By Nagaraj Shetti
After showing upmove with high volatility on Tuesday, Nifty showed a sustainable follow-through upmove on Wednesday and closed the day higher by 184 points. The opening upside gap remains unfilled. A reasonable long bull candle was formed on the daily chart with gap up opening (back to back second opening upside gap which remains unfilled). This pattern indicate a continuation of pullback rally in the market post sharp decline. The Nifty is currently placed at the crucial overhead resistance of 17000-17200 levels and the negative chart pattern of lower highs and lower lows remains intact. Present upmove is in line with the formation of lower top of the pattern. But, there is no confirmation of any lower top reversal yet at the highs.
The negative chart pattern is still intact in Nifty as per smaller to larger timeframe charts. After breaking below the important weekly lower support of ascending trend line at 16700 levels in the early part of this week, the market has bounced back from the lows and regained the lost support area as of now. Hence, further weakness below 16700 could mean emergence of next round of weakness in the market.
The pullback rally continued in the market for second session and the Nifty is now entering a crucial overhead resistance of around 17000-17200 levels. There is a higher possibility that Nifty could reverse down from near this hurdle in the next few sessions. Immediate support is placed at 16830 levels.
Buy TV18 Broadcast – (CMP Rs 45.35)
After showing a sharp upside breakout of the hurdle at Rs 50 in last week, the stock price has failed to sustain the highs and showed downward correction. Presently, formed a higher bottom at Rs 43 in the last session and moved up firmly. Wednesday’s sustainable upmove could confirm higher bottom reversal at Rs 43. The stock price has sustained above the crucial support of weekly 10 and 20 period EMA and moved up so far. The formation higher bottoms and the strength of recent upmove (long bull candle) as per weekly chart could indicate chances of further upside in the stock price ahead. Weekly 14 period RSI and weekly DMI/ADX signal chances of further strengthening of upside momentum in the near term.
Buying can be initiated in TV18BRDCST at CMP (45.35), add more on dips down to Rs 43.25, wait for the upside target of Rs 51 in the next 3-4 weeks. Place a stoploss of Rs 42.
Buy Aurobindo Pharma Ltd – (CMP Rs 718.95)
The stock price has been moving up gradually in the last one month. The sharp upmove of this week has pulled the stock prices to place at the edge of upside breakout of consolidation at Rs 715 levels. This pattern has confirmed a bottom reversal at Nov swing low of Rs 620.50 levels. Weekly 14 period RSI and ADX/DMI shows positive indication.
Buying can be initiated in Aurobindo Pharma at CMP (718.95), add more on dips down to Rs 685, wait for the upside target of Rs 800 in the next 3-4 weeks. Place a stoploss of Rs 665.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing)