Buy these two stocks for near-term gains as Nifty’s immediate trend turns negative

Updated: Feb 18, 2021 8:35 AM

As long as Nifty sustains above 15000 levels, there is a possibility of an upside bounce from the lower levels by forming a new higher low of the sequence.

Nifty, SensexImportant supports to be watched around 15000 and we expect market to show upside bounce from the lows.

By Nagaraj Shetti

After showing weakness from the new all-time high of 15431 on Tuesday, Nifty slipped into follow-through decline on Wednesday and closed the day lower by 104 points. The attempt of intraday upside bounce has failed and Nifty showed weakness amidst high volatility in the afternoon to later part of the session.

A reasonable negative candle was formed on Wednesday as per daily timeframe chart with minor upper and lower shadow. This pattern indicates downward correction in the market with volatility. The Nifty failing to show any upside recovery in the mid to later part of today’s session could hint at some more weakness in the coming session.

The minor positive chart pattern like higher highs and higher lows is in play on the daily chart. As long as Nifty sustains above 15000 levels, there is a possibility of an upside bounce from the lower levels by forming a new higher low of the sequence. The opening upside gap formed on 15th Feb has been filled completely at 15180 and Nifty placed above it. The recent upside bounce has occurred from the support of another opening upside gap of 8th Feb at 14977.

Though Nifty declined by 105 points on Wednesday, the overall market breadth was resilient and the broad market indices like midcap 100 and smallcap 100 of NSE have closed slightly higher by 0.31% and 0.03% respectively. This could be hope for bulls to make a comeback from the lows.

The short term trend seems to have turned down and the near term uptrend status remains intact for the Nifty. The weakness of the last two sessions is expected to complete in the next 1-2 sessions. Important supports to be watched around 15000 and we expect the market to show upside bounce from the lows. On the contrary side, a decisive move below this 15K mark could open more weakness in the short term.  

Stock Picks: 

Buy Cummins India Ltd (CMP Rs 794) 

After showing minor weakness in the last week, the stock price (Cummins) has witnessed a sustainable upside bounce so far this week-as per weekly time frame chart. We observe a larger positive sequence like higher highs and higher lows as per weekly time frame chart. The higher low as compared to higher high has been smaller in size, which indicate a lack of selling enthusiasm in the participants at the highs. The volume and RSI shows positive indication.

Buying can be initiated in Cummins India Ltd at CMP (794), add more on dips down to Rs 765, wait for the upside target of Rs 875 in the next 3-4 weeks. Place a stoploss of Rs 745.

Buy Bank of Baroda (CMP Rs 84.15) 

The PSU Banking stocks have been outperforming in the last few weeks and this stock (Bank of Baroda) was too in limelight. We observe a larger rounding bottom formation as per weekly chart. The consistent formation of higher tops and bottoms signal strength of an uptrend. Volume has expanded during upmove and weekly 14 period RSI sustains above 60 levels. This is positive indication.

Buying can be initiated in Bank of Baroda at CMP (84.15), add more on dips down to Rs 80.50, wait for the upside target of Rs 93 in the next 3-4 weeks. Place a stoploss of Rs 78.

(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed by the author are his own. Please consult your financial advisor before investing.)

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Buy these two stocks for next one month; charts show strong support as Nifty reverses downtrend
2Nifty may hit 16,000 by March 2021-end, check top 3 trading ideas for next 4 weeks
3TCS, ICICI Bank, other must-have stocks: Time to rejig investment portfolio post Budget 2021? INTERVIEW