'Nifty can fall towards crucial support of 7,800-7,700'

Shabbir Kayyumi

Formation of the weekly candle is a small red candle for Nifty, it is continuous 8th week of lower closing. The index had given a bounce back earlier but it could not sustain above 5 WMA and is now trading below 5 DMA. India VIX index has started cooling off after making the highest mark of 86 in the month of March and currently sustaining below 55 marks which suggests contraction of volatility under process and ideal scenario to go towards normal daily ATR.

Recently index touched the lower Bollinger Band placed around 7520 and sustaining above it indicates retracement of prices towards middle band or 20 DMA which is standing around 8900 marks. As long as the index is trading below 20 DMA, one should opt for sell on rise strategy.

Furthermore, prices are trading below 5 days DMA placed around 8400, down move towards earlier crucial support 7800/7700 can continue which can extend to swing low 7500. 7500 interestingly is 50% retracement mark from low of 2008 (2252) and high of 2020 (12430).

Shabbir Kayyumi

Head of Technical & Derivative Research|Narnolia Financial Advisors

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For the banking index, majority of the oscillators are in oversold zone and a relief rally towards 20000 levels is expected.

Below are the top 3 stocks which can give up to 23 percent return:

Bharti Infratel: Buy around Rs 152 | Target: Rs 188 | Stop loss: Rs 135 | Upside: 23%

The scrip has formed a cup and handle on the daily charts and is undergoing consolidation in the longer time frame. It is on the verge of resuming its prior trend. The momentum indicator MACD has crossed the signal line indicating a start of a trend. The RSI too is above its key 40 mark indicating positive momentum on its side. We recommend a buy in Bharti Infratel around Rs 152 keeping a stop loss Rs 135, for target of Rs 188.

Biocon: Buy around Rs 285 | Target: Rs 320 | Stop loss: Rs 268 | Upside: 12%

Daily chart of the stock reveals that demand is increasing and supply is diminishing as stock is taking support from line of parity showing a rebound from its lower levels. Prices are consolidating above the formation of the morning star candlestick pattern showing strength from bottom. With the chart looking attractive and decent volume participation witnessed, we recommend a buy around Rs 285 in this stock for an upside target of Rs 320, keep a stop loss of Rs 268.

Infosys: Buy around Rs 585 | Target: Rs 650 | Stop loss: Rs 550 | Upside: 11%

The stock bottomed out near the Rs 509-515 zones and it has been consolidating for last few days on daily chart. The appearance of emerging cup and handle pattern where handle is about to construct near the line of parity on daily chart indicates up side movement in the coming sessions.

Daily momentum indicator RSI seems to be taking support from its falling line while being trading in an oversold region on daily chart also creating positive rhythm in the scrip. Furthermore, declining histogram in MACD adds the conviction of buying the scrip around Rs 585 for the target of Rs 650 with stop loss of Rs 550 marks.

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