Nifty Continues Downtrend, Expect Big Moves

The NSE Nifty has seen negative moves in the preceding week, with the index plummeting more than 100 points in a single day from the 6100 level. After witnessing a sell-off, it moved as per expectations, consolidating between 5900-6000 for a few trading sessions. However, after breaking its strong support level at 5940, it recovered several times from the 5880 level. Following this too, the index was not able to hold this level and saw another sharp drop of 100 points as on June 11.

In the broader market, Mid-Caps and Small-Caps have broken strong support levels after a long consolidation phase. The Bankex and Consumer Durables indices crashed. Capital Goods, Metals and Auto also saw a sell-off from the higher levels. FMGC and Healthcare moved sideways. Only IT made a smart up-move and continued to see gradual progress.

In the last week, the Nifty has not been able to stay above its 100-day EMA level at 5885 and slumped to 5800. Going ahead, if the index continues to trade in the same manner, it will be looking at its 200-day EMA level (5764), which is a vital support level.

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Reliance Capital | CMP - Rs 330 | Sell

Reliance Capital peaked at an intraday high of Rs 507.95 as on January 7, 2013, and these levels have been rarely seen since. The stock launched into an intermediate downtrend, and declined to post an intraday low of 296.85 as on March 26, 2013. It commenced a short-term uptrend and peaked by posting an intraday high of Rs 455.60 as on July 4, 2012. The stock entered into a corrective phase, and posted an intraday low of Rs 347.20 as on September 6, 2012. It formed a double bottom around this level, entered into a short-term uptrend, and peaked by posting an intraday high of Rs 391.20 as on May 20, 2013.

Reliance Capital is forming a ‘head and shoulder’ pattern on the daily charts, which is bearish in nature. As of now, there has been no pattern breakdown, and this will occur if the stock closes below Rs 323. One can initiate a short position in the counter for a downside target of Rs 307-290, with a stoploss of Rs 350.

Trading Pointers:

Indicators: MACD-Sell | | RMI-Sell | | Stochastic-Buy | | ROC-Sell | | RSI-Buy |
Support: 325, 312 | Resistance: 336, 350
Targets: 1st Target: 307 (4-6 weeks) | 2nd Target: 290 (12-14 weeks)   
BSE Code – 500111 | Stoploss: 350 (cls)
55 Week EMA: 356.68

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Asian Paints | CMP - Rs 4520 | Sell

Asian Paints peaked at an intraday high of Rs 5050 as on March 21, 2013 and declined to post an intraday low of Rs 4477 as on April 10, 2013. The scrip then launched into an intermediate uptrend, peaked at an intraday high of Rs 4949 as on May 7, 2013, only to enter a corrective phase, and declined to post an intraday low of Rs 4605 as on June 6, 2013. On June 10, the stock broke its long-term upward sloping trendline support along with an increase in volumes, which suggests that the stock has changed its long-term trend and is now in the grip of bears.

Currently, Asian Paints has reversed its trend and a confirmation for the same is provided by a bearish candlestick pattern and an increase in volumes. With the oscillators looking negative, the stock may see a further downside in the trading sessions to come.

Trading Pointers:

Indicators: MACD-Sell | | RMI-Sell | | Stochastic-Sell | | ROC-Sell | | RSI-Sell |
Support: 4420, 4265 | Resistance: 4350, 4610
Targets: 1st Target: 4265 (4-6 weeks) | 2nd Target: 4100 (12-14 weeks)   
BSE Code – 500820 | Stoploss: 4750 (cls)  
55 Week EMA: 4712.07

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M&M Financial Services | CMP - Rs 251 | Buy

M&M Financial Services bottomed out by posting an intraday low of Rs 113.52 as on June 19, 2012, commenced a long-term uptrend, and rallied to peak at an intraday high of Rs 244.44 as on January 3, 2013. The scrip entered a corrective phase to actually bottom out by posting an intraday low of Rs 178.50 as on March 4, 2013. It then moved sideways before recovering to peak at an intraday high of Rs 269.65 as on May 8, 2013. The stock has formed a triple top formation around Rs 268-269, and once it breaks this level we can expect to see a good up-move.

Currently, the stock seems to be in a consolidation phase and on the verge of commencing a higher bottom formation on the daily charts, indicating the possibility of a further upside from these levels.

Trading Pointers:

Indicators: MACD-Sell | | RMI-Buy | | Stochastic-Buy | | ROC-Buy | | RSI-Buy |
Support: 241, 235 | Resistance: 261, 270
Targets: 1st Target: 270 (4-6 weeks) | 2nd Target: 295 (12-14 weeks)   
BSE Code – 532720 | Stoploss: 230 (cls)
55 Week EMA: 233.58

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DLF | CMP - Rs 189 | Sell

DLF bottomed out by posting an intraday low of Rs 183.55 as on June 19, 2012, took support at the Rs 183-184 (support) level, entered into a long-term uptrend by positing a higher top and higher bottom, and peaked by posting an intraday high of Rs 289.25 as on March 13, 2013. The scrip declined from here, struggled a bit, but entered into a consolidation phase and found multiple supports around the levels of Rs 225-228. It then broke this support and went into an intermediate downtrend.

The stock looks like it will continue its downtrend and is likely to breach its long-term support of Rs 183-184. 

Trading Pointers:

Indicators: MACD-Sell | | RMI-Sell | | Stochastic-Buy | | ROC-Sell | | RSI-Sell |
Support: 183, 170 | Resistance: 205, 218
Targets: 1st Target: 175(4-6 weeks) | 2nd Target: 170 (12-14 weeks)   
BSE Code – 532868 | Stoploss: 207 (cls)
55 Week EMA: 228.61