View: 12,100 a crucial zone for Nifty50

By Mehul Kothari
Sr. Technical Analyst, Indianivesh Securities

The Nifty is close to breaking out of its correction phase and looks set for growth above 12100 levels. So, 12100 is a very crucial zone to look for, according to technical analysts. Stocks such as HDFC Bank, ICICI Bank, HDFC and Axis Bank could outperform in the near term while IGL and HUL are more likely to underperform.

Where Are We: During the previous week (November 8, 2019), the Nifty formed a candlestick formation that resembles a ‘doji’. Even in the current week, there is another ‘doji’ formation, which indicates indecisiveness prevailing at current levels. Going ahead, 11800 could act as a decisive level for the markets since it is a low seen in the past two weeks. A breach of the same might halt the ongoing momentum for the time being. This can drag the index towards 11700 or levels below along with profit booking in individual stocks.


What Is In Store: On the flip side, a move above 12000 this time could pull the index towards 12200 levels. Even in that scenario, we have a view that the Nifty has rallied from 11100 to current levels without any meaningful correction. Thus, once it starts trading near the 12000–12200 zone, one should start booking profits in order to avoid any losses arising from a decisive correction in the markets.

What Could Investors Do: On the sectorspecific front, looking at the weekly chart of the Nifty Midcap 100 index, we are observing that the index is stuck near the 17000 mark, which is the placement of a falling trend line. Hence, only a breakout above the 17000 mark would result in fresh buying in midcap stocks. With regard to individual stocks, we are bearish on IGL since the stock is approaching the potential reversal zone of the bearish harmonic AB=CD pattern. The stock can be sold between Rs 430 and Rs 440 with a stop-loss of Rs 455 for the downside target of Rs 390 in the coming weeks.