Buy Reliance Industries, stock likely to test Rs 945 in short term: Mustafa Nadeem

Epic Research

Nifty ended up for a positive close on the second consecutive day as we witnessed buying in all sectors with a resumption of an upward move based on improving breadth. The current trend is largely due to the move we have seen in last week.

The positive close last week with a reversal pattern on weekly chart concluded the ground for short-term term bulls. The follow-up buying has now provided short-term term support with price action establishing itself above 200 days MA and this is the half battle done.

With previous week the sentiments pertaining to the overall global trade war fear that may further push markets down was seen cooling off and breadth was one important indicator that improved lately.

Despite domestic cues turning to be all against the banking sector, we have seen a decent short covering in PSU and private banks. There may be some short-term swings but the overall structure for leading indices looks bullish.

A break of the channel on a closing basis in short-term will give us further confirmation of the upward momentum on a sustainable basis. With that, we are also witnessing 50 percent retracement to be providing the psychological support.

We expect next upside resistance to be around 10,350 and 10,380 which comes to be our immediate short-term targets. Bank Nifty is also showing some positive signs of reversal and as far as we are above 24,200 in that index, we expect prices to retrace higher.

We suggest buying on dips strategy for short term with 10,150 as our stop loss and reverse level.

Reliance Industries | Rating: Buy | Target: Rs 945, stop loss: Rs 870 | Return: 5%

The stock is seeing a base formation in short-term with prices sustaining the lower trendline support drawn from troughs of November while higher volume suggests a base building to approach toward a breakout of a descending triangle with the target of Rs 945 in short term.