The trendline support for Nifty is currently placed at 14,350 odd levels, which also coincides with the partially filled gap support placed between 14,336 and 14,469.
MARCH 02, 2021 / 07:26 AM IST
On February 1, Nifty formed a bullish inside candle which is also known as Harami candlestick pattern. However, the overall formation still looks weak on the daily charts and it is advisable to remain stock-specific bullish with protective stop losses.
After the recent fall from the highs, Nifty is now trading below its 5, 10 and 20 days EMA. By breaching the crucial support of 14,635, Nifty has also confirmed the bearish formation of lower top and lower bottom on the daily chart.
On February 26, Nifty formed a bearish island reversal pattern on the daily charts. This formation usually leads to a sharp downside post breaking the low of the candle and it has not been breached as of yet.
Nifty is yet to break below the support of 55 days EMA, placed at 14,315 odd levels.
The 55-day EMA acted as a bullish reversal during the correction seen before Budget.
There has also been the support derived from the upward sloping trend-line adjoining the major bottoms since March 2020 bottom on Nifty weekly charts.
The trendline support is currently placed at 14,350 odd levels, which also coincides with the partially filled gap support placed between 14,336 and 14,469.
India VIX has reached above 28, its highest level in the last eight months. VIX index has also started sustaining above its 200 DMA which is a bearish sign for the markets.
RSI oscillator has given a breakdown on the daily charts, while on the weekly charts it has developed big negative divergence. MACD has also given the bearish sign on daily and weekly timeframes.
This setup indicates that one should not go overboard in long positions.
Nifty has entered the downward trend and is expected to remain under pressure in the coming weeks too.
There is short-term support which is placed in the zone of 14,300-14,350. However, below 14,300, we could see, Nifty accelerating the downward momentum towards the positional support of 13,600 which happens to be the intermediate bottom on weekly charts.
The strategy for March should be to adopt a conservative approach in long positions. Every bounce should be utilised to lighten the long commitments.
Resistance for the Nifty is seen at 14,900 and 15,180.
Here are three buy calls for the next 2-3 weeks:
Dalmia Bharat Sugar | LTP: Rs 165 | Target price: Rs 188 | Stop loss: Rs 152 | Upside: 14%
The stock has broken out from the upward sloping channel on the weekly charts. Volumes during the breakout remained significantly higher as compared to the previous weeks.
The primary trend of the stock has been bullish with higher tops and higher bottoms on the daily and weekly charts.
The stock is placed above all important moving average parameters.
Torrent Power | LTP: Rs 387.55 | Target price: Rs 415 | Stop loss: Rs 360 | Upside: 7%
In February, this stock registered a new all-time high by surpassing the multi-month consolidation.
Volumes went up significantly during the price breakout. The stock is forming higher tops and higher bottoms. It has been trading above all important moving averages. Indicators and oscillators like RSI, MACD and DMI have turned bullish on the short-term charts.
NMDC | LTP: Rs 131.65 | Target price: Rs 147 | Stop loss: Rs 120 | Upside: 12%
The stock has surpassed the previous top resistance on the daily chart after forming nice rounding bottom on the daily chart.
The stock has been trading above all important moving averages. Indicators and oscillators like RSI, MACD and DMI have turned bullish on short-term charts.
(The author is a technical research analyst at HDFC Securities)