Dalal Street Investment Journal

DSIJ's Technical Picks

Nifty Trying To Bounce Back

The NSE Nifty has finally shown some signs of recovering. Despite it being in corrective mode, the resilience has been rather apparent and the 5155-5182 level seems to have done its bit in providing support. A minor recovery is in progress, and if the aforesaid level remains sacrosanct in terms of closing, then there are bright chances that the Nifty could make its first attempt at reflecting positives on the weekly charts. A three trading session recovery has seen the Nifty come back and close above the 55-day EMA. While some extreme near-term turbulence cannot be ruled out, a close above the 5410 level would be a reassuring sign as far as the anticipated positives are concerned.

The Mid- and Small-Caps too have been moving in sync with the market, but the former are distinctly stronger than the latter. Banks have been leading the recovery, while Capital Goods have been resilient. Consumer Durables have been rather strong in the bounce, FMCG has reflected strength to post a fresh all time high and Pharma has also been one of the stronger sectors. IT though, has not made any real headway. Metals have been slightly shaky and Realty too has been a bit weak.

The Nifty has been on the rebound to give a key upward reversal in the last week. A further upside cannot be ruled out as long as the 5155 level is held in terms of closing. It is probably time to buy first and sell later.

Crompton Greaves | CMP - Rs 144.45 | Buy
Crompton Greaves bottomed out by posting an intra-week low of Rs 56.93 during the week ended 27th March, 2009, and these levels have rarely been seen since. The scrip launched into an intermediate uptrend to peak at an intra-week high of Rs 279.60 during the week ended 16th April, 2010. It couldn’t sustain these levels for long, and declined to post an intra-week low of Rs 219.10 during the week ended 28th May, 2010. The scrip commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 349 during the week ended 3rd December, 2010.

Currently, Crompton Greaves seems set to stage an upmove after a decent weekly consolidation. With even the daily picture looking better, a further upside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Buy | RMI-Buy | Stochastic-Sell | ROC-Sell | RSI-Buy
Support:135, 118 | Resistance: 152, 166
Targets: 1st Target: 164 (4-6 weeks) | 2nd Target: 171 (12-14 weeks)
BSE Code – 500093 | Stoploss: 134 (cls)
55 Week EMA: 172.88

IndusInd Bank | CMP - Rs 325.30 | Buy
IndusInd Bank peaked at an intra-week high of Rs 94.60 during the week ended 3rd July, 2009, and declined to post an intra-week low of Rs 72.75 during the week ended 10th July, 2009. The scrip launched into an intermediate uptrend, peaked at an intra-week high of Rs 207.30 during the week ended 21st May, 2010, only to enter a corrective phase, and then declined to post an intra-week low of Rs 179.10 during the week ended 11th June, 2010. It staged a rally to peak at an intra-week high of Rs 333.90 during the week ended 17th February, 2011, and entered a corrective phase. Currently, the stock has reversed its direction after receiving a significant support at the Rs 294 level. A weekly close above the Rs 330 level would mean the possibility of a further upside from here.

Orchid Chemicals | CMP - Rs 192.20 | Buy
Orchid Chemicals bottomed out by posting an intra-week low of Rs 128 during the week ended 21st May, 2010, commenced a short-term uptrend, and rallied to peak at an intra-week high of Rs 195 during the week ended 23rd July, 2010. The scrip entered a corrective phase to actually bottom out by posting an intra-week low of Rs 182.35 during the week ended 17th September, 2010. It moved sideways before recovering to peak at an intra-week high of Rs 344.40 during the week ended 29th October, 2010, only to decline from here. Currently, the scrip seems to be on the verge of continuing its higher top, higher bottom formation on the weekly charts, indicating the possibility of a further upside from these levels.

Trading Pointers:
Indicators: MACD-Buy | RMI-Buy | Stochastic-Buy | ROC-Sell | RSI-Buy
Support: 183, 161 | Resistance: 199, 222
Targets: 1st Target: 222 (4-6 weeks) | 2nd Target: 240 (12-14 weeks)
BSE Code – 524372 | Stoploss: 177 (cls)
55 Week EMA: 194.08

Petronet LNG | CMP - Rs 173.40 | Buy
Petronet LNG bottomed out by posting an intra-week low of Rs 69 during the week ended 26th February, 2010. It took support at the Rs 70 (support) level, recovered smartly, and peaked by posting an intra-week high of Rs 136 during the week ended 21st January, 2011. The scrip declined from here, struggled a bit and finally overcame its recently-posted high. It entered a medium-term uptrend, appreciated to peak at an intra-week high of Rs 185.85 during the week ended 26th August, 2011, and entered a corrective phase. Currently, Petronet LNG could be continuing its short-term uptrend. With the oscillators looking positive, a further upside from these levels cannot be ruled out.

Sebi Disclosure: The author is an active market participant and could not only be having positions but could even be having contrary positions in the stocks mentioned above.

*LEGEND:
EMA – Exponential Moving Average
MACD – Moving Average Convergence Divergence
RMI – Relative Momentum Index
ROC – Rate of Change
RSI – Relative Strength Index

It would be pertinent to note that these are just tools to arrive at a buy or sell decision. There are no absolutes in this sphere, so the best one can do is to minimise losses and let the profits run.

In the event of a sharp movement materialising in the scrips recommended - both upwards or downwards (the analysis is done on Monday evening based on the week's price movements while market action can only be taken on Thursday) investors would do well to stay away. Despite an active movement in the scrip, if a need arises to trade - investors can use the support/resistance levels as stoploss and/or entry/exit for taking a position in the market. In spite of the above-mentioned statement, investors are advised to use their own discretion.