By Nagaraj Shetti
After showing a sustainable up move in the last few sessions, Nifty witnessed profit booking from the new highs of 16701 levels on Wednesday and closed the day lower by 45 points. After opening on an upside gap of 77 points, Nifty made an attempt to move up in the early part of the session. Sharp intraday profit booking has witnessed a day’s high of 16700 levels and the weakness continued till mid to later part. A long negative candle was formed on the daily chart after opening higher, which indicates a formation of a bearish counterattack type candle pattern. This market action suggests further consolidation or minor downward correction ahead.
Previously, we observed downward correction up to 2-3 sessions during broader range movement and recently the consolidation with narrow range movement. The underlying uptrend of Nifty as per smaller and larger time frame is intact and Wednesday’s pattern is not showing any alarming signal with regards to a top reversal pattern. However, there is a possibility of further consolidation or minor weakness within a range in the short term.
The market seems to have started tiring at the new highs of 16700. But, there is no indication of any reversal pattern unfolding at the higher levels. Any decline from here down to the support of 16400 (20 day EMA on a daily chart) could be a buy on dips opportunity in the near term. We expect an upside bounce from the lows in the coming sessions. The upside target for Nifty remains at 16900 levels.
Buy Mangalore Refinery and Petrochemicals– (CMP Rs 45.20)
The sharp trended decline of the last couple of months seems to have completed, as this oil refinery stock (MRPL) has started to show a sustainable upside bounce from the lows. We observed formation of a bullish hammer type candle pattern last week (as per weekly chart) and a decent up move so far this week from the lows. This pattern indicates a crucial bottom reversal at the lows of Rs 39.75-last week. The stock price has also bounced up from the initial support of the up-swing trend line at Rs 42 levels. Weekly 14 period RSI and weekly DMI/ADX patterns signal more upside for the stock price ahead.
One may look to buy MRPL at CMP (Rs 45.20), add more on dips down to Rs 43 and wait for the upside target of Rs 50.50 in the next 3-4 weeks. Place a stop loss of Rs 41.50.
Buy Happiest Minds Technologies Ltd – (CMP Rs 1432)
The weekly time frame chart of this stock indicates a multi-month uptrend in the last many months. The stock price has witnessed an up move as per the positive sequence of higher tops and bottoms. The higher bottom formation was limited to a range movement on most of the occasions. After showing a similar range movement in the last one month, the stock price is now placed to show an upside breakout of the range at Rs 1460 levels. The pattern of daily ADX/DMI and 14 period RSI indicate strengthening of upside momentum for the stock price ahead.
Buying can be initiated in Happiest Minds Technologies Ltd at CMP (1432), add more on dips down to Rs 1370, wait for the upside target of Rs 1580 in the next 3-4 weeks. Place a stop loss of Rs 1330.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)