Mar 12, 2018 07:49 AM IST | Source: Moneycontrol.com

Nifty pullback likely to find resistance around 10,340: Tech Mahindra can yield 8% return in near term

"Nifty patterns on multiple time frames show, this pullback towards 10,340, 10,400 in an extreme case, may again find sellers. Hence, staying cautious on rise is advised," according to Jaydeb Dey of Stewart & Mackertich Wealth Management Ltd.

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October 24, 2008: The Sensex plunged 9.09 percent intraday or 869.64 points. However, the Index was down by 1070.63 points or 10.96 percent to close at 8,701.07 while the Nifty ended at 2,557.25, down 13.11 percent or 386 points. The BSE Midcap closed 8.38 percent lower and BSE Smallcap Index ended 7.66 percent down. The main reason for the fall was that the Central Bank in its policy review did not reduce its rate. The fall was further aided by the confirmation of recession in the UK.
October 24, 2008: The Sensex plunged 9.09 percent intraday or 869.64 points. However, the Index was down by 1070.63 points or 10.96 percent to close at 8,701.07 while the Nifty ended at 2,557.25, down 13.11 percent or 386 points. The BSE Midcap closed 8.38 percent lower and BSE Smallcap Index ended 7.66 percent down. The main reason for the fall was that the Central Bank in its policy review did not reduce its rate. The fall was further aided by the confirmation of recession in the UK.
 
 
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By Jaydeb Dey

Stewart & Mackertich

The Nifty ended 0.15 percent lower at 10,226.85 on the last trading session of the previous week. Early morning pullback found resistance around 10,300, day’s high was 10,296.70, followed by sell off in the later half towards making session lows.

Nifty failing to hold above the critical resistance of 10,280 followed by follow through selling led to a bearish candle at the end of session. However, the Index pull back towards 10,340 is likely as long as dual support zone of 10,140 and 10,100 is intact. Next critical resistance is placed around 10,400.

On the Nifty hourly chart, double bottom formation backed by recovery in RSI from its oversold zone is pointing towards continuation of this pullback towards 10,340. On a similar note, we don’t rule out the possibility of extension of this counter pullback touching 100 hourly EMA placed around 10,400.

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Nifty patterns on multiple time frames show, this pullback towards 10,340, 10,400 in an extreme case, may again find sellers. Hence, staying cautious on rise is advised.

Last Friday, Bank Nifty ended at 24296.45 (down 0.74 percent). The levels of 24,600 and 24,850 are the next resistances. 200 daily EMA is placed around 24,480 which is the major support.

Based on thorough technical study, the stock below can give up to 8 percent return in the near-term:

Tech Mahindra: Rating Buy on dips around Rs 615 | (CMP- Rs 619.20) | Target: Rs 665 | Stop loss: Rs 590 | Return: 8%

Bullish flag pattern breakout followed by sustained consolidation above Rs 600 is an early indication of next leg of up-move towards higher resistances. The 30-daily EMA is placed around Rs 597 which may now act as the immediate pivotal support.

Trend following indicators like MACD and ADX on the weekly chart suggest that the stock is getting ready for the next leg of up-move towards Rs 665. Based on the above mentioned observations, we recommend Tech Mahindra as a strong buy on dips for the near-term upside target of Rs 665.

Disclaimer: The author is Technical Analyst, Stewart & Mackertich Wealth Management Ltd.

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