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Nifty may fall to 16000 if it remains below 16250, charts form bearish candle; Buy BPCL, Tata Motors stocks

On daily charts, the NSE Nifty 50 index has formed a bearish candle which indicates further weakness in the near future.

NSE Nifty, BSE Sensex, stock market
We are of the view that, as long as the index is trading below 16250/54500 the correction wave is likely to continue. Image: Reuters

By Shrikant Chouhan

The benchmark indices witnessed profit booking at higher levels, the NSE Nifty 50 ended 90 points lower while the BSE Sensex was down by 236 points. Among sectors, most of the major sectoral indices witnessed profit booking at higher levels, but Media and IT indices lost the most. Media index down by 2.70 percent and the Nifty IT index corrected over 1.80 percent. Technically, from yesterday’s highest level, the Nifty/ BSE Sensex corrected over 250/1000 points. On daily charts, the index has formed a bearish candle which indicates further weakness in the near future.

We are of the view that, as long as the index is trading below 16250/54500 the correction wave is likely to continue. Below which, it could retest the level of 16000-15050/53800-53700. On the flip side, post 16250/54500 breakout, the index could move up to 16325-16375/54750-54900.

Bharat Petroleum Corporation Ltd (BPCL)
BUY, CMP: Rs 330.1, TARGET: Rs 350, SL: Rs 320

On the weekly scale, the 400 zone acted as the strong resistance area for the counter due to double top formation. This resulted in the correction in stock from higher levels. However, at present a reversal from an important support zone on the daily chart is very likely for a fresh up move.

IndusInd Bank

BUY, CMP: Rs 897.95, TARGET: Rs 950, SL: Rs 875

After the sharp correction from higher levels, the stock is trading in a range bound mode near its demand zone, which indicates accumulation at these lower levels. Therefore, upward movement from the current level is expected to resume in the coming horizon.

Tata Motors
BUY, CMP: Rs 425.75, TARGET: Rs 450, SL: Rs 415

The stock is continuously trading in an ascending triangle chart formation, which clearly suggests bullish momentum to remain in the short term. In addition, on the weekly scale, the stock has formed a higher bottom formation indicating good strength in the counter for fresh breakout.

Cummins India
BUY, CMP: Rs 1,015.85, TARGET: Rs 1,070, SL: Rs 995

The counter is trading into a range bound mode for the last few sessions, and presently the counter is near the breakout line of the Symmetrical triangle chart pattern. Hence, the recent price action indicates a strong breakout for a new leg of up move in a few trading sessions.

(Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. Views expressed are the author’s own.) 

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