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Buy these two stocks for gains; Nifty may extend losses if it breaks 16,150

A break below 16150 will escalate the selling pressure and the index can drift towards 15800 followed by 15500 levels.

Bank Nifty has given a rising wedge pattern breakdown on the weekly chart and has closed below its 21 & 50 – week exponential moving average, indicating a bear favored structure. (Image: REUTERS)

By Rohan Patil

Bears continued to tighten their grip on the Indian market last week and closed in red with a fall of more than two per cent in two consecutive weeks. In the previous week, prices have formed a bullish ABCD harmonic pattern on the weekly chart and it continued to trade with the PRZ (potential reversal zone) of the pattern. The Momentum oscillator RSI (14) is continually forming lower high lower-bottom formation since the last week of September and has closed near 40 levels with a bearish crossover on the weekly interval.

The volatility gauge index India VIX has shown a trend line breakout on the daily as well as the weekly chart and the VIX is continually sustaining above 24 levels and has also closed above its some important averages. On the weekly chart, prices have marginally closed below their 50-week exponential moving average but have been able to find support near its horizontal trend line which is placed near 16200 levels.

The trend continues to be weak till the index stays below the 17000 mark. A break below 16150 will escalate the selling pressure and the index can drift towards 15800 followed by 15500 levels.

Bank Nifty support at 33,900

The Bank Nifty continues to underperform the Benchmark index on the week on week basis and closed in red for the fourth consecutive week with a loss of more than five percent. The banking index has also given a rising wedge pattern breakdown on the weekly chart and has closed below its 21 & 50 – week exponential moving average, indicating a bear favoured structure.

Prices have also formed a rounding top formation and have closed above its horizontal trend line which is formed at 34000 levels. Since 02nd Feb prices are trading within a lower low lower higher structure and the momentum oscillator RSI (14) on the daily chart has drifted near 30 level with bearish crossover on the cards. 

The majority of their indicator and the oscillator on the daily as well as weekly charts are indicating a weak market structure. The immediate support for the Nifty bank is placed at 33900 levels if prices didn’t respect these levels then 33000 is a possible level in the coming weeks. The upper band is capped near 35800 levels, a successful close above the same will open the gate for 37000 levels.

Tata Steel: BUY
Target – Rs Rs 1355 |Stop Loss – Rs 1230
Return 06%

The prices were trading in a rectangle pattern for the past more than three and half months and have formed a trend line resistance at 1260 levels. TATASTEEL has broken out of a rectangle pattern at 1289 levels on 02nd Mar on the daily chart and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last couple of days, prices have given a throwback near its trend line support, which is placed near 1260 levels.

Stock is trading above its 21, & 50- day exponential moving averages on the daily time frame, which is positive for the prices in the near term. The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is hovering near 60 levels which indicates positive momentum will like to continue ahead.

Apollo Hospital: BUY
Target – Rs 5000 | Stop Loss – Rs 4600
Return 05.50%

APOLLO HOSPITAL has broken out of a rectangle pattern at 4802 levels on 28th Feb on the daily chart and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside. From the last couple of days, prices have given a throwback near its trend line support, which is placed near 4700 levels.

On the weekly chart, prices have completed a bullish reciprocal ABCD harmonic pattern and prices have sustained well above its 50- week exponential moving average. On the oscillator front, RSI (14) is reading above 50 levels with bullish crossover and prices are trading above their small and medium-term averages.

(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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