As of now, there is no indication of Nifty sliding below the 16800 – 16700 levels, but you never know how global development pan out.
By Rohan Patil
Technically, Nifty has formed a strong bullish candle on the weekly chart which is broadly positive. This Bull run has more legs to go and it is just a matter of time when Sensex will cross the 60000 mark. The monthly chart of the benchmark index has given an 8.69 per cent return for the August series and has formed a tall green candle indicating bulls still have enough strength to trade higher. Nifty 50 is making new lifetime highs for the fifth consecutive session indicating a strong bull market trend is unfolding.
The intermediate uptrend remains bullish as the benchmark index continues to make higher tops and higher bottoms over the last several months. Nifty is has been trading above 21 & 50 – week exponential moving averages which give further evidence of an uptrend. The reason behind Nifty outperformance is the support coming from select large-cap IT, FMCG and telecom stocks.
There could be throwbacks in the small time frame due to overbought conditions on the short-term chart, but it would be wise to use those opportunities to add open positions as it is a buy on dips market scenario.
As of now, there is no indication of Nifty sliding below the 16800 – 16700 levels, but you never know how global development pan out. The resistance is pegged at 17550 levels. The ideal strategy would be look at the individual stocks rather than the benchmark index.
Bank Nifty has finally broken its consolidation band and has successfully closed above the horizontal trend line support. The change of polarity concept is seen at the current junction as the earlier resistance level is acting as an immediate support zone for the banking index.
We have also seen a breakout in the momentum oscillator RSI (14) as the oscillator has been able to close above its horizontal trend line resistance placed near 58 levels with bullish crossover on the daily time frame. The MACD indicator has also taken support near its centreline and currently moving higher with closing above its signal line indicates strength in the current up move.
On the weekly chart, prices are trading above upward slanting trend line support and a higher high higher low formation is well intact on the broader time frame. The 21 & 50 – day exponential moving average continues to act as an anchor point and any dip near these levels will be an opportunity to add positions in the banking index.
The upside resistance is likely to be capped near 37500- 3770 levels. For now, the support level for the Bank Nifty stands at 36200 – 36000 levels.
Torrent Power: BUY
CMP: Rs 486 | Target Rs 516 | Stop Loss Rs 470 | Return 6%
The prices were trading in a rectangle formation since past two months and have formed a trend line resistance at 475 levels. TORNTPOWER has broken out of a rectangle pattern at 488 levels on 27th Aug and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Stock is trading above its 21, 50 & 100- day exponential moving averages on daily time frame, which is positive for the prices in the near term. MACD indicator is reading above its centerline with positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 60 levels which indicates positive momentum will like to continue ahead.
HDFC AMC: BUY
CMP: Rs 3197 | Target Rs 3390 | Stop Loss Rs 3100 | Return 6%
A swing trade setup is visible for HDFC AMC. The stock can give up to 6 % returns. The momentum is likely to continue as depicted on the weekly charts. The price setup looks promising where a cup pattern is visible. On the indicators front, the MACD line has shown a positive crossover on daily charts and ADX is showing a reading of 19.60 with a rising trend. The RSI is yet to enter into overbought territory indicating that upside potential is still left for the stock.
A falling trend line breakout is also visible, giving a buy signal that the trend on the downside has been arrested. On the moving average front, the stock is trading well above its 21days EMA indicating that the momentum is strong on the upside.
CMP: Rs 1321 | Target Rs 1415 | Stop Loss Rs 1268 | Return 7%
The stock has been forming a higher high higher low formation on the monthly time frame since August 2019, indicating the long-term trend of the stock remains bullish. The prices have also completed its throwback of the rectangle pattern on the daily chart near its trend line support.
RSI (14) plotted in the weekly chart has been hovering above the 50-mark for the last couple of weeks and can be seen moving higher towards the overbought level, indicating the bullish momentum. The level of Rs 1268 (multiple touch point level) will act as a red-flag level followed by Rs 1247 (50-day exponential moving average). The technical parameters suggest the stock may move higher towards Rs 1415. If it breaks Rs 1415, it may head towards 1450.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)