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Tuesday, 20 March 2018

Nifty pullback from prolonged upward trending channel support placed around 10,000 levels; L&T can give 5% return in short-term

“Nifty may see some buying on dips around dual support zone placed around 10,030 and 10,000” says Jaydeb Dey, Technical Analyst at Stewart & Mackertich Wealth Management Ltd.

 http://www.bigprofitbuzz.com/free-trial/The Nifty previous day ended 0.99 percent down at 10,094.25. It reacted down sharply from day’s high 10224.55 towards ending the session below the 200 daily EMA placed around 10110.

Ending the session with a bearish candle suggests, Nifty may challenge prolonged upward trending channel support placed around 10,000 levels. December 6, 2017 bullish reversal point placed around 10,030 is also a critical support.

Broader chart pattern suggests, Nifty pull back from the critical dual support zone of 10,030 to 10,000 is likely. Hence, aggressive short selling is certainly not advised at this juncture. Rather traders and investors may look for some oversold quality blue chip stocks for the purpose of long-term portfolio formation. Upside resistances are placed around 10,190 and 10,230.

On the Nifty hourly chart; RSI is approaching towards oversold zone. Hence short selling is certainly not advised. However, pullback in Nifty may find difficult to breakout immediate resistances placed around 10,190 and 10,230.

Nifty patterns on multiple time frames show, Nifty is approaching towards the prolonged upward trending channel support placed around 10,000 levels, which may provide a springboard to a quick pullback towards 10,190 and 10,230.

The Bank Nifty previous day ended 1 percent down at 24,245.10. It closed below the 200 daily EMA placed around 24,490. Leading indicators suggests, it may continue to trade weak as long as it trades below 24,850 and may well again challenge critical support of 24,000.

Based on thorough technical study, the research firm has recommended L&T which can give up to 5% return in the near short term:

Larsen & Toubro Ltd | Rating: Buy | Target: Rs 1330, stop loss: Rs 1240 | Return: 5%

In yesterday’s session, L&T again found support around March 2015 established top around Rs 1260, day’s low was Rs 1265.85, and ended on a positive note. Also, on the line chart, midterm upward trend line support is placed around Rs 1260 levels.

Rebounding from the critical support of Rs 1260 while the primary uptrend is well intact is an indication of a pull back. RSI turned up from previous double bottom is also a strong evidence in support of our bullish argument.

Based on the above mentioned observations, the house has recommended L&T as a strong buy on dips for the short-term upside target of Rs 1330.

Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision.
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