It was a positive start to the week as the Nifty rallied 0.81 percent to close at 10,540 levels on Monday. Last week, the index decline has taken support at rising trend line originating from September 2017 low of 9,769 and seen a bounce back.
Also, the 100-day moving average (DMA) which arrested the September and December falls has again provided support to recent fall. The line chart and momentum oscillators are showing positive divergence, suggesting that the index may rally towards 10,640 provided it holds above 10,450 levels.
Follow up buying needs to be seen and supportive global markets for Nifty to rally further towards 10,700-10,740 which will fill last week’s falling gap. However, breaking below 10,450 levels, the index is likely to retest last week’s low of 10,276 level.
Broadly post the recent fall in the market, the index is likely to trade in a range of 10,740-10,400 and consolidate around these levels.
The stock has been in an uptrend for the last seven months forming a higher top higher bottom on its daily chart. Last month, the stock hit an all-time high of 2331 after giving a breakout above its previous high of 1960 level with high volumes, indicating buying participation in the stock.
The recent decline in the stock has been on low volumes suggesting that market participants are holding on to the counter. The stock has seen a bounce back from its 50-days moving average which has acted as support in the past and then prices rallied higher.
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The stock consolidated between Rs1240 and Rs800 odd levels over a period of one year. In November last year, it witnessed a breakout from the same with high volumes.
Since then, the stock price has been consolidating gains above the breakout level for the last three months. On Monday, the stock hit a new all-time high of 1360 on closing basis suggesting the start of a fresh uptrend in the stock.
Also, the price has given breakout from Bollinger bands with the expansion of bands on upside indicating a trend to continue in the direction of the breakout.
The stock recently touched a high of 289 last month where it faced resistance at its previous all-time highs and then corrected down to 230 levels.
If the stock is able to find support around its previous lows could witness a strong bounce back towards current levels. Overall, looking at the long-term monthly charts, the stock has formed rounding base pattern between 150-20 odd and currently consolidating above the breakout level.
On the weekly candlestick chart, the stock has formed a bullish engulfing pattern with a long bullish candle which was accompanied by high volumes indicating buying participation in the stock from lower levels.
The stock touched a high of 363 last month and since then it has declined towards Rs285 levels. The volumes on the down move were below average suggesting a corrective fall.
Price retraced 61.8% Fibonacci retracement of the up move from 235 to 363 levels. Here was another Fibonacci retracement of 38.2% of the major swing 154 to 363 comes.
Also, the low was formed at 200-day moving average, indicating strong support zone for the stock from where it is likely to resume its uptrend.
The stock witnessed a sharp decline from 2724 levels in September 2015 to low of 1610 in March 2016. The stock formed a long-term rectangle base between 1610 and 2035 odd levels.
In January, it witnessed a breakout from the base on high volumes. The price has crossed 61.8% Fibonacci retracement of fall 2724 to 1609 and closed above it.
The recent decline in the stock has taken support at its 21-days exponential moving average which has been providing support and moving higher. Thus, the stock can be bought at current levels and on dips to 2280 with a stop loss of 2200 for target 2600 levels.
Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
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