The texture of the pullback rally indicates that the Nifty 50 index is likely to consolidate between 16500 to 16720 price ranges.
By Shrikant Chouhan
After a sharp fall, in the current week the benchmark indices opened with a gap and post strong opening the index was hovering in the range of 16450-16600. However, on Tuesday in the late afternoon, it finally cleared the resistance of 16590 and succeeded to close above the same which is broadly positive for the market.
- Zee Ent, Dish TV, Bharti Airtel, Vodafone Idea, TCS, Wipro, Adani Transmission stocks in focus
- Stocks to buy: Nifty eyes 17500; SBI, IndusInd Bank, Motherson Sumi, others show strong uptrend in near-term
- Ami Organics, Vijaya Diagnostic, HCL Tech, Infosys, Zee Entertainment, Vodafone, Wipro stocks in focus
Technically, the texture of the pullback rally indicates that the market is likely to consolidate between 16500 to 16720 price ranges. In addition, on the intraday chart, the index has formed higher bottom formation which suggests further uptrend from current levels. We are of the view that, as long as the index is trading above 10 day SMA or 16500 uptrend wave likely to continue up to 16700-16750. On the flip side, below 16500 uptrend would be vulnerable. Sector specific, so far current rally largely dominated by IT, FMCG and financial stocks. The formation suggests large cap FMCG and financial stocks would likely to outperform in the near term. So any short term corrections should be used to add quality FMCG and Financial stocks with the medium term time horizon.
Technical stocks to buy
BUY, CMP: Rs 632.50, TARGET: Rs 662, SL: Rs 617
The stock is in the strong uptrend wave, on daily and weekly charts it has formed strong breakout continuation formation. Rs. 617 would be the key support level for the trend following traders, above the same uptrend wave likely to continue up to Rs. 662.
The stock is consistently taking support near 50 day SMA, on daily charts it has formed strong reversal formation which indicates further uptrend from current levels. For the positional traders, 10 day SMA or Rs. 2135 would be the sacrosanct support level, above the same reversal wave likely to continue till Rs. 2265.
BUY, CMP: Rs 3,717, TARGET: Rs 4,865, SL: Rs 3,640
From the last couple of months the stock is witnessing price correction, currently, the stock is trading near 200 day SMA. The oversold texture suggests high chances of pullback rally from current levels. We are of the view that, 200 day SMA would act as a key support zone and strong pullback rally is not ruled out if it succeeds to trade above Rs. 3640 level.
In this month so far, the stock corrected over 5 percent. After a short term correction the stock has formed Hammer followed by bullish candle formation. Which is broadly positive for the SBI Ltd. Currently, the stock is trading near its previous support level and momentum indicators suggest high chances of fresh uptrend rally if the stock succeeds to trade above Rs. 408.
(Shrikant Chouhan is the Executive Vice President, Equity Technical Research at Kotak Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)