Buy Hero Motorcorp, Shriram Transport Finance shares for gains; Nifty may head to 16500 if it breaches 16300

Buy Hero Motorcorp, Shriram Transport Finance shares for gains; Nifty may head to 16500 if it breaches 16300

By Rohan Patil

Despite the volatility in the benchmark index, bulls find their way to control the trend and traded higher with a gain of more than two and a half per cent on the weekly chart, closing above the 16100 levels. The Nifty is sustaining above its 4 weeks highs, which indicates positivity of the prices. On the daily chart too index is trading in a higher bottom higher top formation.

Nifty faced a strong resistance near 16300 levels and witnessed a profit booked near a prior trend line resistance. In case prices break above 16300 levels then strong momentum can be seen in the prices towards 16500 levels. The immediate support for the Nifty is placed near 16000 and below that 15900 will act as a major support for the Nifty.

Bank Nifty outperforms

The Banking index rallied more than four and a half per cent for the week and has outperformed the benchmark index on the weekly chart and closed above 35000 levels.

The Bank Nifty has closed above its four-week high and has filled the gap which was formed on June 13, on the weekly and daily chart. Bank Nifty has completed a bearish ABCD harmonic pattern at 35250 levels on the daily chart and prices are trading within its PRZ levels.

On a weekly chart, BANKNIFTY has been trading in a falling wedge pattern and has halted near the upper band of the pattern indicating an immediate resistance for the index. Moreover, at the same time, the momentum indicator RSI (14) also gave a break out of its range after taking support of 40 levels, which points out a further acceleration in the index.

Bank Nifty is likely to face a strong resistance near 35500 levels near the upper band of the pattern. In case prices break above 35600 levels then strong momentum can be seen in the prices towards 36500 levels. The immediate support for the Bank Nifty is placed near 34600 and below that 34400 will act as major support for the Bank Nifty.

Hero Motorcorp: BUYTarget: Rs 3020 | Stop Loss: Rs 2735Return: 06%

The HEROMOTOCOP consolidated in broad range of 2500 – 2750 levels from the past one month and has formed an inverted head & shoulder with neckline resistance formed at 2780 levels on the daily time frame.

The prices formed a basing formation and a falling wedge pattern on the weekly time frame and have given a combined breakout of an inverted head & shoulder and falling wedge pattern on the daily and weekly charts.

Stock is trading above its 21, 50 & 100- day exponential moving averages on weekly & daily time frame, which is positive for the prices in the to the mid to long term.

MACD indicator is reading above its centerline with positive crossover above its signal line. Momentum oscillator RSI (14) on the weekly chart has given a trend line breakout which is placed near 55 levels with positive crossover.

Shriram Transport Finance: BUYTarget: Rs 1370 | Stop Loss: Rs 1220Return 07%

SRTRANSFIN consolidated for more than eighteen weeks within the range of 1050 – 1200 levels and formed a basing formation and created a channel pattern. The prices witnessed a consolidation range breakout on 01st July and closed above its trend line resistance.

Momentum oscillator RSI (14) shown a sharp rebound from the 35 levels and witnessed a trend line breakout above 50 levels. The MACD indicator has shown an early reversal by crossing above its signal line which is below its line of polarity.

The prices are also sustained above its 21-day exponential moving average. The counter is also trading near the upper band of the Bollinger band indicating a possible continuation of the uptrend after the recent consolidation.

(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)