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Nifty outlook negative, may fall below 18300 if 18459 support breached; sell these two stocks in near-term

Nifty could test the 20-day SMA at 18459 in the very near term. A larger correction towards the 18365-18294 supports is likely if the Nifty fails to hold above the 20-day SMA

Nifty outlook negative, may fall below 18300 if 18459 support breached; sell these two stocks in near-term
Nifty has been correcting in the last few sessions after touching a new life high of 18888

By Subash Gangadharan

On Daily chart, we observe that Nifty has broken out of a downward-sloping trend line that has held down the highs of 2021 and 2022. In the process, the index is now comfortably trading above the 20 and 50-day SMA. However, Nifty has been correcting in the last few sessions after touching a new life high of 18888. On the 30 min chart, we can also observe a negative MA crossover as the 20-period MA has moved below the 50-period MA and the index has been making lower tops and lower bottoms over the last few sessions. We, therefore, believe that the Nifty index could test the 20-day SMA at 18459 in the very near term. A larger correction towards the 18365-18294 supports is likely if the Nifty fails to hold above the 20-day SMA.

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Stocks picks for next 15-26 trading sessions

Bata India: Sell
Bata is in a short-term downtrend as it has been making lower tops and lower bottoms for the last several weeks. Recently, the stock broke down below its recent supports and also reacted from the 20-day SMA this week. This indicates that the downtrend looks set to continue. Technical indicators are giving negative signals as the stock is now trading below the 20-day and 50 day SMA.

Momentum readings like the 14-day RSI are in decline mode and not oversold, which implies potential for more downsides. We, therefore, expect the stock to correct further in the coming sessions. Sell between the 1684-1690 levels. CMP is 1687.5. Stop loss is at 1739 while the downside target is at 1600.

Jubilant Foodworks: Sell
Jubilant Foodworks is in a short-term downtrend as it has been making lower tops and lower bottoms for the last several sessions. In the process, it has broken its near-term support and reacted from the 20-day SMA. This indicates that the downtrend looks set to continue. Technical indicators are giving negative signals as the stock is now trading below the 20-day and 50-day SMA.

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Momentum readings like the 14-day RSI too are in decline mode and not oversold, which implies potential for more downsides. We, therefore, expect the stock to correct further in the coming sessions. Sell between the 535-541 levels. CMP is 538.2. Stop loss is at 557 while the downside target is at 500.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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First published on: 08-12-2022 at 08:39:40 am