Nifty hovering around resistance levels; buy these two stocks for near term gains

March 18, 2021 10:12 AM

On the weekly chart, the important support of 10 week EMA is intact around 14,580-14,550 levels.

U.S. Treasury yields, 10-year rate, Federal Reserve, Powell, Covid-19 pandemic,The benchmark 10-year rate climbed Wednesday to the highest since the Covid-19 pandemic took hold more than a year ago, while the 30-year yield touched its loftiest level since 2019.

By Nagaraj Shetti

After showing choppy movement in the last couple of sessions, Nifty finally slipped into a steep fall on Wednesday and closed the day lower by 189 points. After opening on a slightly positive note on Wednesday, Nifty started to show gradual weakness since opening. Intraday pullbacks of in-between have s and they are sold into rises. The Nifty closed near the low.

A long negative candle was formed, that closed below the recent swing low of 14745 levels. The market is now nearing a lower range of last 14-15 trading sessions at 14500 levels. This could be a negative indication and a move below 14,450 could open a sharp weakness in the near term.

Nifty is now sliding down to another key support of ascending trend line on the daily chart (connecting the swing lows of 24th Sept and 30th Oct) around 14,650 levels and a move below this area could open broader weakness for the market ahead.

On the weekly chart, the important support of 10 week EMA is intact around 14,580-14,550 levels. The Nifty has sustained above this moving average support for many months with minor whipsaws. Hence some more weakness down to this lower support area could be expected in the near term.

The short term trend remains weak and the market is nearing important cluster support around 14,500-14,450 levels, as per daily/weekly timeframe charts. There is a possibility of an upside bounce from this cluster support in the next few sessions. The strength of the market during upside bounce could be important to hold on support and show sustainable bounce. Immediate resistance is placed at 14,850.  

Stock Picks: 

Buy KEI Industries Ltd – (CMP Rs 547) 

After moving into a sideways range over the last one month, the stock price has witnessed upmove in this week and closed higher. This pattern indicates the chance of a sharp upside breakout of the range of around Rs 530 levels. The larger timeframe chart like weekly signal positive sequential movement like higher tops and bottoms. Further upside from here could form a new higher top of the sequence. Weekly 14 period RSI has turned up which signal a strengthening of upside momentum in the stock price.

Buying can be initiated in KEI Industries Ltd at CMP (Rs 547), add more on dips down to Rs 520, wait for the upside target of Rs 610 in the next 3-4 weeks. Place a stoploss of Rs 505.

Buy Multi-Commodity Exchange of India Ltd – (CMP Rs 1,607) 

The sharp trended decline of the previous couple of months seems to have ended in this stock price. After showing a range movement in the last few weeks, the stock price has shifted into an upside bounce recently. The last two sessions upmove is placed at the verge of moving above the crucial multiple resistance of around 10&20 period EMA as per the concept of change in polarity. Volume has started to expand and weekly 14 period RSI shows positive indication. 

Buying can be initiated in MCX at CMP (1,607), add more on dips down to Rs 1,540, wait for the upside target of Rs 1,770 in the next 3-4 weeks. Place a stoploss of Rs 1,500.

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

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