The short term trend of Nifty continues to be positive and Wednesday's upmove could be a confirmation of bullish reversal from the lows.
By Nagaraj Shetti
Nifty continued with a sustainable upmove for the second consecutive session on Wednesday and closed the day higher by 123 points. Nifty registered a new all-time high at 14666 in the latter part of the session. Another long bull candle was formed, which indicate an uptrend continuation pattern. The previous four sessions decline has been retraced completely in the last two sessions. This faster retracement could signal further upside in the short term.
The positive sequence like higher highs and lows continued on the daily chart and Nifty is currently making an attempt to reach higher highs. Previously, the short term downward corrections have resulted in a sustainable upside for many sessions. Hence, having moved up sharply from the higher bottom in the last two sessions, Nifty is expected to show further upside gradually.
The immediate support of 10 day EMA has proved to be a false downside breakout and that led to a sharp upside reversal. As per this pattern, this 10 period EMA could be tested again during next dip, after moving into new highs above 14666-14700 levels. On the upper side, the long term trend line resistances as per monthly chart) could come into play.
The short term trend of Nifty continues to be positive and Wednesday’s upmove could be a confirmation of bullish reversal from the lows. One may expect further upside for the next few sessions, before encountering a next crucial overhead resistances around 14800 levels. Immediate support is at 14550.
Buy SBI Cards & Payment Services Ltd (CMP Rs 997.15)
After showing a range movement in the last 8-9 sessions, the stock price has witnessed a sharp upside bounce on Wednesday. We observe positive chart pattern like higher highs and lows, which indicate strength of an uptrend in the stock price. The volume has expanded during recent upside breakout and daily 14 period RSI is placed around 70 levels. Hence, further uptick of RSI from here could mean further strengthening of upside momentum.
Buying can be initiated in SBI Cards at CMP (997.15), add more on dips down to Rs 960, wait for the upside target of Rs 1100 in the next 3-5 weeks. Place a stoploss of Rs 935.
Buy Godrej Consumer Products Ltd- (CMP Rs 799)
After showing an upside breakout as per weekly time frame chart at Rs 765 in the last week, the stock price continued with upside momentum so far in this week. This pattern could be a confirmation of valid upside breakout of a larger triangle pattern and one may expect further sustainable upside in the near term. Volume keeps on rising after the upside breakout and the weekly momentum oscillator like RSI/Stochastic signal positive indication.
Buying can be initiated in Godrej Consumer at CMP (799), add more on dips down to Rs 765, wait for the upside target of Rs 880 in the next 3-5 weeks. Place a stoploss of Rs 745.
(Nagaraj Shetti is a Technical Research Analyst at HDFC Securities. The views expressed by the author are his own. Please consult your investment advisor before investing.)