After showing range-bound movement with positive bias in the last few sessions, Nifty witnessed steep decline on Wednesday and closed the day lower by 189 points. Nifty opened on a negative note and continued with weakness in the early to mid-part of the session. Intraday upside recovery attempt of mid part has failed to sustain and Nifty finally closed near the lows. A long bear candle was formed on the daily chart that indicates downside breakout of the recent sideways range movement in the market.
After the downside breakout of ascending trend line support on 23rd Dec, the market showed gradual pullback rally in the next 6-7 sessions and broken down from the highs on Wednesday from near the resistance of said up trend line. The negative chart pattern of lower tops and bottoms is intact and further weakness from here could drag index down to the lower bottom in the near term. Nifty on the weekly chart is indicating a possible completion of lower top near the trend line resistance around 18250 levels.
The short-term trend of Nifty seems to have reversed down after a small pull back rally. Further weakness from here could take Nifty down to the recent swing low of 17775 levels in the short term. Any pull back rally could find resistance around 18150 levels.
Trent Jan Future: Sell (CMP Rs 1304.70)
After showing minor upside bounce in the last week, the stock price (Trent Ltd) has witnessed a sharp decline in this week so far. The stock price has revisited the crucial support of ascending trend line on the weekly chart at Rs 1300 levels and is currently showing indications of sharp downside breakout of the support ahead. Hence, further weakness from here could bring bears into action for the near term. The weekly 14 period RSI shows negative indication. Selling can be initiated in TRENT Jan Future at CMP (1300.05), add more on rise up to Rs 1355, wait for the downside target of Rs 1195 in the next 3-5 weeks. Place a stoploss of Rs 1385.
Gujarat Gas Jan Future: Sell (CMP Rs 477.95)
After the downside breakout of the important support of ascending trend line at Rs 500 in week before last, the stock price Gujarat Gas Ltd showed minor pull back rally in the last week and has slipped into weakness again so far this week. The weekly chart pattern indicates a validation of downside breakout of the trend line support recently. Volume has started to rise during weakness in the stock price and weekly RSI shows negative indication. Selling can be initiated in Gujarat Gas Jan Future at CMP (477.95), add more on rise up to Rs 492, wait for the downside target of Rs 440 in the next 3-5 weeks. Place a stoploss of Rs 507.
(Nagaraj Shetti is a Technical Research Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)