Nifty is consolidating in a tight range of 10,930-10,650 since last two months. The entire movement forms an Ascending Triangle pattern. A breakout will lead to a close above 10,930 for higher target of 11,200
Shabbir Kayyumi
Despite opening lower last week, indices recouped its losses in the last four trading sessions by making higher highs and higher lows formation that helped Nifty to close above 10,900.
The market has managed to sustain above its three major simple moving averages—20-DMA, 100-DMA and 200-DMA—which are placed between 10,820-10,830. It suggests strong support zone on lower side. A normal retracement towards this strong support zone can be used as a buying opportunity.
Nifty is consolidating in a tight range of 10,930-10,650 since last two months. The entire movement forms an Ascending Triangle pattern. A breakout will lead to a close above 10,930 for higher target of 11,200.
Although the index is moving in a tight range of 10,840-10,930 since last week, Parabolic SAR, a smart trading system is in a buy mode on daily as well as on weekly timeframe.
Bank Nifty: Banking index is trading in rising wedge pattern having lower side support around 26,950 and a descending trend line breakout on lower time frame is expected above 27,585, which will push prices higher towards 27,900.
IGL: Buy | Buy around: Rs 270 |Target: Rs 330| Stop loss: Rs 238| Upside: 22 percent
The scrip has given Symmetrical Triangle breakout after a short-term consolidation on the daily chart. From last few days, it has been trading above all its important moving averages along with golden crossover that shows further impetus on the upside.
On the weekly chart, long bull candle suggests further bullishness in coming sessions. Moreover, RSI has given trendline breakout on the weekly chart that indicates upside momentum. By looking all these factors, trader and investor can buy this scrip around Rs 270 with the stop loss at Rs 238 for the target of Rs 330.
Vijaya Bank: Buy | Buy around: Rs 45 |Target: Rs 53| Stop loss: Rs 41| Upside: 18 percent
The scrip took a sharp rebound on the upside after hitting the low of Rs 40 and started consolidating. It is going to form a Cup and Handle pattern on the weekly chart in coming sessions.
Currently, it forms a strong base near Rs 45-46. Positive crossover of MACD in negative territory is showing firmness that indicates support at current levels. One can go long in Vijaya bank around Rs 45 for the target of Rs 53 with a stop loss of Rs 41.
PNB: Buy | Buy around: Rs 80 |Target: Rs 94| Stop loss: Rs 74.5| Upside: 17 percent
The stock has been an underperformer throughout 2018 and was trading in a sloping channel with lower highs and lower lows on the monthly chart. However, for the past few weeks, supply is looking diminished due to the formation of long bull candles at lower levels.
It has managed to hold above the downward sloping line and has given a breakout from its Double Bottom pattern. The positive divergence on the daily chart also suggests prices may move further on the upside in the coming weeks. Hence, investors should accumulate the stock around Rs 80 with a stop loss of Rs 74.5 for the target of Rs 94.
Federal Bank: Buy | Buy Around: Rs 88 |Target: Rs 98| Stop loss: Rs 81| Upside: 11 percent
The scrip seems to be bottoming near Rs 85-87 where it has formed Bullish Harami pattern on the daily chart. It suggests upsurge towards higher side. Scrip took support from its upward sloping line along with declining histogram in the negative territory of MACD on an hourly chart. It indicates the scrip can take northward turn.
Aforementioned rationale suggests buying in the scrip around Rs 88 for the target of Rs 98 with a stop loss of Rs 81.
Maruti: Buy | Buy around: Rs 7,350 |Target: Rs 8,050| Stop loss: Rs 7,019| Upside: 9 percent
After hitting the peak of Rs 7,949, the stock slipped to Rs 7,161. Then it turned back after forming a congestion zone on daily charts. As of now, it has bounced back from its rising trendline on the daily chart that is showing stability in the stock.
A declining histogram in MACD below the central line is creating optimism in coming sessions. Key support level is located near Rs 7,020. As long as it sustains above the same, a possibility of moving on the upside is higher and it can hit the target of Rs 8,050.
The author is Head — Technical and Derivative Research at Narnolia Financial Advisors.
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