Buy these stocks for gains while Nifty’s short-term trend remains choppy, may retest 16800 support

Buy these stocks for gains while Nifty’s short-term trend remains choppy, may retest 16800 support

By Nagaraj Shetti

After showing a sustainable upside bounce from the lower support of around 16800 levels on Tuesday, Nifty failed to show follow-through up-move on Wednesday and closed the day lower by 28 points, amidst high volatility. A reasonable negative candle was formed on the daily chart at the highs, which indicate a counter-attack of bear’s type pattern. The formation of such a weak pattern immediately after the sustainable upside from the lower support may not be a good sign for the market and this indicates that the lower important support of 16800 could be retested. The consistent lower top formation is intact as per the daily chart and Wednesday’s swing high of 17220 could be signalling a formation of another lower top of the sequence, which needs to be confirmed. Such lower top formations and repeated testing of important supports could eventually result in a decisive downside breakout of the said supports.

Stock Picks:

Buy KPIT Technologies Ltd- (CMP Rs 570.55)

The downward correction of the last 6-7 weeks, seems to be ending soon in this Tech. stock (KPITTECH), as we observe that the stock price making an attempt to form a crucial bottom reversal at the low of Rs 510 levels this week. The larger positive sequence like higher tops and bottoms is intact as per the weekly chart. The stock price is currently sustaining above the key lower support of 20 week EMA. The weekly RSI shows a positive indication.

Buying can be initiated in KPITTECH at CMP (Rs 570.55), add more on dips down to Rs 550, wait for the upside target of Rs 630 in the next 3-4 weeks. Place a stoploss of Rs 534.

Buy Eveready Industries India Ltd- (CMP Rs 358.80)

After showing a sharp upside bounce in the last week, the stock price (EVEREADY) has shifted into a consolidation pattern so far this week. After a minor weakness in the early part of this week, the stock price has bounced back firmly from intra-week lows. Present weekly chart pattern indicates an attempt of a sharp upside breakout of a couple of months gradual downward trend. Weekly 14 period RSI is placed at the edge of 60 levels and its up-move above the upper 62 could mean a further strengthening of upside momentum in the stock price ahead.

One may look to buy EVEREADY at CMP (Rs 358.80), add more on dips down to Rs 345 and wait for the upside target of Rs 394 in the next 3-4 weeks. Place a stoploss of Rs 334.

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