After witnessing a sharp upside bounce on 7th April 2020, Nifty continued to show follow-through upmove in the better part of Wednesday’s session amidst a volatility
- By Nagaraj Shetti
After witnessing a sharp upside bounce on 7th April 2020, Nifty continued to show follow-through upmove in the better part of Wednesday’s session amidst a volatility, but closed the day on a negative note. A small positive candle was formed on Wednesday with long upper shadow. Technically, this pattern could indicate an emergence of selling pressure at the hurdle of 9100 levels. The Nifty is currently moving in an ascending type channel pattern and witnessed a profit booking from the upper channel line around 9100 on Wednesday. We observe a formation of consistent higher highs in the last couple of weeks.
Hence, there is a possibility of minor downward correction in the short term, which is going to be a buy on dips. This could coincide with the formation of higher bottom around 8500-8550 levels. On the way up, a sustainable move above 9100-9200 levels could push Nifty towards the next upside targets of around 9800-10,000 levels in the next few weeks.
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Century Textile and Industries Ltd: BUY- (CMP Rs 319.70)
After a sharp decline during later February and early March 2020, the stock price has witnessed a sharp upside bounce recently. Presently the stock price makes an attempt of bottom reversal around the swing Rs 280 (25th March 20).
Present upside bounce after a range type movement could indicate an acceleration of upside momentum. Volume expanded with upmove and daily 14 period RSI indicate bullish bias.
Buying can be initiated in CENTURY TEXTILES at CMP (319.70), one may add more on dips down to Rs 305, wait for the upside target of Rs 355 in the next 3-4 weeks. Place a stoploss of Rs 293.
Cholamandalam Investment & Finance co Ltd (CHOLAFIN) – (CMP Rs 147.80)
After the formation of a slight lower bottom at Rs 117.40 (7th April), the stock price has witnessed an excellent comeback recently. This pattern could also indicate an important double bottom type formation at the above said lows. This pattern has formed currently, after the sharp downtrend in the month of March 2020.
We observe a rise in volume along with upmove and a formation of positive divergence pattern in the stock price/daily 14 period RSI. This pattern indicates a positive bias for the stock price in the near term.
One may look to buy CHOLAFIN at CMP (Rs 147.80), look to add more on dips around Rs 141-139 band and wait for the upside target of Rs 166 in the next 3-4 weeks. Place a stop loss of Rs 134.
(Nagaraj Shetti is a technical research analyst at HDFC Securities. Views expressed are the author’s own)