Nifty likely to remain weak below 10,630; see 10% return in PNB

Jaydeb Dey

The Nifty ended Tuesday down 0.33 percent at 10,593.15. It opened on a stronger note and reacted down sharply from the day’s high of 10,633, followed by day long oscillation in the price band of 10,560 to 10,630.

Ending the session with a bearish candle implies it may continue facing resistance on a rise around 10,630. Its 30-day exponential moving average (EMA) is placed around 10,610. Tuesday’s low of 10,551 will act as pivotal support in today’s session as well. 10,500 is its next support level.

On the Nifty hourly chart, its early morning positive opening failed to break out of its 200 EMA and fell sharply back to 10,560 levels. Chart pattern suggests it may continue trading on the negative side as long as it trades below 10,630 levels. Downside dual supports are placed around 10,550 and 10,500 levels.

Nifty patterns on multiple timeframes show that it again nosedived from Tuesday’s high followed by consolidation towards the end of the session. Formation of a Doji candle ahead of the outcome of the Monetary Policy Committee meet scheduled to be released in the latter half of the session implies indecision among traders and investors. Downside supports are placed around 10,560 and 10,500 levels.

The Bank Nifty ended Tuesday 0.02 percent lower at 26,251.00. It fell from its mid-term upward trend line support and ended the session with a Doji candle. Upside resistances are placed around 26,500 and 26,600 levels. 26,100 may continue to act as pivotal support in trade today.

Based on a thorough technical study, the research firm recommends Punjab National Bank which can deliver up to 10 percent return in the short term:

Punjab National Bank | Rating: Buy | Target: Rs 90, stop loss: Rs 75, Return: 10%

After a prolonged downfall, the stock rebounded from the critical support around Rs 75 levels and has again come down to the critical support placed around Rs 80 levels. It looks extremely oversold on the daily as well as the weekly charts.

Based on above mentioned observations, the firm recommends PNB as a buy on dips for the short term upside target of Rs 90.

Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision.