Nifty has an immediate resistance area, which indicates that level 8,750-8,800 will be a curial hurdle to be crossed immediately.
Nifty recently observed some profit booking and the index breached the 8750 levels. There are strong support clusters around the 8,680-8,700 levels which would act as a cushion on the downside. The momentum indicators have shown sign of exhaustion and we recommend reducing aggressive longs. This expiry we expect Nifty to expire between the 8,750-8,800 levels. The index has an immediate resistance area, which indicates that level 8,750-8,800 will be a crucial hurdle to be crossed immediately. It is essential for the Nifty to close above this level for a positive bias and continuation of the uptrend. And any move beyond that may trigger a further upside till 8,950 and 9,000, which is a possibility over the next few months. However, for the uptrend to remain intact, the Nifty should sustain above the level of 8,550 in case of further correction over the next few weeks.
The decline in the banking along with metal and auto sector was main reason for the fall in the markets. Most of these stocks have entered into the oversold zone and are due for a bounce unless any strong reversal is confirmed. The Bank Nifty faces immediate resistance around the 19,750 level on the upside and will continue to face selling pressure at higher levels.
Reliance Industries after a sharp rise has confirmed a multiyear breakout pattern which is a bullish signal. The counter recently has been market outperformer and the stock is in a strong uptrend and any dips should used as a buying opportunity. The RSI is in bullish mode and is currently trading above the 65 levels. The stock has rallied from the crucial support zone of 1020 levels. The prices have consolidated near its long term averages and the rising trend line. The RSI is in bullish mode and is currently trading above the 60 levels and can expect price targets of 1220-1280 in the long term.
Kotak Mahindra Bank has tested the rising support line drawn from the important lows and formed a bullish candlestick pattern along with the positive divergence in the momentum oscillators which indicates an impending trend reversal on cards and short term bottom in place and we recommend to buy at the current levels for an upside of 8-10% in short term.
(The author is Manav Chopra, CMT, head technical analyst, Monarch Networth Capital)