The area of 10K mark has been a strong valuation levels over the last many months. Nifty has witnessed sharp upside bounces from near this 10K mark in March and Oct 2018 period

• By Nagaraj Shetti

The upside momentum continued for the sixth consecutive sessions, but the market faced overhead resistance at the high of 10175 and showed intraday weakness towards the end on Wednesday’s session. A small negative candle was formed on Wednesday at the swing high of 10175 levels. This pattern indicates an emergence of selling pressure/profit booking at the highs. The area of 10K mark has been a strong valuation levels over the last many months. Nifty has witnessed sharp upside bounces from near this 10K mark in March and Oct 2018 period. Hence, Nifty failing to sustain above 10,000 levels in the next 1-2 sessions could be considered as a minor negative reversal for the market and one may expect minor downward correction in the short term.

The overall chart pattern as per weekly/monthly timeframe are still positive. Any decline down to 9700 levels is expected to be a buying opportunity in the near term. As there is a higher possibility of strong buying emerging from the lows. On the upside bounce from the lows, Nifty could surpass the swing high of 10175 and could eventually test the upside levels of 10500 in the next one month. Immediate support is placed at 9980.

Stock Picks:

ADANI ENTERPRISES LTD: BUY- (CMP Rs 150.65)

After showing sharp weakness in the month of March 2020, the stock price (Adani Ent) has shifted into a consolidation with positive bias in the last couple of months (as per weekly timeframe chart). Currently, the stock price is making an attempt of upside breakout of the key overhead resistance at Rs 155. The chart pattern of the last two months is also indicates a formation of ascending triangle type pattern with the neckline of Rs 155. As per this pattern, a sustainable move above Rs 155 could open a potential upside target of around Rs 175-180 levels. Buying can be initiated in Adani Ent at CMP (150.65), add more on dips down to Rs 144, wait for the upside targets of Rs 170-180 in the next 3-5 weeks. Place a stoploss of Rs 137.

GE SHIPPING – (CMP Rs 214.50)

The stock price was in a downtrend over the last few weeks and witnessed sharp upside bounce in this week (as per weekly timeframe chart). We observe a formation of double bottom type pattern around Rs 190 (pink line) and also a ‘W’ type formation. These bullish patterns indicate an important bottom reversal in the stock price (at the swing low of Rs 162- mid of March). Weekly 14 period RSI has turned up from near crucial 40 levels. As per its bearish high low range theory (30-60 levels), it could move up to 60 levels (from a current levels of 43). Buying can be initiated in GE SHIP at CMP (214.50), add more on dips down to Rs 207, wait for the upside target of Rs 240 in the next 3-4 weeks. Place a stoploss of Rs 202.

( Nagaraj Shetti is a Technical Analyst at HDFC Securities. The views expressed are the author’s own. Financial Express Online does not bear responsibility for the investment advice, please consult your investment adviser before investing)