Buy these two stocks for near-term gains as Nifty forms small positive candle on daily chart

Updated: November 11, 2021 9:04 AM

A small positive candle was formed on the daily chart of Nifty 50 with minor upper and lower shadows.

Nifty, dishman carbon, Hemisphere Properties IndiaThe range bound action continued in the market on Wednesday

By Nagaraj Shetti

The range-bound action continued in the market on Wednesday and the Nifty 50 closed the day lower by 27 points amidst a range-bound movement. After opening lower on Wednesday, the market slipped into further weakness soon after the opening. It later shifted into a gradual upside recovery for the better part of the session. The upside recovery was sharpened in the afternoon to the later part, but the market failed to close at the highs. A small positive candle was formed on the daily chart with minor upper and lower shadows.

Technically, this action could indicate a formation of a high wave-type candle pattern. This also signals a confused state of mind among market participants. Normally, such high wave formations after a reasonable up move or down move signal probability of reversal. Having formed this pattern within a range movement, the predictive value could be less.

Conclusion: The short term trend of Nifty continues to be range bound with weak bias. As long as the lower support of 17900-17850 is protected, there is a possibility of another round of upside bounce towards 18150 in the short term. A decisive move below the support is likely to drag Nifty down to 17600 levels in the near term.

Stock Picks:

1. Buy Hemisphere Properties India Ltd (CMP Rs 153.45)

After showing range bound movement in the last few weeks, the stock price has shifted into an upside bounce in this week so far. The stock price is currently making an attempt to stage an upside breakout of the resistance of the down sloping trend line at Rs 152 levels. Hence, a sustainable move above this area could have a sharp positive impact on the stock price ahead. The stock price is currently trading above the crucial moving average of 10w and 20week EMA around Rs 139 and 141 levels respectively. We observe a rise in volume during Tuesday’s up move and the weekly 14 period RSI shows positive indication. The overall chart pattern of HEMIPROP indicates a long trading opportunity. One may look to create positional long as per the levels mentioned above.

Buying can be initiated at CMP (Rs 153.45), add more on dips down to Rs 147, wait for the upside target of Rs 170 in the next 3-4 weeks. Place a stop loss of Rs 142.

2. Buy Dishman Carbogen Amcis Ltd (CMP Rs 217.65)

The downward correction of the last three weeks seems to have completed in the stock price (DCAL). The stock price has witnessed an upside bounce since last week from near the crucial supports of 20w EMA around Rs 203 levels. We observe a formation of larger degree of higher bottoms as per weekly chart. Recent swing low of Rs 201.50 of last week could now be considered as a new higher bottom of the sequence. Hence, one may expect further upside in the near term. Weekly 14 period DMI has started to widen with outperformance was seen in +DMI. The weekly ADX has moved above 25 levels. Both of these DMI/ADX patterns indicate further strengthening of upside momentum in the stock price ahead. The overall chart pattern of DCAL indicates a long trading opportunity. One may look to create positional long as per the levels mentioned above.

One may look to buy DCAL at CMP (Rs 217.65), add more on dips down to Rs 208.50 and wait for the upside target of Rs 242 in the next 3-4 weeks. Place a stop loss of Rs 202.

(Nagaraj Shetti, Technical Research Analyst, HDFC Securities. Views expressed are the author’s own.)

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