. Technically, this market action indicates a formation of a high wave type candle pattern at the highs and this reflects ongoing volatility in the market. Normally, such high wave type candle formation after a reasonable upmove or at the hurdle sometimes results in an impending reversal of trend after the confirmation.
Having placed near the crucial resistance, the Nifty was unable to gather strength to witness a decisive upside breakout. A bullish chart pattern like higher highs and lows is intact on the daily chart and any dips from here could be a buying opportunity.
Conclusion: The near-term trend of Nifty continues to be positive. Having not been able to surpass the resistance zone sharply above 24500 levels, there is a possibility of some more consolidation or minor dip in the next 1-2 sessions before showing the next round of upmove. Immediate support is at 24300 levels.
Stock Picks:
Buy Mazgaon Dock Shipbuilders – (Current market price Rs 4,880)
The weekly timeframe chart of Mazgaon Dock Shipbuilders witnessed a sustainable upmove in the last couple of weeks. The stock price has witnessed a sharp upside breakout of a downsloping trend line around Rs 4,650-4,700 levels this week, as per the weekly chart. The present chart pattern indicates a crucial reversal of the downward correction of a few months and one may expect a continuation of upside momentum in the near term. Volume has started to expand during the upside breakout in the stock price and RSI shows a positive indication.
Buying can be initiated in Mazagon Dock Shipyard at the current market price of Rs 4,880, add more on dips down to Rs 4,740, and wait for the upside target of Rs 5,300 in the next 3-5 weeks. Place a stoploss of Rs 4,625.
Buy Elecon Engineering Company – (current market price Rs 639)
The weekly timeframe chart of Elecon Engineering Company indicates a sustainable uptrend after moving into a range movement. The stock price is currently showing a sharp upside breakout of range movement and also a hurdle of weekly 10/20 period EMA around Rs 600-620 levels. The larger degree positive chart pattern like higher tops and bottoms is intact as per the weekly chart. Present price action indicates a formation of a new higher bottom at the recent lows. Daily and weekly RSI shows positive indications.
One may look to buy Elecon Engineering Company at a current market price of Rs 639, add more on dips down to Rs 620 and wait for the upside target of Rs 700 in the next 3-5 weeks. Place a stoploss of Rs 595.
(Disclaimer: Nagaraj Shetti is a Senior Technical Research Analyst at HDFC Securities. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)