Nifty tech charts indicate pause & further weakness
The rise in volatility & whipsaw trades may take place in short term.
By ET CONTRIBUTORS |
BCCL
By Sandeep Porwal
Technical analyst - Institutional desk, Ashika Stock Broking
Where We Are: A close fight between bulls & bears was being observed in the week gone by, while multiple attempts by the bulls to hold up gains above the all-time high (ATH) failed. The key reasons for the volatility have been the dismal GDP data & frequent divergent news flows on the US-China trade deal front. The level of 12100 remains a strong resistance for the index. This level shall act as a key trigger/resistance for the resumption of the uptrend. Midcap & smallcap index, too, had reversed its gains & technical setup is indicating further correction may take place.
What Is in Store: FIIs remained net sellers in the week gone by & since the last 3 trading sessions once again there is a build-up of bearish bets in the Nifty index future. For the first time since October 9, the index registered a close below to its 20 days SMA which is placed at the level of 11980. Formation of the bearish engulfing candlestick on a weekly chart indicates a pause & further weakness. We, however expect weakness on a close below the 11883 mark which is an intermediate low/support. Nifty Bank yet again failed to sustain above the key level of 31740 (spot) & staged a sharp intraday drop. This level remains a strong hurdle in the short term.
What Could Investors Do: The rise in volatility & whipsaw trades may take place in short term. We recommend addition of longs in Pidilite Industries & Concor and expect upside of 6% & more with SL of 3%. Sell on the rise is advised for M&M Fin.
Technical analyst - Institutional desk, Ashika Stock Broking
Where We Are: A close fight between bulls & bears was being observed in the week gone by, while multiple attempts by the bulls to hold up gains above the all-time high (ATH) failed. The key reasons for the volatility have been the dismal GDP data & frequent divergent news flows on the US-China trade deal front. The level of 12100 remains a strong resistance for the index. This level shall act as a key trigger/resistance for the resumption of the uptrend. Midcap & smallcap index, too, had reversed its gains & technical setup is indicating further correction may take place.
What Is in Store: FIIs remained net sellers in the week gone by & since the last 3 trading sessions once again there is a build-up of bearish bets in the Nifty index future. For the first time since October 9, the index registered a close below to its 20 days SMA which is placed at the level of 11980. Formation of the bearish engulfing candlestick on a weekly chart indicates a pause & further weakness. We, however expect weakness on a close below the 11883 mark which is an intermediate low/support. Nifty Bank yet again failed to sustain above the key level of 31740 (spot) & staged a sharp intraday drop. This level remains a strong hurdle in the short term.
What Could Investors Do: The rise in volatility & whipsaw trades may take place in short term. We recommend addition of longs in Pidilite Industries & Concor and expect upside of 6% & more with SL of 3%. Sell on the rise is advised for M&M Fin.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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