By Rohan Patil
Nifty 50 traded in a band of almost 200 points between September 6 and September 14 without giving any meaningful indication. On September 15, the Benchmark index finally witnessed a breakout on the higher side of a narrow range consolidation pattern and continued to trade higher for the next couple of trading sessions and registered its lifetime high of 17792 on September 17.
At the start of last week, we saw a consistency in the advance-decline ratio 2:1 where advancing stocks were having the upper hand even in the sideways trend; it clearly indicates the accumulation phase for the majority of the stocks. Even FII data at the start of the week hinted at a strong accumulation in the front line stocks as we have seen more than Rs 3,000 cr buying.
Nifty continues to trade within the rising channel pattern on the daily time frame and on the Fridays trading session prices have taken a stiff resistance near the upper band of the rising channel pattern and witnessed a profit booking after hitting a new lifetime high in the early trading ticks.
Momentum oscillator RSI (14) is continuously sustaining above 70 levels and currently hovering between 75 – 80 levels on the daily interval. An indicator or oscillator can remain in the overbought zone for a longer duration in the bull market and any dip of an RSI near its previous low can be utilized for a buy-on dips strategy.
The immediate support for the Nifty is placed near 17300 levels which is the lower band of the pattern and the resistance is capped at 17800 – 17850 which is the upper band of the pattern.
It was a banking-driven week where a BANK NIFTY has registered its new lifetime high of 38112 on the 17th of Sept and has closed three higher on a weekly closing basis.
Bank Nifty has witnessed a breakout of a triangle pattern on the weekly chart and the prices have been able to close above its trend line support. On the weekly chart, prices are trading above upward slanting trend line support and a higher high higher low formation is well intact on the broader time frame.
Both Private and PSU banks participated equally in this rally where both the index closed above four percent on the weekly chart.
On the indicator front, RSI (14) has also witnessed a breakout of a conjunction zone which was formed between 65 – 60 levels on the weekly interval. The banking index continues to trade above its 21 & 50 – day exponential day moving average on the daily as well as the weekly chart.
As Bank Nifty has given a breakout after almost seven months so we are expecting an outperformance compared to the benchmark index. The immediate support for the index is placed near its upper band of the breakout pattern which is placed near 37000 levels and the resistance is likely to cap near 39000 levels which is uncharted territory.
Hindustan Petroleum Corporation Limited : BUY
CMP: Rs 283 | Target Rs 300 | Stop Loss Rs 274
On the daily chart, the stock took support near its 21-day exponential moving average and bounced back with volume confirmation. HINDPETRO has given an inverted head & shoulder pattern breakout on the daily interval on 15th Sept and prices have been able to close above its neckline support.
Plus DI is placed above the minus DI while the ADX line has started slopping upwards, indicating the stocks is likely to gather momentum in the coming days. Daily RSI has shown a trend line breakout which is bullish development for the short term.
On the current juncture, this stock has once again picked up momentum above the key resistance level of Rs. 275 along with rising volumes.
PAGE INDUSTRIES: BUY
CMP: Rs 33,121 | Target Rs 35,400 |Stop Loss Rs 32,000
A swing trade setup is visible on the daily and weekly timeframe for this stock and is poised to give up to 9% returns in the upcoming trading sessions. The stock has shown a healthy run-up in the last month and a proper higher high higher low price formation is spotted on the price action front.
The stock is on the verge of an inverse head and shoulder breakout and the price is currently near its neckline breakout level. If the stock is able to sustain above 33450-33480 levels, we may see a major upswing. The price has taken support from its 10 days EMA and in the previous trading session a bullish pin bar is formed which means there is a rejection of lower prices and bulls managed to overcome the bears.
On the indicator front, ADX is showing a reading of 19.70 and is rising which tells us that the strength of the trend is strong and will gain momentum. The MACD has already given a positive crossover and is sustaining above its zero lines. RSI hasn’t yet entered overbought levels and is showing a reading of 65 which means there is upside potential left in the stock.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)