A small negative candle was formed with minor lower shadow. The market action of Wednesday indicate volatility and emergence of minor buying interest from the lower levels.
By Nagaraj Shetti
After witnessing sharp weakness on Monday and Tuesday, Nifty continued to show follow-through weakness on Wednesday and closed the day lower by 21 points. A small negative candle was formed with minor lower shadow. The market action of Wednesday indicate volatility and emergence of minor buying interest from the lower levels.
The area of 11100-11000 has acted as a support in the last two sessions and led to a minor upside bounce. The formation of overlapping candles of the last couple of sessions and a recent formation of lower shadow could signal a possibility of upside bounce from here or from the lower levels.
The positive sequential movement like higher tops and bottoms of the last few months has been broken recently and Nifty formed a new lower top at 11618 on 16th Sept. The recent swing high of 11794 and the formation of bearish engulfing pattern as per daily and weekly timeframe chart could be considered as an important top reversal pattern as of now. This swing high is unlikely to be breached on the upside in the near term.
Having formed a new lower top recently, the overall technical setup suggest that any upside bounce from here could eventually be a lower top formation around 11300-11400 in the next few sessions and one may expect selling pressure to resume from the highs.
The short term trend of Nifty continues to be negative. Having showed signs of buying emerging from the lows on Wednesday, there is a possibility of minor upside bounce attempt in the next couple of sessions and that expected upside bounce could be short lived. The near term downside target is intact around 10800-10700 by next week. Immediate resistance is placed at 11260.
BUY- BATAINDIA LTD (CMP Rs 1337.10)
The stock price on the weekly chart has been moving in a larger range bound action over the last few months. We observe a formation of consistent higher lows and the stock price is repeatedly testing the hurdle of Rs 1360 levels in the last two weeks. The resistance of 20 EMA has been surpassed on the upside at Rs 1328 recently and the stock price is now placed at the upside breakout of the consolidation. Daily and weekly RSI shows positive indication.
Buying can be initiated in Bata India Ltd at CMP (1347.10), add more on dips down to Rs 1285, wait for the upside target of Rs 1445 in the next 3-4 weeks. Place a stoploss of Rs 1260.
Buy- Fortis Healthcare Ltd (CMP Rs 135.15)
After showing a decent upmove in month of June-July 2020, the stock price has shifted into a gradual decline with range bound action in the last 6-7 weeks. The lower area of 20 period EMA has acted as a strong support in the last couple of weeks and the stock price moved up from near Rs 130 levels for few occasions. Hence, the recent swing low of Rs 130 could now be considered as a new higher bottom of the sequence and the stock price is expected to move up from here. Weekly momentum oscillator signal positive outlook ahead.
Buying can be initiated in Fortis Healthcare Ltd at CMP (134.60), add more on dips down to Rs 129, wait for the upside target of Rs 145 in the next 3-4 weeks. Place a stoploss of Rs 126.
(Nagaraj Shetti is a technical research analyst at HDFC Securities. The views expressed are the author’s own. Please consult your investment advisor before investing.)