BackThis is the stock to buy as Nifty remains rangebound; Sell Ashok Leyland
For last 3 days, Nifty has been trading around 200-DMA level. Rupak De of LKP Securities says a fall below 200-DMA could trigger panic.
PremiumThe NSE's benchmark index, Nifty continued to witness a time correction as the index remained mostly range-bound before closing flat. After correcting from the recent high of 17,863, Nifty has been consolidating around the 200-day moving average for the last three days. So far, the bulls have been able to hold the Nifty above the long-term average of 200-DMA, which is considered the line of polarity for long-term investment. A fall below 200-DMA, currently pegged at 17,605, might trigger a panic button. Below 17,600, the Nifty may slip towards 17,400. On the higher end, a resistance is placed at 17,700, above which the index may move towards 18,000.
Meanwhile, the Bank Nifty index witnessed a volatile trading session, and it closed around the critical support zone of 42,000. The index is consolidating in a broad range between 42,000 and 42,500, and a break on either side will have trending moves. If the index fails to hold the support level of 42000 on a closing basis, it will witness further downside towards the 41,500 level.
Among the sectoral indices, the Nifty Auto index has slipped lower after forming a sideways pattern on the daily chart, suggesting a rise in bearish bets among traders. Besides, on the daily timeframe, the index found resistance around the previous swing high before falling lower. The momentum oscillator RSI is about to enter a bearish crossover. Over the short term, the index may fall towards 12700, below which a further correction looks possible. On the higher end, resistance is visible at 13,100.
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On the other hand, Nifty FMCG has given a downward consolidation breakout on the daily chart, pointing towards a rising bullishness in the space. The critical moving averages are sitting well below the current index value, which confirms the positive trend. The momentum oscillator, RSI, is in a bullish crossover. Over the short term, the index may rise towards 48,000. On the lower end, resistance is visible at 46,150.
Buy ITC | CMP: ₹408; Target: ₹444; Stop Loss: ₹394
The stock has recorded its fifth winning streak in a row on the weekly timeframe. It has moved above the previous consolidation, suggesting a rise in optimism in the stock. The momentum oscillator is also indicating strong momentum in the price.
Over the short term, the stock may move towards 444. On the lower end, support is visible at 394, below which the stock is likely to fall into a decline.
Sell Ashok Leyland | CMP: ₹136.45; Target: ₹133/130; Stop Loss: ₹139
The stock has slipped below the recent consolidation on the daily chart. Besides, the price has fallen below the critical short-term moving average on the daily timeframe. The oscillator RSI is in a bearish crossover and is falling. Over the short term, the stock is likely to fall towards 133/130. On the higher end, resistance is visible at 139.
The author, Rupak De is Senior Technical analyst at LKP Securities
Disclaimer: The views and recommendations shared by the analysts are their own and Mint is not responsible.
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