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'If Nifty holds 11,780, bounceback towards 12,050 possible'

Nifty is trading above its major simple moving averages, which are rising and are placed around 11,680 that suggest a strong uptrend will unfold in mid-term

June 17, 2019 / 10:10 AM IST
The 10 most valued domestic companies together added a whopping Rs 4,04,068.05 crore in market valuation last week, with RIL and HDFC Bank leading the gains. Here are the top 10 firms according to their market capitalisation for the week ended April 9:

The 10 most valued domestic companies together added a whopping Rs 4,04,068.05 crore in market valuation last week, with RIL and HDFC Bank leading the gains. Here are the top 10 firms according to their market capitalisation for the week ended April 9:

 
 
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Nifty traded in a tight range of 12,000-11,800 the entire last week, forming an inside bar type candlestick pattern. Current weekly candlestick pattern formation suggests upmove is intact unless it breaks 11,770 on the lower side.

The recent price action of the index is showing flag formation in progress having a lower side of the flag around 11,800 and upper side around 12,100. Since the formation is resembling a bullish flag, a decisive close above 12,100 will give a pattern breakout and target as per pattern comes around 12,500 and higher levels.

RSI indicator on the monthly timeframe is trading around 63 whereas RSI on daily time frame is trading above 50 that signifies positive momentum is intact unless it slides below 50. At the same time, RSI on weekly time frame took a reversal from 50 forming pullback buy pattern and is currently trading around 63 indicating correction sell leg will complete shortly and the original trend may re-begin.

Nifty is trading above its major simple moving averages, which are rising and are placed around 11,680 suggest strong uptrend will unfold in mid-term. Nifty's short-term moving average 5-week EMA is rising and placed around 11,780 that implies weakness is only below the crucial support of 11,780 till then one should opt for buy on dip strategy.

Major trend line support is on the lower time frame and principle of polarity shows support near 11,780-11,800. If these levels hold then Nifty forms the double bottom pattern on an hourly chart and it can bounce back toward 11,970 and 12,050.

Bank Nifty

Bank Nifty traded lower below its pivot point placed at 31,000, last week forming a big body bearish candle. However, looking at oversold oscillators, a possibility of a bounce back towards 31,000 cannot be ruled out.

Here is the list of five stocks that could return 6-21 percent:

Tata Motors | Buy around: Rs 163 | Target: Rs 198 | Stop loss: Rs 148 | Upside: 21 percent

After hitting high of Rs 435, Tata Motors has given correction and touched Rs 130 where its key support is seen. RSI has started curling up after testing its oversold zone and daily MACD has given bullish crossover in negative territory thus supports bullish bias in the stock.

Apart from this, positive divergence seen in RSI that suggests upside move in the counter in coming sessions. We suggest buying Tata Motors around Rs 163 with a stop loss of Rs 148 and a target of Rs 198.

REC: | Buy around: Rs 148 |Target: Rs 170| Stop loss:  Rs 134 | Upside: 15 percent

Recently, the stock gave ascending channel break out on upside that suggests trend reversal on the daily chart. From last few days, it has been trading above its all significant DMAs that indicates strength.

Formation of a big body bullish candlestick pattern while giving trend line breakout indicates stock can upsurge further higher. Buy RECL around Rs 148 with a stop loss of Rs 134 and for a target of Rs 170.

Indian Bank | Buy around: Rs 265 | Target: Rs 295 | Stop loss: Rs 247 | Upside: 11 percent

After hitting a high of Rs 428 Indian Bank has given correction and touched Rs 202 level where its key support is seen. The emergence of a green candle above 200-DMA is showing upside move.

Sustainability of RSI above 50 and positive divergence adds the conviction of buying the scrip around Rs 265 for a target of Rs 295 and with a stop loss of Rs 247.

CESC | Buy around: Rs 760 |Target: Rs 830 | Stop loss: Rs 719 | Upside: 9 percent

Scrip took a sharp rebound on the upside after hitting the low of Rs 648. Currently, it has formed a strong base near its 50-DMA that comes near Rs 720.

RSI and MACD are also looking firm that indicates support at current levels. One can go long in CESC around Rs 760 for a target of Rs 830 and with a stop loss of Rs 719.

United Breweries | Buy around: Rs 1,335 | Target: Rs 1,415 | Stop loss: Rs 1,290| Upside: 6 percent

After taking support at Rs 911, scrip took a sharp rebound. From the past few weeks, it has made a higher high formation on the weekly chart. The emergence of green candles above 200-DMA shows upside move.

Sustainability of RSI above 50 and positive divergence adds the conviction of buying the scrip around Rs 1,335 for a target of Rs 1,415 with a stop loss of Rs 1,290.

The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Disclosure: The analyst does not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. 

Shabbir Kayyumi
Shabbir Kayyumi is the Head of Technical & Derivative Research at Narnolia Financial Advisors. He has rich experience in Technical Analysis across Equities, Commodities, Global Indices and Global Currencies. His strength lies in Elliott wave and Neo Wave theory while he is equally proficient in Candlestick patterns, Fibonacci, price projection, classical Dow Theory, and inter market analysis for interpreting market trends.
first published: Jun 17, 2019 09:56 am

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