Buy these two stocks for gains; 17200 to act as support for Nifty, Bank Nifty upside capped at 40000

Buy these two stocks for gains; 17200 to act as support for Nifty, Bank Nifty upside capped at 40000

By Rohan Patil

Last week was an event-driven week where Nifty 50 held its volatility till the completion of the event and later on bulls confirmed their dominance and prices traveled above its resistance zones confirming the bullish breakout on the daily time frame. Prices witnessed a throwback in the last couple of trading sessions and eroded their fifty percent gain, but still manage to close two and a half percent higher on the weekly chart.

A bullish pole flag pattern on the weekly time frame seems to have completed its throwback near 61.80 percent Fibonacci retracement and the uptrend is most likely to stretch the prices further higher.

From here on 17200 levels will act as immediate support for the Nifty 50 and if prices slip below this level then 17000 will be the next support zone for the index. The upper band is capped near 18000 levels for the time being. The options data indicates that the Nifty could remain in a broader range of 17200 – 18000 in the coming days.

Bank Nifty upside capped near 40000

It was a week where the banking index started to lead from the front and witnessed a breakout of a horizontal trend line resistance on the daily time frame. Bank Nifty has closed above its trend line resistance placed at 38700 levels and has also crossed above its 61.80 percent Fibonacci retracement which was acting as strong resistance on a previous couple of occasions.

The banking index on Friday closed at 38789, down 220 points, and formed a bearish candle on the daily scale. However, there was a bullish candle formation on the weekly frame, as it gained 2.9 percent during the week.

The prices are well settled above their 21, 50 & 100 – day exponential moving averages on the daily as well as the weekly time frame. The momentum oscillator RSI (14) has formed an inverted head& shoulder pattern on the weekly chart with positive crossover and the breakout of the pattern is expected above 60 levels. The support for the banking index is placed near its previous resistance zone at 38600 – 38400 levels and the upper band is capped near 40000 levels.

NMDC: BUYTarget- Rs 165 | Stop Loss Rs 145Return 8%

The prices were trading in an inverted head & shoulder formation for the past three months and have formed a neck line resistance at 146 levels.

NMDC has broken out of an inverted head & shoulder at 148 levels on 02nd Feb and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. Stock is trading above its 21, 50 & 100- day exponential moving averages on the daily time frame, which is positive for the prices in the near term.

The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 60 levels which indicates positive momentum will like to continue ahead.

MARICO: BUYTarget- Rs. 550 | Stop Loss- Rs 484Return 08%

The Prices are trading in a lower high lower low pattern since past three months and has formed a falling channel pattern on the daily time frame.

MARICO has broken out of a falling channel pattern at 497 levels on 01st Feb and the prices have registered a decisive breakout that suggests a change in the trend from bearish to bullish.

The sharp move on the 01st Feb has forced their pries to close above its 21-day exponential moving average and has breached its hurdle of downward sloping trend line on the daily interval. Momentum oscillator RSI (14) has witnessed a breakout of a horizontal trend line at 50 levels with positive crossover.

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