Equity markets at crucial juncture; charts hint at positive support for these stocks in coming weeks

Published: July 9, 2020 10:10 AM

After rallying for five consecutive sessions, the Nifty corrected on Wednesday from a high of 10848. The Nifty failed to test the 200-day SMA, which is currently at 10885.

Zooming into the 15 minute intra charts, we can see that the Nifty has closed just above the intraday support of 10689 on Wednesday.

By Subash Gangadharan

After rallying for five consecutive sessions, the Nifty corrected on Wednesday from a high of 10848. The Nifty failed to test the 200-day SMA, which is currently at 10885. Zooming into the 15 minute intra charts, we can see that the Nifty has closed just above the intraday support of 10689. A close below this level could trigger a bigger correction that could see the Nifty moving down towards the next major support at 10560-10520 where we have the 200-day EMA.

On the other hand, if the Nifty does find support at the 10689 levels, then a bounce back is possible that could take the Nifty once again towards the 200-day SMA. The below picks are for the next 15-26 trading sessions.

Buy Shriram Transport Finance 

After correcting sharply from a high of 1367 touched in February 2020, Shriram Transport Finance found support around the 440 levels a few months back. The stock had also previously found support around these levels many years back, thereby making it a strong support on the long term charts. The stock has since then rebounded and gradually moved higher, making higher tops and higher bottoms in the process.

This week, the stock has broken out of the 690-714 narrow trading range on the back of healthy volumes. This augurs well for the current uptrend to continue. 

Technical indicators are giving positive signals as the stock trades above the 13-day and 50-day SMA. Daily and weekly momentum readings are in rising mode and not overbought.

We recommend a Buy between 740 and 760 with a SL at 700 and Target of 880 for 2-5 weeks. CMP is Rs. 757.

Buy United Spirits

United Spirits has formed a double bottom pattern on the daily charts around the 585 levels. The stock has since then been gradually moving higher in the last few sessions, which is encouraging.

Today, the stock broke out of the 590-605 range on the back of huge volumes, which augurs well for the uptrend to continue.

Technical indicators are giving positive signals as the stock trades above the 13-day SMA and the 14-day RSI is in rising mode and not overbought. The Relative Strength Comparative indicator too has started turning up, indicating that the stock is outperforming the Nifty.

We recommend a Buy between 605 and 621 with a SL at 590 and Target of 670 for 2-5 weeks. CMP is Rs 620.5.

(Subash Gangadharan is a technical research analyst at HDFC Securities. Views expressed are the author’s own.)

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, 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
1Charts suggest Nifty could move back to recent highs; two stocks that chartists are tracking
2Good time to invest in BFSIs, charts suggest once in a decade investment opportunity
3Favourable land rates, skilled workers could make India a lucrative investment destination post-Covid