By Rohan Patil
The Benchmark NSE Nifty 50 index, for the last two trading sessions, is hovering within a very narrow range and has formed two consecutive small candles indicating a sideways trading range. Nifty 50 broke its narrow range candlestick consolidation on 27th Aug 2021 and registered its lifetime high of 16722.05 levels.
Nifty has also whipsawed its bearish dark cloud cover pattern which was formed on August 18, indicating bulls are having the upper hand in the current scenario. From the last few trading sessions market breadth is in the favor of the bulls. In terms of ratio on every two positive closings, there is one negative closing that indicates a 2:1 ratio.
The index is closely trading above its 21-day exponential moving average on the daily interval. We have also spotted a bullish hidden divergence in the RSI (14) where prices did not register a new intermediate low but RSI formed a new low near 65 levels on the daily interval.
Nifty closed well above the 16600 level which is an optimistic start to the September series. The upside resistance is likely to be capped near 16950 – 17000 levels. For now, the support level for the Nifty stands at 16400 – 16300 levels.
It was a volatile week for the Bank Nifty where prices traded in a one thousand points range and closed 1.70 per cent higher from its previous week’s close. Prices are trading within the rectangle pattern on the daily time frame and have been able to close above their 21 & 50-day exponential moving averages. Bank Nifty has continuously underperformed the Benchmark index on all the time frames which is visible of relative strength (RS) indicator. The majority of the indicators & oscillator has indicated a negative trend for the banking index.
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Momentum oscillator RSI (14) has flattened out near the 55 – 65 range and clearly indicates a sideways trading range in the Banking stocks on the weekly time frame. The upside resistance is likely to be capped near 36300 – 36400 levels. For now, the support level for the Bank Nifty stands at 34800 – 34600 levels.
Stocks to buy
HDFC BANK: BUY
CMP: Rs 1548.45
Target RS 1635 | Stop Loss Rs 1500 | Return 05.62%
The prices were trading in a symmetrical triangle formation for the past four months and have formed a trend line resistance at 1530 levels. HDFC BANK has broken out of a symmetrical triangle pattern at 1558 levels on 24th Aug and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Stock is trading above its 21, 50 & 100- day exponential moving averages on daily time frame, which is positive for the prices in the near term.
MACD indicator is reading above its centerline with positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 60 levels which indicates positive momentum will like to continue ahead.
ABB INDIA: BUY
CMP: Rs 1850
Target Rs 2050 | Stop Loss Rs 1790 | Return 11%
A swing trade setup is visible for ABB India Ltd. The stock can give up to 11 % returns. It has given a multi-year breakout and the momentum is likely to continue. The price setup looks promising with a big green candle coupled with impressive volumes. On the front of the indicator, MACD has shown a positive crossover on daily charts and ADX is showing a reading of 22 with a rising trend.
The counter has likely to complete its accumulation phrase near its horizontal trend line support on the weekly scale. RSI (14) on the daily chart is reading near 67 levels indicates stock still has a lot of potentials to move ahead.
CMP: Rs 3941
Target Rs 4220 | Stop Loss Rs 3783 | Return 07%
BRITANNIA registered its low of Rs 2100 on March 20 and prices witnessed a sharp reversal and gave a return of 90 percent in just four months and made a high of 4010 on 24th July 20. And post that counter consolidated in a falling channel pattern on the weekly scale.
Last week’s prices have given a breakout of a one-year-long consolidation pattern and tested its 52-week high of Rs. 3967.50. The Nifty FMCG index itself has given a breakout of eight weeks conjunction zone indicates FMCG index is likely to lead from the front.
On the daily chart, the stock has formed a W pattern after forming a double bottom pattern around the Rs. 3400 level, below its 200-day exponential moving average.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)