After showing minor intraday weakness from the highs on Tuesday, Nifty continued to show upside momentum amidst a range movement on Wednesday and closed the day on a decent gain of 77 points.
By Nagaraj Shetti
After showing minor intraday weakness from the highs on Tuesday, Nifty continued to show upside momentum amidst a range movement on Wednesday and closed the day on a decent gain of 77 points. A small positive candle was formed with minor lower shadow, which indicates a continuation of upside momentum in the market with range bound action. New swing high was formed at 11561 on Wednesday, but Nifty did not show any intraday profit booking from the highs.
The crucial overhead resistance of the intermediate uptrend line (resistance as per the concept of change in polarity) at 11500 has been broken on the upside in this week, but there is evidence of lack of strength in the upside momentum at market highs recently.
This mentioned action could be a cause of worry for bulls to sustain the upside breakout. More often such lack of upside momentum during upside breakouts tend result in a false upside breakout of the underlying. On the way up, Nifty could encounter another upside resistance as per weekly timeframe chart at 11630-11650 levels.
The short term trend of Nifty continues to be positive. Next upside resistance to be watched at 11650 for the next few sessions. Immediate support to be watched at 11450. A decisive/sustainable move above 11600-11650 could pull Nifty towards the next upside of 11900-12000 in the near term.
BUY RBL Bank Ltd (CMP Rs 200.95)
After moving into a larger consolidation pattern, the stock price has shifted into an upside bounce on Wednesday.
Presently shows an upside breakout of the triangle pattern on the weekly chart at Rs 93, which could be an upside breakout of significant reversal pattern. We observe a formation of positive candlestick pattern as per daily/weekly time frame chart. Volume has started to rise along with the upside breakout in the stock price and the weekly RSI is showing positive indication.
Buying can be initiated in RBL Bank Ltd at CMP (200.95), add more on dips down to Rs 192, wait for the upside target of Rs 222 in the next 3-4 weeks. Place a stoploss of Rs 186.
BUY Shriram Transport Finance Co. Ltd (CMP Rs 729)
After showing minor declines/sideways consolidation in the last few weeks, the stock price has witnessed an upside bounce in this week. At the day’s close, the stock price is placed at the edge of witnessing an upside breakout of the crucial overhead resistance around Rs 730-735 levels. We observe a formation of higher bottom reversal at Rs 636 of early Aug 20. This positive chart pattern signals the strength of upside momentum in the stock price.
Volume has started to rise along with the upmove in the stock price. The weekly 14 period RSI has turned up from near 40 levels. Hence, one may expect further strengthening of upside momentum.
Buying can be initiated in Shriram Transport Co. Ltd at CMP (729), add more on dips down to Rs 700, wait for the upside target of Rs 805 in the next 3-4 weeks. Place a stoploss of Rs 685.
(Nagaraj Shetti is a Technical Research 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.)