Sell on any bounce; 2 stocks to exit as Nifty may go below 18K: Chandan Taparia

“On the trade side, first is a sell on Indian Hotels, this stock has seen a huge short build up and continues with still lower top, lower bottom. Technically, it has given a breakdown below 305-310 zone and holding below the same. Second trading idea is to go for a sell in Tata Chemicals. Already the structure is weak and when the market is falling down, more weakness is visible,” says Chandan Taparia, Head Technical & Derivatives, Motilal Oswal Securities


What is your view on the market, this selling from the day’s high is not always a great sign even for technical analysts. What would you look out for considering today is weekly expiry?
Talking about the market setup, the index is gradually drifting lower and we have noticed that from last six to seven trading sessions, the index is forming the lower lows and that means every day, the index is making the new low and resistances are gradually shifting higher and supports drifting lower.

Today, we have broken this 50-day exponential moving average which was near the 18,180 marks and even now we are approaching a key level of 18,088. If we remember, around September 16, it made high near to the same and then drifted lower and took effort to surpass the same. We have come to the key level but as of now, the gravity and the pressure is intact in the market and that is why we believe the term side is opening.

As of now, the resistances are gradually shifting higher. Earlier, the hurdles were near to 18,442 and are shifting even lower to the 18,350-18,300 zone. With this setup, we suggest selling on any bounce with resistance at 18,300. We are expecting this index to go down below 18,000 and test the next support of 17,950.

To sum up, the overall trend set up is negative and will play some negative bias, looking at the jump in volatility and decline in both the indices. 18,300 is the hurdle and looking for 17,950 in the Nifty index.

But in terms of stock specific action, are you recommending some sell trades?
Yes the structure of the market is negative and most of the stocks are down. The advance decline ratio being what it is, it is very tough to go for bottom fishing and it is not advisable to challenge the trend which is turning lower due to global concerns.

Now, on the trade side, first is a sell on Indian Hotels, this stock has seen a huge short build up and continues with still lower top, lower bottom. Technically, it has given a breakdown below 305-310 zone and holding below the same.

We have seen a build-up of short position and long liquidations are also visible. So Rs 306 is the resistance where one can sell. The stock is gradually falling down. We have two targets – 290 and 285. One can sell with a stop loss of Rs 306 for a target of Rs 290-285.

Second trading idea is to go for a sell in Tata Chemicals. Already the structure is weak and when the market is falling down, more weakness is visible. This stock has corrected sharply in the last two months all the way from Rs 1,200 to near Rs 950 level. So the trend and structure is weak and breaking the key zone. So weakness could continue and we can sell with a stop loss of Rs 965. We have a target of Rs 910-900.


(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)