Nifty breaches key support of 19563; expected to move towards 19303; Buy Berger Paints, sell Bharti Airtel

Nifty breaches key support of 19563; expected to move towards 19303; Buy Berger Paints, sell Bharti Airtel

By Subash Gangadharan

On the daily chart, we can observe that Nifty has broken its recent support of 19,563 and also closed below the 20-day SMA. Momentum readings like the 14-day RSI too are in decline mode, which is a negative signal. We expect the Nifty to move towards its next supports of 19,361-19,303 in the coming sessions. Any pullback rallies could find resistance at 19,678.

The stock is now trading above the 20-day and 50-day SMA. And momentum readings like the 14-week RSI are in rising mode and not overbought, which implies the potential for more upsides. With the intermediate technical setup looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 715-719 levels. CMP is Rs 717.05. Stop loss is at Rs 673 while the target is at Rs 790.

Sell Bharti Airtel

Bharti Airtel is in a short term downtrend as it has been making lower tops and lower bottoms for the last few sessions. On Wednesday, the stock broke down below its recent supports and also closed below the 20-day SMA. Momentum readings like the 14-day RSI too are in decline mode and not oversold, which implies the potential for more downsides.

We, therefore, expect the stock to correct further in the coming sessions. Sell between the 875-880 levels. CMP is Rs 876.6. The stop loss is at Rs 891 while the downside target is at Rs 855.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)