Decisive move below 9,700 can push Nifty around 9,300; Infosys, SBI top buys

Shabbir Kayyumi

The domestic market shrugged off the negative downgrade rating by Moody's, as a robust rally of 5 percent was seen during the last week in the index.

Now, Nifty is heading closer to 100 DMA placed around the 10,320 mark. At the same time, Nifty has given closing above five months SMA last week suggesting bullish movement to continue in mid-term too.

On a larger timeframe, Nifty has managed to close inside lower Bollinger band in monthly time frame indicating mean reversion movement in the progress which can continue towards the middle of the band currently standing around 11,000 levels.

Shabbir Kayyumi

Head of Technical & Derivative Research|Narnolia Financial Advisors

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Recent Cup and Handle pattern breakout by Nifty shifts the immediate price range to 10,000-11,000 mark.

Nifty’s movement of higher highs with higher lows remains. On the lower side crucial support is seen near 9,700 marks and any decisive move below this zone can push the index lower towards previous swing pivot placed around 9,300 marks.

Explosive Price Momentum (EPM) in Bank Nifty has pushed its upside by 4,000 points in the last two weeks indicating sharp short covering. However, previous swing high is standing near 22,000 marks and it can act as resistance and possibility of consolidation before moving further cannot be ruled out.

Canara Bank | Rating: Buy around Rs 100 | Target: Rs 134 | Stop Loss: Rs 89 | Upside: 34 percent

Canara Bank prices have given falling channel breakout on the upside with the expansion of bands on daily chart suggesting a continuation of the trend in the direction of the breakout. MACD has given bullish crossover and about to move above the equilibrium level of zero on daily chart.

Flat positive divergence in RSI on daily chart is also adding further strength in the stock. Traders can accumulate the stock on dips around Rs 100 for the upside target of Rs 134 with a stop loss of Rs 89.

State Bank of India | Buy around Rs 182 | Target: Rs 208 | Stop Loss: Rs 166 | Upside: 14 percent

The stock has been consolidating in a wide range from the past few weeks. Currently stock has given breakout with long body bullish candle from the rounding pattern indicating move on the upside. Positive crossover in MACD with ascending histogram is attributing further strength.

RSI also gave a positive crossover with its average on daily chart. Thus, stock can be bought around Rs 182 with a stop loss of Rs 166 for the target of Rs 208.

Infosys | Buy around: Rs 680 | Target: Rs 770 | Stop Loss: Rs 620 | Upside: 13 percent

From last few weeks, Infosys is moving in a well defined ascending channel with multiple touch points and appears to be having strong support around Rs 620-630 levels as it bounced back on a couple of time from the demand zone of the mentioned channel.

Hence, the stock sustained above this support then a decent target of Rs 770 is not ruled out in this counter over a given period of time. Therefore, investor should accumulate this scrip around Rs 680 with a suggested stop-loss of Rs 620 for the upside target of Rs 770.

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