By Nagaraj Shetti
After showing a sustainable upward movement in recent sessions, Nifty witnessed earnings reserve from the new highs of 16701 on Wednesday and closed the day lower at 45 points. After opening a gap to the upside of 77 points, Nifty tried to advance in the early part of the session. Sharp intraday earnings reserve has witnessed a one-day high of 16700 levels and the weakness continued into the mid-to-late. A negative long candle formed on the daily chart after opening higher, indicating a formation of a bearish counter-type candle pattern. This market action suggests further consolidation or a small downward correction in the future.
Previously, we observed a downward correction to 2-3 sessions during the wider range move and recently the narrow range move consolidation. The underlying nifty uptrend based on a shrinking time frame is intact and Wednesday’s pattern shows no alarming signs regarding a higher reversal pattern. However, there is the possibility of further consolidation or less weakness within a short-term range.
The market appears to have started to tire at the new highs of 16700. But there is no indication that a reversal pattern is developing at the higher levels. Any drop from here to the 16400 support (20-day EMA on a daily chart) could be a downside buying opportunity in the short term. We expect a rally to the upside from lows in the coming sessions. Nifty’s bullish target remains at 16900 levels.
Buy Mangalore Refinery and Petrochemicals – (CMP Rs 45.20)
The marked downward trend of the past few months appears to have been completed as this oil refinery stock (MRPL) has started to show a sustainable upward rally from lows. We saw the formation of a bullish hammer-type candlestick pattern last week (based on the weekly chart) and a decent upward movement so far this week from the lows. This pattern indicates a crucial bottom reversal at the lows of Rs 39.75 last week. The stock price has also recovered from the initial support of the rising trend line at the Rs 42 levels. The 14-period weekly RSI and weekly DMI / ADX patterns indicate more upside for the stock price in the future.
One can look to buy MRPL at CMP (Rs 45.20), add more on the dips to Rs 43, and wait for the bullish target of Rs 50.50 in the next 3-4 weeks. Place a stop loss of Rs 41.50.
Buy Happiest Minds Technologies Ltd – (CMP Rs 1432)
The weekly time frame chart for this stock indicates a multi-month uptrend in recent months. The share price has seen an upward movement according to the positive sequence of higher highs and higher lows. The higher bottom formation was limited to a range move most of the time. After showing a similar range movement in the last month, the stock price is now positioned to show an upside breakout of the range at the Rs 1460 levels. The daily ADX / DMI pattern and 14-period RSI indicate a strengthening of bullish momentum for the stock price going forward.
Buying can be started at Happiest Minds Technologies Ltd at CMP (1432), add more on the dips down to Rs 1370, await the bullish target of Rs 1580 in the next 3-4 weeks. Place a stop loss of Rs 1330.
(Nagaraj Shetti is HDFC Securities Technical Research Analyst. Opinions expressed are those of the author. Consult your financial advisor before investing.)