By Nagaraj S Shetti
Technical Observation: NIFTY
After showing a steep weakness on Tuesday, Nifty shifted into a sustainable upside bounce amidst volatility on Wednesday and closed the day higher by 215 points. Sharp intraday buying has propelled the market to move up in the later part and Nifty closed near the highs. A long positive candle was formed on the daily chart after opening lower, which is indicating a formation of bullish Piercing line type candle pattern. Formation of such patterns after a reasonable weakness calls for caution for shorts. The negative chart pattern like lower tops and bottoms is intact and the Nifty is currently moving up towards the formation of new lower top of the sequence (which is yet to be formed at the highs). Nifty is currently placed at the hurdle of mid part of Tuesday’s long bear candle at 21500 levels.
Conclusion: The short-term trend of Nifty seems to have reversed up, but the uncertainty remains in the market at the highs. The market could encounter strong overhead resistance around 21500-21600 levels in the coming sessions. Immediate support is at 21220 levels.
Stock Picks:
After showing one day of weakness on Tuesday, the stock price-IOB has witnessed a decisive comeback on Wednesday and closed higher. The stock price is again testing the crucial overhead resistance of down sloping trend line at Rs 46 levels. Hence, a sustainable move above this area is expected to be a sharp upside breakout of the resistance. The pattern of volume and RSI is indicating more upside for the stock price ahead. Buying can be initiated in IOB at CMP (46.05), add more on dips down to Rs 44, wait for the upside targets of Rs 51 and Rs 56 in the next 3-5 weeks. Place a stoploss of Rs 42.
PI Industries Ltd
The range bound action of the last few weeks has eventually resulted in a decisive downside breakout in the stock price-PIIND so far this week. The stock price has declined sharply on Tuesday after forming a new lower top at Rs 3543 in this month. The volume has expanded on Tuesday during downside breakout in the stock price and daily/weekly RSI shows negative indication. One may look to sell PIIND at CMP (Rs 3281), add more on rise up to Rs 3400 and wait for the downside target of Rs 3050 in the next 2-3 weeks. Place a stoploss of Rs 3475.