Market

Buy these two stocks for gains while Nifty, Bank Nifty structure remains bearish

By Rohan Patil

Last week was a very volatile week for the Indian bourses as well as for the entire global market. Every alternate day Nifty changes its candle colour and the major gap up and gap down was the main pain for the benchmark index. Till the last day of the trading week, the index was showing a negative return for the week but a surprising gap-up opening on Friday’s session led to a strong buying and the Nifty closed the week with a three per cent gain.

Nifty has formed a double bottom pattern on the daily chart and the momentum oscillator RSI (14) has shown a bounce back from the oversold levels. The overall structure for the Nifty still remains bearish as prices are well sustained below its (21, 50, & 100) — day exponential moving averages.

The immediate support for the Nifty is placed near 16000 and below that 15800 will act as major support for the Nifty. The immediate resistance for the Nifty is placed at 16450 levels where 21-day exponential moving average is settled.

Bank Nifty structure still bearish

From the last couple of weeks, prices are finding support near their 100-week exponential moving average which is placed at 33618 levels.  The Momentum oscillator RSI (14) has shown a positive divergence at oversold levels on the weekly scale. In this case, indicator made a new low but prices have defended their previous low. 

The Bank Nifty on the daily chart has made a flag like formation whose upper band is formed at 34800 levels and the lower band of the pattern is from 33400 levels. The overall structure for the Bank Nifty still remains bearish as prices are well sustained below its (21, 50, &100) – day exponential moving averages.

We feel that the Currently Banking index has just shown a positive divergence and prices have just shown some recovery so an oversold rally at this point cannot be ruled out.

The immediate support for the Bank Nifty is placed near 33300 and below that 32500 will act as major support for the Bank Nifty. The immediate resistance for the Bank Nifty is placed at 34800 levels where 21-day exponential moving average is settled.

Tata Elxsi: BUY
Target: Rs 9000 | Stop Loss: Rs 8000
Return 07%

TATA ELXSI on the daily chart has given a sharp V shape reversal rally and has formed an intermediate bottom at around 6800 levels. The prices have also given a downward sloping trend line breakout on 18th May above 8200 levels.

On the weekly chart prices have formed a bullish engulfing candle stick pattern and prices are trading above the high of the pattern which is positive for the prices. Prices are trading well above its important averages and Momentum oscillator RSI has also witnessed a trend line breakout above 55 levels on the daily interval.

ITC: BUY
Target: Rs 300 | Stop Loss: Rs 266
Return 07.20%

ITC is giving a consolidation breakout which has been making since last six weeks and sustaining at multi – -year high indicating positive undertone of the market. On the daily charts, the stock is forming big bullish candle with huge volumes of confirmations. 

On the indicator front, the RSI plotted on all the time frame is sustaining above 60 levels which shows strong positive momentum. The earlier stock has given breakout 6 weeks prior and prices consolidated above its trend line support without disturbing its bullish technical factor.

(Rohan Patil is a Technical Analyst at Bonanza Portfolio. The views expressed are the author’s own. Please consult your financial advisor before investing)



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