Dalal Street Investment Journal

DSIJ's Technical Picks: Nifty Waiting For A Trigger

The NSE Nifty has gone nowhere, and despite multiple attempts on either side (more on the downside), the breakout has been elusive as the sideways corrective phase continues. However, the resilience has been rather apparent, and the 5155-5182 level seems to be doing its bit in providing support. It is needless to say that a decisive breach of this aforesaid level would be a bad omen for the market. So, it’s back to square one, as the situation hasn’t changed much. The bigger range of 5155 on the downside and 5410 on the upside hasn’t changed much, while for any significant upside to materialise, a decisive overcoming of the 5410 level is a must. The Nifty continues to flirt with the 200-day EMA.

Mid- and Small-Caps too have been moving in sync with the market, but the latter are distinctly stronger than the former, and both are better than the Nifty itself. Banks have been rather resilient, while Capital Goods have been stable. Consumer Durables have been clearly stronger in the correction, while FMCG has reflected strength to post a fresh all-time high. Pharma has been one of the distinctly better sectors. IT has totally imploded, Metals have been distinctly weak and Realty has faltered and stagnated.

The Nifty has been on a sabbatical, so to speak, for the last nine weeks or so (including the ongoing week), and is obviously waiting for a trigger. While it is difficult to take a call on the direction of this anticipated trigger, Banks could make or break the market.

ALSTOM PROJECTS | Buy CMP - Rs 369.05
1st Target: 419 (4-6 weeks) | 2nd Target: 440 (12-14 weeks) | Stoploss: 344 (cls)

Alstom Projects bottomed out by posting an intra-week low of `223.70 during the week ended 2nd 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 `610 during the week ended 23rd October, 2009. It couldn’t sustain these levels for long, and declined to post an intra-week low of `505.05 during the week ended 29th January, 2010. The stock commenced its uptrend from here, and rallied to peak at an intra-week high of `874.85 during the week ended 8th October, 2010.

Currently, Alstom 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.

BANK OF INDIA | Buy CMP - Rs 377.40
1st Target: 421 (4-6 weeks) | 2nd Target: 439 (12-14 weeks) | Stoploss: 355 (cls)

Bank of India peaked at an intra-week high of `400 during the week ended 16th April, 2010, and declined to post an intra-week low of `310.15 during the week ended 21st May, 2010. The scrip launched into an intermediate uptrend, peaked at an intra-week high of `476.40 during the week ended 20th August, 2010, only to enter a corrective phase, and declined to post an intra-week low of `436.40 during the week ended 3rd September, 2010. It staged a rally to peak at an intra-week high of `588 during the week ended 8th October, 2010, and entered a corrective phase. Currently, Bank of India has reversed direction after receiving significant support from the `359 level. A weekly close above the `380 level would mean the possibility of a further upside from here.

PATEL ENGINEERING | Buy CMP - Rs 116.05
1st Target: 132 (4-6 weeks) | 2nd Target: 140 (12-14 weeks) | Stoploss: 108 (cls)

Patel Engineering bottomed out by posting an intra-week low of `103.15 during the week ended 13th March, 2009, commenced a short-term uptrend, and rallied to peak at an intra-week high of `188.50 during the week ended 17th April, 2009. The scrip entered a corrective phase to actually bottom out by posting an intra-week low of `172.40 during the week ended 15th May, 2009. It moved sideways before recovering to peak at an intra-week high of `526 during the week ended 25th September, 2009, only to decline from here.

Currently, the scrip seems to be on the verge of continuing its higher top, higher bottom formation on the daily charts, indicating the possibility of a further upside from these levels.

SIEMENS | Buy CMP - Rs 802.85
1st Target: 872 (4-6 weeks) | 2nd Target: 900 (12-14 weeks) | Stoploss: 767 (cls)

Siemens bottomed out by posting an intra-week low of `375.50 during the week ended 17th July, 2009, took support on the `375 (support) level, recovered smartly, and peaked by posting an intra-week high of `762.50 during the week ended 16th April, 2010. The stock 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 `951 during the week ended 29th July, 2011, and entered a corrective phase.

Currently, Siemens could be continuing its short-term uptrend. With the oscillators looking positive, a further upside from these levels cannot be ruled out.