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Buy these two stocks for gains in the near term as Nifty 50 heads towards crucial resistance at 16800-16850

The sharp upside bounce of Wednesday opens a possibility of reversal on the upside after the higher bottom formation.

Buy these two stocks for gains in the near term as Nifty 50 heads towards crucial resistance at 16800-16850
A long bull candle was formed on the daily chart, that engulfed the previous negative candle completely.

By Nagaraj Shetti

After showing weakness with range-bound action in the last couple of sessions, the NSE Nifty 50 shifted into a sharp upside bounce on Wednesday and closed the day higher by 157 points. After opening on a negative note, the market slipped into further weakness soon after the initial hours of trade. It later shifted into a sustainable upside recovery from the day’s low of 16438 levels. The upside momentum continued for rest of the session and Nifty finally closed near the highs.

A long bull candle was formed on the daily chart, that engulfed the previous negative candle completely. This is a positive indication and signals the formation of a bullish Piercing Line type candle pattern. This action indicates the possible completion of the recent downward correction in the market. The positive sequence of higher tops and bottoms is intact on the daily chart and Wednesday’s low of 16438 could now be considered as a new higher bottom of the sequence. Now one may expect the Nifty to move up and challenge the recent higher top of 16752 shortly.

The sharp upside bounce of Wednesday opens a possibility of reversal on the upside after the higher bottom formation. Hence, one may expect the Nifty to advance towards the crucial resistance zone of around 16800-16850 levels in the short term. Immediate support is placed at 16580 levels.

Buy ULTRATECH CEMENT LTD

The stock price (Ultratech Cement) has been in a sharp uptrend over the last one month. The strong upside momentum of the last one month indicates possible reversal on the upside as per smaller and larger timeframe charts. The present action could mean reversal of negative chart pattern like lower tops and bottoms in the near term. The stock price has sustained above the weekly hurdle of 10 and 20 period EMA and weekly RSI shows positive indication.

Buying can be initiated in ULTRATECH CEMENT at CMP (6535), add more on dips down to Rs 6280, wait for the upside targets of Rs 7060 and Rs 7600 in the next 3-5 weeks. Place a stop-loss of Rs 6025.

Buy JK PAPER LTD

After shifting into a consolidation in the previous few weeks, the commodity stock (JK Paper Ltd) has witnessed sharp upside in the last two weeks. The stock price has witnessed decisive upside breakout of crucial resistance of down sloping trend line at Rs 328 levels and is currently trading higher. Volume has started to rise during upside breakout and weekly RSI shows positive indication.

Buying can be initiated in JK Paper Ltd at CMP (343), add more on dips down to Rs 330, wait for the upside targets of Rs 375 and Rs 405 in the next 3-5 weeks. Place a stop-loss of Rs 317.

(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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