There is a possibility of consolidation movement or minor weakness near 18000 mark in the next 1-2 sessions, before showing further upside movement from dips.

By Nagaraj Shetti

The upside momentum continued in the market for the third consecutive sessions on Wednesday and Nifty closed the day with handsome gains of around 120 points. A reasonable long bull candle was formed on the daily chart with minor upper and lower shadow. Technically this pattern indicates a continuation of an uptrend in the market and the formation of upper and lower shadow’s signal emergence of volatility at the highs. At the same time, the formation of lower shadows of the last two session’s bull candle indicates a buy on intraday dips action in the market. However, having moved up sharply in the last four sessions, there is a possibility of consolidation or minor downward correction from the highs. The overall market breadth seems to have tired on Wednesday after a sharp run up of the last few sessions. The broad market indices have started to consolidate at higher levels. The nullifying of a bearish pattern recently could mean sharp trend reversal on the upside and any dips from here could be a buying opportunity.

The market continued with upside momentum on Wednesday, but the pace of the market seems to have reduced and the volatility has started to occur at higher levels. There is a possibility of consolidation movement or minor weakness near 18000 mark in the next 1-2 sessions, before showing further upside movement from dips. Immediate support is placed at 17760 and the near term upside target to be watched at 18200 levels.

Stock Picks: 

Buy Welspun India Ltd- (CMP Rs 155) 

As per weekly timeframe chart, the stock price-Welspun India Ltd indicates a sustainable upside bounce over the last two weeks. The stock price was moving in a larger consolidation pattern in the last couple of months and is currently moved above the upper range at Rs 152-153 levels. Hence, a sustainable move above Rs 155 could be considered as a decisive upside breakout for the stock price. The intermediate uptrend in the stock remains up as the stock price continues to sustain above weekly 10 and 20 period EMA over the last many months. Weekly 14 period RSI has moved above 60 levels, which signal further strengthening of upside momentum in the stock price ahead.

Buying can be initiated in WELSPUNIND at CMP (Rs 155), add more on dips down to Rs 149, wait for the upside target of Rs 172 in the next 3-4 weeks. Place a stoploss of Rs 144.

Buy Hindustan Copper Ltd- (CMP Rs 134.45) 

The metal stock Hindustan Copper Ltd signal a sharp upside bounce in the last two weeks, as per weekly timeframe chart. Now, the stock price has moved above the hurdle of down sloping trend line at Rs 130-132 levels. Hence a sustainable move above this area could open a sharp positive impact for the short term. Formation of rising swing lows in the last 2-3 months signal a chances of decisive upside breakout in the stock price ahead. Volume has started to expand during upside breakout of the stock price. Weekly 14 period RSI shows positive indication.

One may look to buy HINDCOPPER at CMP (Rs 134.45), add more on dips down to Rs 129 and wait for the upside target of Rs 150 in the next 3-4 weeks. Place a stoploss of Rs 125.

(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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