By Nagaraj Shetti
After showing consolidation movement on Tuesday, Nifty witnessed a sustainable upmove on Wednesday and closed the day higher by 135 points. A sustainable upmove has emerged in the market till afternoon, before showing another round of consolidation movement at the highs. A long positive candle was formed on Wednesday on the daily chart with lower and minor upper shadow. Technically, this pattern indicate an upside bounce in the market after one session of sharp weakness on Monday. The crucial overhead resistance of 14,880 levels (resistance as per change in polarity) came into the scene on Wednesday, as Nifty retested the hurdle by forming a day’s high of 14,879, before showing minor weakness from the highs.
Previously, on three occasions, the Nifty has witnessed a sharp downward reversal from near this resistance area (14,880) in subsequent sessions, after closing at the edge of this area in previous sessions. The Nifty has closed again at the edge of this hurdle on Wednesday (made a high of 14,879) and there is odds of downside turnaround of Nifty from the highs, as happened in the past. But, a sustainable move above 14,900 levels could bring sharp upside momentum back into action. The formation of broader range movement with one day of declines just below the hurdle and a formation of consistent higher lows in the last three daily candles could signal an optimistic view in the market for a short term.
The short term trend of Nifty is positive with range bound action. The market is now placed near the make or break – crucial area of 14,900 levels. The short term chart pattern indicate minor intraday weakness or consolidation movement around 14,880 levels before showing a sustainable upside breakout in the short term. Immediate support is placed at 14,730.
Buy KOLTEPATIL (CMP Rs 243)
The weekly timeframe chart of this Real Estate stock-Kolte Patil Developers Ltd indicate a sustainable upside bounce, that started from last week. After showing a false downside breakout of the weekly lower range at Rs 240 in the mid part of March, the stock price has witnessed a sustainable upside bounce in the next two weeks. This false downside breakout could mean chances of more upside in the near term. The larger degree of higher tops and bottoms is intact and the recent swing low of Rs 212 of mid of March could be considered as a new higher bottom of the sequence. Weekly 14 period RSI is making an attempt to move above 60. This could mean further strengthening of upside momentum in the stock price.
Buying can be initiated in KOLTEPATIL at CMP of Rs 243, add more on dips down to Rs 232, wait for the upside target of Rs 268 in the next 3-4 weeks. Place a stoploss of Rs 225.
Buy UNIONBANK (CMP Rs 36.85)
The sharp downtrend in this PSU banking stock (Union Bank) seems to be over, as the stock price has witnessed a sustainable upside bounce in the last few sessions. The stock price has witnessed an upside bounce from near the crucial support zone of weekly 10 and 20 period EMA and the trend line support as per the concept of change in polarity around Rs 34-35 levels.
We observe a formation of higher bottoms on the weekly chart and the recent swing low of Rs 33.30 of mid part of March could be considered as a new higher bottom of the sequence. Hence one may expect further upside in the short term. Weekly 14 period RSI shows positive indication and volume has started to expand with upmove in the stock price.
Buying can be initiated in UNIONBANK at CMP of Rs 36.85, add more on dips down to Rs 35, wait for the upside target of Rs 40.50 in the next 3-4 weeks. Place a stoploss of Rs 33.75.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)