Nifty faces bearish grip: Key levels to watch and top 3 stock picks for next week

Edited excerpts from a chat:

Nifty gave up gains made in the previous two weeks to end 2.2% lower but showed support at 23,260 level. How would you trade the index in the week ahead?

On Friday, Nifty found resistance at the previously acted support that turned a resistance during the week. Besides, the index found resistance at 20EMA on the daily chart and around 50EMA on the hourly chart, closing about 200 points off the day’s high. On the hourly chart, the RSI is in bearish crossover and falling.

On the daily chart, a set of lower tops could be seen which suggests a rise of weakness in the market and this can be considered as initial signs of bears taking control in the market pushing bulls away.

A support is placed at 23500, once Nifty moves below 23500 decisively a significant fall might come in the market taking the index towards 23150 and may be lower. On the higher end, 23800 continues to act as crucial resistance for the short term. As long as it remains below this resistance of 23800 the bears might have upper hand on the market.

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Nifty IT index tumbled another 6%. Do you see chances of any relief rally?

Indian IT witnessed a sharp decline during the week, dragging the index below the 28000 mark. On the daily chart, the index has been consistently forming lower tops and lower bottoms, indicating a descending price structure and a weakening trend.

The overall sentiment in the sector remains bearish, and any short-term rise is likely to attract selling pressure. Although IT stocks witnessed some buying interest on Friday, a complete trend reversal cannot be confirmed based on a single day’s recovery. The broader chart structure continues to remain weak, suggesting that further correction in the sector is still possible.

Kaynes was the top loser in the week and fell 27%. What are the charts indicating at: buy the dip or more pain ahead?

The stock has broken below its previous low, confirming a weakening trend, while the recent recovery attempt failed to sustain. On the weekly chart as well, the stock has slipped below its earlier swing low, indicating the possibility of a deeper correction from current levels.

Considering the overall chart structure, buying on dips appears risky at this stage. It would be prudent to avoid fresh buying in the stock for now and instead look for better opportunities in relatively stronger counters within the market.

HFCL shares have surprised by more than doubling in just 3 months. What would you recommend for those who missed the rally?

The stock has witnessed a spectacular rally over the last few months, surging nearly 124% in just one and a half months. Although the overall trend continues to remain bullish, entering the stock after such a sharp move appears highly risky, not only in this counter but in any stock that has rallied aggressively in a short span of time.

The better strategy at this stage would be to avoid chasing the rally and wait for a meaningful dip before considering any fresh entry. Alternatively, investors may look for opportunities in other stocks that offer a more favourable risk-reward setup.

Give us your top trading ideas for the week.

Buy Marico | CMP: 841 | SL: 824 | Target: 880

The stock, after witnessing a healthy rally, is currently consolidating on the daily chart, indicating strength within the ongoing uptrend. Prices continue to sustain above key moving averages, which reflects a positive underlying structure. Besides, the RSI remains in a bullish crossover and is trending higher, signalling improving momentum.

In the short term, the stock may move towards 880, while immediate support is placed at 824. A breach below this level could drag the stock into a broader consolidation phase.

Buy Arvind | CMP: 451 | SL: 429 | Target: 495

The stock has given a swing high breakout on the weekly chart, indicating rising bullishness in the counter. In addition, the weekly 20 EMA has moved above the 50 EMA, confirming a bullish crossover and strengthening the positive trend structure. The RSI is also witnessing an ascending formation, suggesting improving momentum.

The overall trend appears strong, with the potential for further upside towards 495. On the downside, support is placed at 429.

Buy Triveni Turbine | CMP: 607 | SL: 590 | Target: 642

The stock has given a consolidation breakout on the daily chart, signalling strengthening bullish momentum. Besides, the weekly 50 EMA has crossed above the 200 SMA, indicating a positive long-term trend reversal. The RSI has also entered a bullish crossover on the daily timeframe, supporting the improving momentum outlook.

The trend structure remains favourable, with the stock having the potential to move towards 642 in the near term. On the downside, support is placed at 590.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)