We can expect Nifty to hit an upside target range of 16650 - 16700 in a short span of time. Dips should be utilized to create fresh longs in large-cap stocks.
By Rohan Patil
Nifty 50 has consolidated in the narrow range of 16200 – 16350 for six trading sessions and has given a breakout on the higher side and closed near its lifetime high levels on August 13. On the weekly chart, prices have given a clean break out of a bullish pole flag pattern and prices were able to close above the upper band of the pattern.
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RSI (14) plotted on the weekly time frame remains above the 65 mark and is drifting higher towards the overbought level, indicating that bulls are tempting to take control of the trend. Two back-to-back strong green candles on the weekly chart indicate an aggressive breakout in the Benchmark index.
To conclude, we believe that the choppy trend has ended in the large-cap space. We can expect Nifty to hit an upside target range of 16650 – 16700 in a short span of time. Dips should be utilized to create fresh longs in large-cap stocks.
Nifty FINANCIAL Index continued its bullish trend after a consolidation breakout and closed at 17350 levels with a gain of 1.25% on the weekly interval. Nifty IT index continues to rule the market on week on week basis and closed at 32678 levels with a gain of 4.39% on the weekly time frame.
Nifty pharma index seems to be in its distribution phase and closed at 14049 levels with a loss of 3.23% and indicates an overbought condition. The nifty Metal index has formed a bearish hanging man candlestick pattern at all-time high levels if prices closed below the lower wick of the pattern which is at 5540 levels we can get a confirmation for the pattern.
It was a very volatile week for the Bank Nifty where a price continues to trade in a stringent manner within the range of 35700 – 36150 levels. Prices on the daily chart are trading near the horizontal trend line resistance which is placed at 36250 – 36300 levels.
One of the positive aspect is that prices are trading in a higher high higher bottom formation on the weekly interval. The 21-day exponential moving average is reading near the continuation gap which is placed near 35500 levels.
Momentum oscillator RSI (14) on the daily chart has formed an inverted head & shoulder pattern and its neckline resistance is placed near 63 levels. On the indicator front, MACD has given a positive Crossover which indicates that the move is likely to continue northward. ADX (14) shows a reading of 17 and is rising which explains the strength of the trend will continue.
Bank Nifty is also seeing large put writing at 36000, this makes a good potential support for Bank Nifty followed by 35800 levels. Resistance is pegged near 36500 and 36900 levels.
CMP: Rs 1272.40 | Target Rs 1360 |Stop Loss Rs 1220
ESCORTS were trading in a narrow range of 1140 – 1240 from last four months and has formed rectangle pattern on the daily time frame. On August 10, prices witnessed a breakout of a rectangle pattern at 1270 levels.
Stock is trading above its 21, 50 & 100- day exponential moving averages on a daily time frame, which is positive for the prices in the near term. When we observe volume activity there has been above-average volume set up from the past couple of weeks on the daily chart, which indicates accumulation phrase. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover on the weekly scale.
Based on the above Technical studies we can come out with a view that the price may move towards higher levels over a short period.
BATA INDIA: BUY
CMP: Rs 1705 | Target Rs 1825 | Stop Loss Rs 1635
The prices were trading in an ascending triangle formation since past six months and have formed a trend line resistance at 1690 levels.
BATA India has broken out of an ascending triangle pattern at 1693 levels on August 10 and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. Stock is trading above its 21, 50 & 100- day exponential moving averages on daily time frame, which is positive for the prices in the near term.
MACD indicator is reading above its centerline with positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)