Bullish trend will be continued in the large-cap space. We can expect Nifty to take a breather as we are approaching near the upper band of the rising channel pattern.
By Rohan Patil
At the beginning of the previous week, the benchmark index griped in volatility and we witnessed a tug of war between bulls and bears in the initial days of the trading week. However, Nifty 50 traded within the rising channel pattern and took strong support near the lower band of the channel pattern and witnessed a sharp rally and registered its new lifetime high levels of 17947.65 on September 24.
As we are approaching near the upper band of the channel pattern index may witness some profit booking or consolidation in the coming trading session.
Nifty REALTY and Nifty IT outperformed and ruled the Dalal street for this week where the REALTY index top the chart with a gain of 21.22% and the IT index gained 4.09% and continue to lead the benchmark index. The Nifty Metal index seems to be in its distribution phase and closed at 5498.20 levels with a loss of 3.27% and indicates an overbought condition.
To conclude, we believe that the bullish trend will be continued in the large-cap space. We can expect Nifty to take a breather as we are approaching near the upper band of the rising channel pattern. A dip of a couple of per cent would be a good opportunity for traders to enter. The immediate resistance is capped near the 18000 mark and the support for the index is placed near 17600 – 17500 levels.
Last week, Bank Nifty had given a breakout and posted a record high of 38112 but this week saw some profit booking in the index and was unable to continue the momentum on the upside. Though there was no follow-through buying, the index witnessed some volatile trading sessions owing to the FOMC meeting and strengthening of USD against INR.
On the weekly charts, Bank nifty has given a breakout above 37700 which was the intermediate top made in February, and after 7 months of consolidation, it is likely that a fresh-up move will begin taking the index at higher levels. Some important levels will be seen in the coming week if the index manages to sustain above 38150.
On the upside, 38500 will hold key resistance based on Fibonacci extension targets. On the downside, weakness can be seen if the index starts to trade below 37200 taking it further down to 36550 levels.
COAL INDIA: BUY
CMP: Rs 166.10 | Target Rs 185
Stop Loss Rs. 157 | Return 11.50%
The prices were trading in a symmetrical triangle formation for the past nine months and have formed a trend line resistance at 160 levels.
COAL INDIA has broken out of a symmetrical triangle pattern at 166 levels on 23rd Sept and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Indicators and oscillators like RSI & MACD have been showing strength on the daily and weekly charts. Prices are trading above their 21 & 50-day exponential moving averages and based on the price action analysis on the short and the medium timeframes; we can say that the medium-term trend of the stock remains bullish.
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.
Mahindra & Mahindra Financial Services: BUY
CMP: Rs 182 | Target Rs 200
Stop Loss Rs 173 | Return 10%
The prices were trading in a falling channel formation for the past two months and have formed a trend line resistance at 170 levels.
M&MFIN has broken out of a falling channel pattern at 179.35 levels on 17th Sept 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 the daily time frame, which is positive for the prices in the near term.
The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 65 levels which indicates positive momentum will like to continue ahead.
TATA STEEL OCT FUT: SELL
CMP: Rs 1272 | Target Rs 1235
Stop Loss Rs 1290
The stock has witnessed a breakdown of an upward rising trend line on the daily time frame and has closed below the same. Overall we have seen that the stock has underperformed the benchmark index and has drifted lower.
The prices on the daily chart are trading below their 21 & 50 – day exponential moving averages and we have observed a distribution formation on the weekly chart after registering lifetime high levels of 1534.
This week TATASTEEL has given a gap-down opening in the start of the week and was not able to fill the gap despite the positive sentiments in the overall market.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)