Charts suggest Nifty could move back to recent highs; two stocks that chartists are tracking

August 06, 2020 8:37 AM

Given the momentum with which the markets have bounced back and the fact that the Nifty has bounced back from an important moving average like the 200-day SMA, there is a good possibility that the Nifty could move higher.

Technical indicators are giving positive signals for the short term as the Nifty index is now trading above the 20-day SMA and the 14-day RSI too has bounced back.

By Subash Gangadharan

After correcting for four consecutive sessions from a high of 11341, the Nifty found support at the 200-day SMA and rallied in the last two sessions. In the process, the Nifty crossed the previous swing highs of 11058, thereby reversing the recent downtrend.

Given the momentum with which the markets have bounced back and the fact that the Nifty has bounced back from an important moving average like the 200-day SMA, there is a good possibility that the Nifty could move higher in the coming sessions towards the recent highs of 11341.

Technical indicators are giving positive signals for the short term as the Nifty index is now trading above the 20-day SMA and the 14-day RSI too has bounced back. The 20-day SMA also continues to remain above the 50-day SMA, indicating that the intermediate trend remains positive.

Crucial supports to watch for a reversal of the current uptrend are at 11026.

Buy Bata India (CMP is Rs.1319)
Target: 1440
Stop Loss: 1266
After falling gradually for several weeks and testing the supports of 1230-1245, Bata India has bounced back smartly and broken out of the recent trading range of 1239-1290 on the back of above average volumes. The intermediate supports of 1245-1230 have been tested several times in the last few months and held, thereby making it a strong support. This augurs well for the current uptrend to continue.

Technical indicators too are giving positive signals as the stock trades above the 20-day SMA and 50-day SMA. The 14-day RSI too is in rising mode. We therefore recommend buying Bata India between 1290 and 1323. Targets are at 1440, while stop loss is at 1266.

Buy National Aluminium (CMP is Rs.34.7)
Target: 40
Stop Loss: 32.5
After finding resistance at the 200-day EMA and falling gradually towards the 32 levels, which coincide with the 50-day SMA, National Aluminium found support and has bounced back smartly on Wednesday. Wednesday’s rise from important supports was accompanied with above average volumes, which indicates significant accumulation and a high probability of continuation of the current uptrend.

Technical indicators are giving positive signals as the stock’s 20-day SMA is above its 50-day SMA. The 14-day RSI is in rising mode and the intermediate technical setup too is looking positive. We therefore recommend buying National Aluminium between 34 and 35. Targets are at 40, while stop loss is at 32.5.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are the author’s own.  Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing)

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