By Nagaraj Shetti
After showing a massive upside breakout of the range at 15960 levels on Tuesday, Nifty shifted into a follow-through up move on Wednesday and closed the day higher by 128 points. After opening on an upside gap of 65 points, Nifty shifted into a further up move in the early-mid part of the session. A new all-time high was registered at 16290 levels and later shifted into a range movement with minor profit booking from the highs.
A reasonable positive candle was formed on the daily chart with minor upper shadow, which indicate a follow-through up move in the market. This pattern confirms a valid upside breakout of the range of Tuesday. The upside gap of the last two sessions is still intact and the formation of minor upper shadow in Wednesday’s bull candle signal chances of minor profit booking from the highs. Though Nifty made new all-time highs, the overall market breadth was negative on Wednesday and broad market indices like mid-cap and small-cap of NSE exchange have slipped into decline by 1.19% and 1.09% respectively.
Nifty as per long term charts is strongly up and a sharp upside breakout as per weekly timeframe chart is visible. Hence, any profit booking from the highs could be a buy on dips opportunity.
The short term trend of Nifty continues to be up and the sharp upside breakout has been confirmed. Having moved up sharply in last 2 sessions and weak market breadth is likely to pull the market into profit booking from the highs in the next 1-2 sessions. Any dips down to 16K mark is going to be a buy on dips opportunity. Our initial upside target of 16300 has almost been reached (made a high of 16290 on Wednesday). The next upside levels to be watched around 16500 in the next one week.
Buy HEG LTD– (CMP Rs 2371)
The stock price as per the weekly timeframe chart indicates a larger range bound action over the last many months. The stock price is currently making an attempt to break above the intermediate resistance of downsloping trend line of larger range at Rs 2370-2380 levels.
Hence, a sustainable move above this area could open a sharp up move in the underlying for near term. Weekly 14 period RSI has turned up above 60 levels, which indicate a strengthening of upside momentum in the stock price.
Buying can be initiated in HEG Ltd at CMP (2371), add more on dips down to Rs 2265, wait for the upside target of Rs 2605 in the next 3-4 weeks. Place a stoploss of Rs 2205.
Buy CAN FIN HOMES LTD – (CMP Rs 564)
The stock price (CANFINHOME) indicate a sharp upside bounce in this week. We observe a formation of triangle type pattern on the weekly chart and the stock price is now making an attempt to stage upside breakout of the pattern at Rs 575 levels. Hence, a sustainable move above Rs 575 could be considered as a decisive upside breakout of the pattern and one may expect more upside in the short term. Weekly 14 period RSI and DMI/ADX are signalling further strengthening of upside momentum in the stock price.
Buying can be initiated in CANFINHOME at CMP (564), add more on dips down to Rs 540, wait for the upside target of Rs 625 in the next 3-4 weeks. Place a stoploss of Rs 525.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)