By Nagaraj Shetti
A sharp down trended move continued in the market for the second consecutive sessions on Wednesday and Nifty closed the day lower 174 points amidst a range movement. Another long bear candle was formed on the daily chart, which signal a downtrend continuation pattern in the market. The formation of long bear candle back to back in the two session indicate a trend reversal down in Nifty after a sustainable upmove of the last 22-23 sessions. The present weakness could form a new higher bottom of the uptrend of last three weeks. Important daily support as per change in polarity is placed around 17650 levels. Hence, this area could be a buy on dips opportunity for the short term. Nifty on the weekly chart has started to show weakness after an excellent upmove in the last three weeks. After the negation of bearish lower tops and bottoms pattern as per weekly chart in recent past, the market could find support at the previous upside breakout point of around 17650-17700 levels during its current downward retracement.
Stock Picks:
Buy Rashtriya Chemicals & Fertilizers – (CMP Rs 85.35)
As per weekly timeframe chart, this fertilizer stock (RCF) indicate a sustainable upside bounce over the last couple of weeks. The stock price has made an attempt of upside breakout of the significant hurdle of down sloping trend line at Rs 85-86 and corrected down slightly. Hence, further upmove above the hurdle is likely to open a sharp upside momentum. Volume has started to expand along with upmove in the stock price. Weekly RSI and weekly ADX/DMI indicate chances of further strengthening of upside momentum in the stock price ahead.
Buying can be initiated in RCF at CMP (Rs 85.35), add more on dips down to Rs 82, wait for the upside target of Rs 94 in the next 3-4 weeks. Place a stoploss of Rs 79
Buy Aster DM Healthcare – (CMP Rs 192.10)
According to the weekly timeframe chart of health care stock ASTERDM signal an upside bounce in this week after a consolidation of last week. The stock price has witnessed a false downside breakout of the crucial support at Rs 180 in later part of Dec-21 and bounced back from the lows. Presently, the stock price is expected to move towards the important hurdle breakout of Rs 198-200 levels in the short term (down sloping trend line, connecting previous lower highs). A sustainable move above this area could open a sharp upside momentum in the stock price ahead. The volume has started to expand and weekly RSI shows positive indication.
One may look to buy ASTERDM at CMP (Rs 192.10), add more on dips down to Rs 182 and wait for the upside target of Rs 212 in the next 3-4 weeks. Place a stoploss of Rs 180.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)