Nifty above 19700 can negate bearish patterns, could target 20k; buy these stocks to pocket short-term gains

Nifty above 19700 can negate bearish patterns, could target 20k; buy these stocks to pocket short-term gains

By Nagaraj Shetti

After showing weakness amidst range movement on Tuesday, the Nifty witnessed sharp upside recovery from the intraday lows on Wednesday and closed the day higher by 61 points. A reasonable positive candle was formed on the daily chart with a long lower shadow. Technically this pattern indicates a formation of bullish hammer type candle formation (not a classical one), but the placement of the candle is not ideal. The negative chart pattern like lower top and bottoms is still intact, but there is no confirmation of any lower top reversal pattern as of now.

Stock Picks:

Buy Crompton Greaves (CMP Rs 305.50)

The weekly timeframe chart of Crompton Greaves Consumer Electricals Ltd indicates a sustainable upside bounce so far this week. After moving into a narrow range movement in the last 5-6 weeks, the stock price is currently in an attempt of upside breakout of the range at Rs 304-305 levels. The present chart pattern also indicates an attempt of upside breakout of bullish flag type pattern with the neckline of Rs 304 levels. This price action is expected to be an uptrend continuation pattern. Weekly 14 period RSI is sloping upward there by signaling a strengthening of upside momentum in the stock price.

Buying can be initiated in Crompton Greaves at CMP (Rs 305.50), add more on dips down to Rs 292, wait for the upside targets of Rs 335 and Rs 357 in the next 3-5 weeks. Place a stoploss of Rs 280.

Buy Mangalore Refinery (CMP Rs 85.55)

The stock price as per weekly timeframe chart has been showing sharp upside momentum over the last few months. The said upside rally was as per the positive chart pattern of higher highs and higher lows. The stock price has recently shifted into a consolidation movement in the last one month and is now placed at the new higher bottom of the pattern. The stock price has also moving up from near the immediate support of 10-week EMA at Rs 79. The weekly RSI shows positive indication.

One may look to buy Mangalore Refinery at CMP (Rs 85.55), add more on dips down to Rs 82 and wait for the upside targets of Rs 95 and Rs 104 in the next 3-5 weeks. Place a stoploss of Rs 79.

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