By Nagaraj Shetti
The sharp up trended movement continued in the market for the third consecutive sessions on Wednesday and Nifty closed the day with hefty gains of around 326 points. A long bull candle was formed on the daily chart and the Nifty has overtaken the key resistance area of the previous opening down/up gap at 15065 levels and the recent swing high of 15176-25th Feb. This is positive indication and the recent negative pattern seems to have nullified and one may expect further upside in the short term.
The formation of new lower top of 25th February has been surpassed on the upside and the market could start showing positive sequential movement like higher highs and lows in the short term. Hence, any consolidation or intraday declines from here could be a buy on dips opportunity.
The medium-term uptrend in Nifty as per the weekly timeframe chart is intact and we observe a formation of a larger degree of higher tops and bottoms over the last many months. The 10 period weekly EMA has been respected on dips so far. According to this action, one may expect further upside towards the new highs soon.
The short term trend of Nifty continues to be up. The negation of recent bearish patterns could indicate more upside in the short term. The next upside levels to be watched around 15430 in the next 2-3 sessions. Immediate support is placed at 15160.
Buy Firstsource Solutions Ltd – (CMP Rs 101.50)
The attached weekly timeframe chart of FSL indicates an uptrend since last week, which signal a larger consolidation pattern as per smaller timeframe charts. Presently, the stock price is making an attempt to stage the upside breakout of the crucial overhead resistance around Rs 104-105 levels. A sustainable move above this area could mean a sharp upside breakout for the stock price. We observe a larger positive sequence like higher tops and bottoms as per the weekly timeframe chart. Further upmove from here could pull stock prices to new higher top in the near term. The weekly 14 period RSI is now placed above 65, which signal strength of upside momentum.
Buying can be initiated in FSL at CMP (101.50), add more on dips down to Rs 97, wait for the upside target of Rs 112 in the next 3-4 weeks. Place a stoploss of Rs 94.
Buy United Spirits Ltd- (CMP Rs 567.80)
After showing declines, the stock price (United Spirits Ltd) has shifted into an upside bounce in today’s session. Today’s upmove could be considered as a higher bottom reversal pattern at Rs 531-26th Feb, compared to last bottom of Oct-20. We observe a formation of positive candlestick pattern as per daily/weekly timeframe chart, which signal the comeback of bulls from the lows. Volume has started to rise along with the recent upmove in the stock price. The daily/weekly RSI shows positive indication.
Buying can be initiated in United Spirits Ltd at CMP (567.80), add more on dips down to Rs 545, wait for the upside target of Rs 620 in the next 3-4 weeks. Place a stoploss of Rs 530.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)