The Sensex is also very close to the psychological level of 50,000, which is another reason to trigger a short term sell off. By Subash Gangadharan
Markets have been continuously moving higher over the last few sessions and making new life highs in the process. Buying has emerged on any intraday dips, thereby ensuring the uptrend remains intact. The short term uptrend is however beginning to look stretched. While the Nifty/Sensex could move up further in the very near term, we believe that these main indices could make a short term top soon. Zooming into the intraday charts of the Nifty, we can see that the index may be forming a head and shoulder pattern.
The Sensex is also very close to the psychological level of 50,000, which is another reason to trigger a short term sell off. Crucial supports to watch for a short term trend reversal on the Nifty are at 14435. A close below this level could lead to the Nifty coming down towards the 14300-14200 levels.
Buy CESC
After correcting from a high of 700 touched in September 2020, CESC found support at the 555 levels in early November 2020. These levels also roughly coincide with the previous supports tested in May and Aug 2020, thereby making it a strong support.
The sock has since then rebounded and consistently been making higher tops and higher bottoms over the last few weeks.
Yesterday, the stock also broke out of the recent high of 640 on the back of above-average volumes. This augurs well for the uptrend to continue.
Technical indicators too are giving positive signals as the stock trades above the 20-day and 50-day SMA. Intermediate momentum readings like the 14-week RSI too are in rising mode and not overbought.
We believe the stock is ready to continue the next leg of its underlying uptrend and has the potential to move higher in the coming weeks. We, therefore, recommend a Buy between the 670-685 levels. CMP is 683. Stop loss is at 624 while targets are at 810.
Buy ITC
ITC has entered into a new intermediate uptrend a few weeks back as it crossed its previous intermediate high of 210. The stock has since then corrected and consolidated in a range above the 200-day EMA.
Today, the stock broke out of the 200-206 range on the back of above-average volumes. This suggests that the stock is ready to move higher and continue its intermediate uptrend.
Technical indicators too are giving positive signals as the stock trades above the 20-day and 50-day SMA. Intermediate momentum readings like the 14-week RSI too are in rising mode and not overbought.
We believe the stock is ready to continue the next leg of its underlying uptrend and has the potential to move higher in the coming weeks. We, therefore, recommend a Buy between the 208-212 levels. CMP is 211.2. Stop loss is at 205 while targets are at 226.
(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are personal. Please consult your financial advisor before investing)
This article is auto-generated by Algorithm Source: www.financialexpress.com
