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On the February F&O expiry session, the bulls took a brutal knock to test the levels of 16200 however post that for the few sessions there was some consolidation where the benchmark traded in a broad range of 16400 – 16800.

During the week there were few upticks that created illusion that worst was behind us but on Friday the bears again came strongly to slip below 16200 and eventually end tad above it with a weekly loss of around 2.5 percent.

The bounce during the week exactly faced resistance around the bearish breakdown levels that coincides with a 200SMA and bearish gap; this augurs well for the bears. If we monitor the recent price action of Nifty on the weekly chart, it can be seen that Nifty twice faced resistance around the 18300 – 18600 zone and now by breaking the December month swing low has confirmed a ‘Double Top’ bearish breakdown.

The charts are definitely distorted however the oscillators are now hovering in the oversold zone and hence we may continue to see in between bounce; traders may hence continue with stock specific trades that are giving opportunities on both sides of trend however they need to avoid getting carried away.

As far as levels are concerned, we sense Nifty testing levels of 16000 soon followed by 15800 whereas on the flip side, immediate resistance is seen around 16400 – 16550. The recent moves are mostly driven by the geopolitical news hence it would be difficult to catch a perfect bottom however investors can take this opportunity to accumulate some of the marquee names in a staggered manner.

Stock recommendations:

NSE Scrip Code – TECHM

View – Bullish

Last Close – Rs. 1453.60

Justification – While the broader markets were under pressure, some of heavyweight IT stocks showed out performance and signs of near term bottoming out. This marquee IT stock as well after forming a base around the 200SMA has bounced back sharply to break above the recent congestion zone. On the weekly chart we are witnessing a positive candle formation on a key retracement level that augurs well for the bulls. In addition, momentum oscillator i.e. RSI has entered positive zone above 50 supporting the buy call. We sense the IT pack and this front line counter to perform and hence we recommend a buy with a near term target of Rs, 1520. The stop loss can be placed at Rs. 1397.

2.  NSE Scrip Code – BATA

View                  –   Bearish

Last Close          –   Rs. 1722.50

Justification – The stock prices have broken below key support levels of Rs. 1780 that played a sheet anchor role for more than four times in last three months. By breaking below the key support the prices have confirmed a ‘Cup N Handle’ bearish breakdown.

Momentum oscillator i.e. RSI has already slipped into the negative territory and we are also witnessing a bearish crossover between 50SMA and 89EMA that indicates a decent price correction in the near term. We hence suggest to sell this counter at current levels and on rise towards 1740 for a downside target of Rs. 1570. The stop loss can be kept around Rs. 1790.

(The article is written by technical analyst Rajesh Bhosale. Views are personal)