Charts suggest potential upside near 10,000 levels for Nifty; two stocks that may gain with it

Published: June 18, 2020 9:39 AM

Nifty continued with range bound action with negative bias on Wednesday and closed the day lower by 32 points. A small negative candle was formed on Wednesday with long upper shadow.

As long as this repeated testing of 10,000 level continues with minor profit booking, there is a higher possibility of a sharp upside breakout of 10K mark soon in the market.

By Nagaraj Shetti

Nifty continued with range bound action with negative bias on Wednesday and closed the day lower by 32 points. A small negative candle was formed on Wednesday with long upper shadow. Technically, this pattern indicates an emergence of profit booking again around 10,000 levels. 

Nifty repeatedly hitting this 10K resistance (resistance of weekly and monthly timeframe chart, as per the concept of change in polarity) in the last three occasions and showed minor weakness this time compared to previous two occasions. 

As long as this repeated testing of 10,000 level continues with minor profit booking, there is a higher possibility of a sharp upside breakout of 10K mark soon in the market. A sustainable move above 10,000 could pull Nifty towards 10350 and next 10550 levels over the period of time. Immediate support is placed at 9800.

Stock Picks: 

NIACL (The New India Assurance Co Ltd): BUY- (CMP Rs 128.05) 

After showing sharp upside bounce in the later March-early April 2020, the stock price (The New India Assurance Co Ltd) has shifted into a narrow range movement in the last couple of months, as per weekly timeframe chart. Currently, the stock price is placed at the key overhead resistance of Rs 130 (as per the concept of change in polarity) and making an attempt to break above it. 

The weekly 13 period +ve DMI is holding its dominance over its counterpart (-ve DMI). Weekly 13 period trend strength indicator like ADX is turning above from near its crucial lower region of 15 levels. This is positive indication.

Buying can be initiated at CMP (128.05), add more on dips down to Rs 122, wait for the upside target of Rs 142 in the next 3-4 weeks. Place a stoploss of Rs 118.

HAVELLS INDIA LTD – (CMP Rs 553.50) 

After witnessing a sharp upmove in the later part of May month, the stock price (Havells India Ltd) shifted into consolidation with minor weak bias recently. The stock price is currently facing resistance around Rs 570 and has shifted into minor weakness.

The above said pattern indicates lack of selling participation after a sharp upmove. The daily and weekly 14 period RSI suggests a possibility of further strengthening of upside momentum. 

Buying can be initiated at CMP (553.50), add more on dips down to Rs 532, wait for the upside target of Rs 610 in the next 3-4 weeks. Place a stoploss of Rs 520.

(Nagaraj Shetti is a Technical Research Analyst at HDFC Securities. The views expressed are the author’s own. Financial Express Online recommends you consult your investment advisor before investing. 

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