By Nagaraj Shetti
After showing up move with high volatility on Tuesday, Nifty witnessed sharp upside bounce on Wednesday and closed the day higher by 197 points amidst intraday range movement. The opening upside gap remains unfilled. After the formation of positive hammer type candlestick pattern on the daily chart on Tuesday, the market gave Thumbs-up to the bullish pattern and formed a long bull candle. Technically, this indicate a higher bottom reversal pattern. This is a positive indication and opens more upside for the short term.
The significant uptrend line (trend line connecting previous swing highs and lows) has acted as a strong support again for the market around 17K levels recently. But, having formed couple of lower tops after moving up from this trend line support in the past, the odds of another lower top formation is high (below last lower top of 17794 -2nd Feb). On the occurrence of such action, one may expect another round of selling pressure emerging from lower highs. RBI’s mid quarter policy is expected to be out by Thursday and the outcome is likely to show fresh directions to the market for the near term.
Conclusion: The short term trend of Nifty has reversed up after the bullish candlestick pattern of Tuesday. There is a chances of further upside towards 17600-17700 levels in the next few sessions. But, the overall chart pattern indicate a probability of weakness from the lower top formation below 17800 levels. Immediate support is placed at 17350.
Buy TVS Motor Company (CMP: Rs 664.05)
The down trend of the last few months seems to have ended in this automobile stock (TVS Motors). After the formation of double bottom type formation around Rs 590 levels recently, the stock price has witnessed a sustainable upside bounce in the last week and the upmove with volatility continued this week as well. The stock price is now making an attempt to move above the hurdle of previous swing high of Rs 570 levels and the upside breakout of this area could open a sharp upmove for the stock price ahead. The weekly 14 period RSI shows positive indication.
Buying can be initiated in TVS Motors Co. Ltd at CMP (Rs 664.05), add more on dips down to Rs 640, wait for the upside target of Rs 730 in the next 3-4 weeks. Place a stoploss of Rs 620.
Buy Gujarat Alkalies Chemicals (CMP: Rs 756.45)
The stock price is in a sustainable upmove over the last couple of weeks. The overall weekly chart pattern indicate bullish sequence like higher tops and bottoms. Minor dips in between was used as buying opportunity. Currently, the stock price is showing minor downward correction on Thursday. Further upside from here could find resistance of previous high around Rs 840-845 levels and a decisive move above this area is likely to open a sharp trended upmove in the stock price ahead. The weekly 14 period RSI and volume pattern are showing positive indication.
One may look to buy GUJALKALI at CMP (Rs 756.45), add more on dips down to Rs 730 and wait for the upside target of Rs 835 in the next 3-4 weeks. Place a stoploss of Rs 701.
(Nagaraj Shetti is a Technical Research Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)
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