By Nagaraj S Shetti
After moving into a narrow high low range on Tuesday, Nifty continued with choppy movement with positive bias on Wednesday and closed the day higher by 47 points. A small body of positive candle was formed on the daily chart with minor upper and lower shadow. Technically, this pattern signals a formation of doji or high wave type candle patterns at the highs, but not a classical one.
Nifty is currently placed at the crucial resistance of down sloping trend line around 19450-19500 levels and is struggling to break decisively above the hurdle. At the same time, the market is not willing to show any reasonable weakness from near the resistance. This market action suggests chances of one more attempt of an upside breakout around 19500 levels in the short term and any failure to sustain the anticipated upside breakout could open selling pressure from the highs. Important support is placed at 19300- 19250 levels.
Stock Picks:
Buy Mangalore Refinery and Petrochemicals – (CMP Rs 90.80)
The weekly timeframe chart of Mangalore Refinery and Petrochemicals indicates sharp upside bounce so far this week, after showing a consolidation movement in the last week. After moving into a narrow band over the last 5-6 weeks, the stock price has witnessed an upside breakout of the consolidation at Rs 87- Rs 88 levels and is currently showing consolidation at the highs. Bullish chart pattern like higher tops and bottoms is intact as per weekly chart and the stock price is now moving up after forming a new higher bottom in the mid part of Aug. Weekly 14 period RSI has turned up from the upper 65 levels signaling strengthening of upside momentum.
Buying can be initiated in MRPL at CMP (Rs 90.80), add more on dips down to Rs 87, wait for the upside targets of Rs 100 and Rs 108 in the next 3-5 weeks. Place a stoploss of Rs 84.
Buy Hindustan Copper – (CMP Rs 148)
After witnessing a decisive upside breakout of the strong overhead resistance at Rs 135 levels in the early part of Aug 23, Hindustan Copper has reacted down later in the last few weeks towards the prior upside breakout area. A sustainable buying has emerged from Tuesday from near the support of Rs 135, as per the concept of change in polarity. This is indicating a buy on dips opportunity. Weekly RSI has turned up from near upper 60 levels.
One may look to buy HINDCOPPER at CMP (Rs 148), add more on dips down to Rs 143 and wait for the upside targets of Rs 162 and Rs 175 in the next 3-5 weeks. Place a stop loss of Rs 138.
(Nagaraj S Shetti, Technical Research Analyst, HDFC Securities. Views expressed are the analyst’s own. Please consult your financial advisor before investing.)