By Nagaraj Shetti
After showing a gradual upmove in the last couple of sessions, Nifty continued with upside momentum on Wednesday amidst high volatility and closed the day higher by 36 points. After opening with a flat note, the market has slipped into weakness in the early part of the session. The buying has emerged from the day’s low of 19491 levels and the upside recovery got strengthened towards the later part of the session and Nifty closed near the highs.
A small positive candle was formed on the daily chart with minor upper and long lower shadow. Technically, this pattern reflects high volatility in the market. Post the upside breakout of crucial resistance of the down sloping trend line at 19,450 levels recently, the Nifty manages to move up consistently with the formation of lower shadows in the last three sessions candles. The upside breakout of trend line resistance remains intact.
The short-term trend of Nifty continues to be positive. One may expect further upside in the coming sessions. Any dips down to the immediate support of 19,500 is likely to be a buy on dips opportunity. The next upside levels to be watched are around 19,800-19,900 for the near term.
Stock Picks:
Buy Hikal- (CMP Rs 313)
The weekly timeframe chart of Hikal indicates an upside bounce in the stock price in last week post consolidation pattern. After showing a consolidation with weak bias in the previous 2-3 months, the stock price has witnessed a sustainable upside bounce in the last week. Currently showing minor range movement. The stock price has moved above the immediate resistance of weekly 10 and 20 period EMA around Rs 298/300 levels respectively. Volume has started to expand during upside breakout in the stock price and the weekly 14 period RSI has turned up from near 40 levels.
Buying can be initiated in Hikal at CMP (Rs 313), add more on dips down to Rs 303, wait for the upside targets of Rs 344 and Rs 375 in the next 3-5 weeks. Place a stoploss of Rs 289.
Buy Aarti Drugs- (CMP Rs 611)
The weekly timeframe chart of Aarti Drugs indicates sharp upside bounce since last week. The recent downward correction from the highs has reversed on the upside in this week post formation of crucial bottom reversal at Rs 530 in last week, as per the concept of change in polarity. The positive chart pattern like higher tops and bottoms is intact. Having formed a new higher bottom at Rs 530, the stock price is expected to move up further to form a new higher top. Weekly 14 period RSI has turned up from near 60 levels, which is indicating strengthening of upside momentum.
One may look to buy Aarti drugs at CMP (Rs 611), add more on dips down to Rs 590 and wait for the upside targets of Rs 672 and Rs 740 in the next 3-5 weeks. Place a stoploss of Rs 565.
(Nagaraj Shetti, Technical Research Analyst, HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)