Nifty short-term trend remains positive, key resistance placed at 18250; MPHASIS among top stock picks

By Nagaraj Shetti

After showing decent upside bounce on Tuesday, Nifty witnessed a fine follow-through upmove from the intraday lows on Wednesday and closed the day higher by 86 points. After opening with a weak note, the market slipped into further weakness soon after the opening. It later showed upside bounce from the day’s low of 17855 levels amidst a range movement. The upside got strengthened towards the end and Nifty closed near the highs. A long bull candle was formed on the daily chart, which is back to back in the last couple of sessions. Nifty surpassed the crucial hurdle of down sloping trend line (connected lower tops) around 17950 levels and closed higher. This pattern indicates a sustainable upside breakout of the crucial overhead resistance. This is positive indication.

Conclusion

The short-term trend of Nifty continues to be positive. The upside breakout of important resistance of down trend line and overall positive chart set up is expected to result in further upside for Nifty towards the next key resistance of 18250 levels in the near term. Immediate support is placed at 17850 levels.

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Stock Picks

MPHASIS LTD

Buy | CMP: Rs 2156

The weekly timeframe chart of this IT stock (MPHASIS LTD) indicates a gradual upmove over the last few weeks. The stock price was in an intermediate down trend in the past and has declined as per lower tops and bottoms on the weekly chart. It seems to have formed a bottom reversal around Rs 1900 levels in Dec and has been moving up sustainably since then. The previous negative chart pattern is at the verge of turning into bullish formation like higher tops and bottoms. Hence, the stock price is expected to move up in the coming weeks. A sustainable move above the hurdle of Rs 2180-2200 levels could be considered as a decisive upside breakout of the accumulation pattern. Daily 14 period RSI shows positive indication. Buying can be initiated in MPHASIS at CMP (2156), add more on dips down to Rs 2070, wait for the upside target of Rs 2360 in the next 3-5 weeks. Place a stoploss of Rs 2010.

ROUTE MOBILE LTD 

Buy | CMP: Rs 1251

The weekly timeframe chart of Route Mobile Ltd indicates continues down trend over the last many months. After showing a range bound action in the last one month, the stock price has moved up sharply in the last week, and is currently trading higher post minor downward correction. We observe an attempt of upside breakout of down sloping trend line at Rs 1270-1280 levels. Hence, a sustainable move above this area (Rs 1280) is expected to bring sharp upside momentum for the stock price ahead. Weekly RSI shows positive indication. Buying can be initiated in ROUTE at CMP (1251), add more on dips down to Rs 1200, wait for the upside targets of Rs 1355 and Rs 1430 in the next 3-5 weeks. Place a stoploss of Rs 1165.

(Nagraj Shetti, Research Analyst, HDFC Securites. Views are author’s own.)