After falling sharply for several weeks and bouncing back sharply from the lows of 7511 last week, this week began on a quiet note as the Nifty traded in a range between the 8199-8679 levels.
- By Subash Gangadharan
After falling sharply for several weeks and bouncing back sharply from the lows of 7511 last week, this week began on a quiet note as the Nifty traded in a range between the 8199-8679 levels. Technical indicators are however giving weak signals. The Nifty trades below the 13-day and 50-day SMA. The 13-day SMA is also below its 50-day SMA and both these moving averages are still sloping down, suggesting potential for more downsides in the intermediate term.
While the 14-day RSI is moving higher and giving positive divergence signals, the 14-week RSI is in decline mode and making new lows, suggesting a weakening of momentum for the intermediate term. This implies that while there are possibilities of a pullback rally in the near term, the markets are headed lower in the intermediate term.
The Nifty would however need to convincingly cross the 8679 levels for a pullback rally to emerge. Else, we could be headed lower once the immediate supports of 8199 are broken. Downside targets in this scenario are at the recent lows of 7714-7511.
Buy Hero Moto Corp above Rs.1648 (CMP is Rs.1640)
Target: 1860 | Stop Loss: 1530
After falling sharply for several weeks and almost testing the major long term supports of 1400, Hero Moto Corp has bounced back recently and stabilized at current levels. The stock has in fact made a higher bottom at 1542 and is gradually moving higher.
Technical indicators too are giving positive signals as the 20 minute MA has crossed the 50 minute MA from below on the 15 minute intraday charts. This is a positive signal for the near term at least. The 14-day RSI too has bounced back smartly from oversold levels and giving positive divergence signals
The short term uptrend is likely to continue if the stock can take out its recent highs of 1673. With the weakness seen in the broad markets, we however recommend buying Hero moto Corp only if it crosses today’s highs of 1648. Targets are at 1860, while stop loss is at 1530.
- Subash Gangadharan is a Technical & Derivatives Analyst at HDFC Securities. Views expressed are the author’s own.