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Nifty could fall to 14592 in coming weeks; sell these two stocks to pocket gains, charts show downtrend

By Subash Gangadharan

On the daily chart, we can observe that after recently breaking the lows of 15735 and touching a new 52-week low last week, NSE Nifty 50 bounced back this week. But the bounce has not sustained as selling once again emerged from the resistances and pushed the Nifty index lower. Technical indicators too are not giving any positive signals as the Nifty index trades below a downward sloping 20 day and 50 day SMA. 14-week RSI too is weakening. Nifty could now be headed towards the next major intermediate support of 14592 in the coming weeks. 

Our view would turn wrong if the Nifty manages to take out the resistances of 15565-15707. Traders should wait for strength to emerge before going aggressively long.

The below picks are for the next 15-26 trading sessions

Sell Escorts

Escorts is in an intermediate downtrend as it has been making lower tops and lower bottoms for the last several weeks. Last week, the stock broke down from a trading range and closed below the 50 week SMA. This indicates that the downtrend looks set to continue.

Technical indicators are giving negative signals as the stock is now trading below the 20 day  and 50 day SMA. And both these moving averages are sloping down. Momentum readings like the 14-day RSI are in decline mode and not oversold, which implies potential for more downsides.

We therefore expect the stock to correct further in the coming sessions. Sell between the 1475-1485 levels. CMP is 1479.9. Stop loss is at 1605 while downside target is at 1300.

Sell Sun Pharmaceutical Industries

Sun Pharma is in an intermediate downtrend as it has been making lower tops and lower bottoms for the last several weeks. Last week, the stock broke below the 50 week SMA and 200 day EMA. After a minor pullback this week, the stock has again started to move lower. This indicates that the downtrend looks set to continue.

Technical indicators are giving negative signals as the stock is now trading below the 20 day  and 50 day SMA. And both these moving averages are sloping down. Momentum readings like the 14-week RSI too are in decline mode and not oversold, which implies potential for more downsides.

We therefore expect the stock to correct further in the coming sessions. Sell between the 805-815 levels. CMP is 809.95. Stop loss is at 851 while downside target is at 750.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)



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