By Nagaraj Shetti
After showing consistent up moves in the last six sessions, Nifty shifted into a minor profit-booking mode on Wednesday and closed the day lower by 57 points. A small negative candle was formed on the daily chart with a minor lower shadow. Technically, this pattern indicates a short-term reversal in the market after a rise of 6 sessions. The smaller decline at the highs could signal a lack of sharp selling participation in the market. The bullish sequence of higher tops and bottoms is intact and Tuesday’s high of 18180 levels could now be considered as a new higher top of the sequence. Present minor weakness or consolidation movement could end up with the formation of another higher bottom at the lows. Hence, the present weakness with range movement could be a buy-on-dips opportunity.
Stock Picks
Buy Birlasoft – CMP: Rs 275.5 – Targets: Rs 296-320 – Stop Loss: Rs 258
The stock price has been in a consistent uptrend over the last six sessions. The chart pattern indicates the formation of an important bottom reversal around Rs 250 levels in the month of March. Presently, the stock price is in an attempt to upside breakout of the key overhead resistance of descending trend line around Rs 278-280 levels. Volume has started to expand during the upside breakout and the daily 14-period RSI is showing a positive signal. Buying can be initiated in BSOFT at CMP (Rs 275.50), add more on dips down to Rs 266, and wait for the upside targets of Rs 296 and Rs 320 in the next 3-5 weeks. Place a stoploss of Rs 258.
Buy Hindustan Copper – CMP: Rs 105.2 – Targets: Rs 114-122 – Stop Loss: Rs 98
After a sharp downtrend from January to March, the stock price has shifted into a consolidation phase in the last month with a positive bias. The sharp up move of this week so far is signalling a possibility of a rounding bottom formation. This overall positive chart pattern suggests an upside breakout of that pattern around Rs 108-118 levels in the near term. Volume has started to expand during the up move in the stock price. One may look to buy HINDCOPPER at CMP (Rs 105.20), add more on dips down to Rs 101 and wait for the upside targets of Rs 114 and Rs 122 in the next 3-5 weeks. Place a stoploss of Rs 98.
(Nagaraj Shetti is Technical Research Analyst at HDFC securities. Views expressed are author’s own.)