During the initial part of last week, Benchmark lacked momentum however on the October F&O expiry day; the bears were in complete charge as they not only broke the psychological support of 18000 but also managed to close below 17900 on the same day. The bank index that initially started the week on a strong note succumbed to the pressure of broader markets and the saviour of the previous week turned culprit to drag benchmark below key support.
Now technically there is some evidence that indicates further weakness in the market. 1) Nifty has marked a lower top lower bottom price formation by slipping below 18000 2) Nifty has comfortably closed below 20EMA and 3) Importantly, as the October month candle has completed it is showing a formation of Shooting Star a bearish formation that doesn’t augur well for the bulls. On Friday, we did see a bounce back however that got sold into; going ahead as the hourly oscillators are in deep oversold territory we may see in-between bounce however with all the above evidence it seems the upside are likely to remain capped. In such a scenario, 17900 – 18000 levels are likely to act as immediate resistance whereas on the flip side, immediate support is seen around 17550 i.e. 50SMA followed by 17450 the previous swing low.
The volatility is likely to remain on the higher side hence we advised traders to avoid aggressive bets and be selective in stock selection.
NMDC | Rating: Buy | Stop loss: Rs 133 | Target: Rs 160
On the daily chart, we are witnessing a bullish reversal candlestick pattern known as ‘Bullish Engulfing’. The said pattern is seen on the support of the previous swing low and is witnessed with a huge spurt in volume. The oscillator RSI has given a fresh buy signal and is also showing positive divergence. In addition, a bullish pattern is known as ‘Dragon Fly Doji’ can also be seen on the weekly chart supporting the buy call. Looking at the above evidence and favourable risk-reward ratio at current levels we recommend a buy for a short term target of Rs 160. The stop loss can be placed at Rs 133.
Adani Enterprise | Rating: Buy | Stop loss: Rs 1,260 | Target: Rs 1,515
Prices have broken below key trend line support that previously acted as a strong demand zone four times in the last four months. The said pattern resembles a ‘Rising Wedge’ breakdown. On the daily chart, prices have closed below short term and medium-term moving average 20SMA and 89EMA respectively. In addition, RSI as well has entered the negative zone indicating overall weakness in the counter. We recommend shorting this counter on a bounce around Rs 1,450 levels for a near term target of Rs 1,260. The stop loss can be placed at Rs 1,515.
(The writer is a technical analyst at Angel One Limited; views expressed are personal)
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