Mar 26, 2024
Nifty may witness more weakness after breaking crucial support, but these trades could help pocket gains
By Nagaraj Shetti
After showing an intraday upside recovery from the lows on Monday, Nifty witnessed sharp weakness on Wednesday and closed the day steeply lower by 391 points. After opening with a positive note, the market slipped into weakness in the early to mid-part of the session. After the announcement of repo rate hike by RBI at 2 pm, the selling pressure got intensified with high volatility during the mid to later part of the session. A long bear candle was formed on the daily chart that has broken decisively below the important support of 16900-16800 levels. The present chart pattern also indicates a downside breakout of the broader high low range movement of around 17400-16900 levels. This could be considered as a downside breakout of crucial lower support in the market. This is not a good sign and could have more weakness for the short term.
Having broken again below the important support of 16800, the chances of further steep weakness in the near term. This anticipated market action could open a possibility of larger degree of lower bottom formation below 15670 levels in the next few weeks. Any upside bounce from here could find strong resistance around 16800-17000 levels. Immediate downside targets to be watched for Nifty around 16200 levels.
Sell DLF MAY FUTURE- (CMP Rs 350.20)
After the formation of lower top at Rs 407.50 in the early part of April, the stock price has witnessed a sustainable down trend in the last one month. The formation of long negative candle so far this week, after a formation of small weekly candles in the past indicate resumption of intense weakness in the stock price. Volume has expanded during decline and weekly RSI shows negative indication. The overall chart pattern looks negative for near term.
Selling can be initiated in DLF May Future at CMP (350.20), add more on rise up to Rs 360, wait for the downside target of Rs 320 in the next 2-3 weeks. Place a stoploss of Rs 368.
Sell APOLLO HOSPITAL MAY FUTURE – (CMP Rs 4038)
After showing a range bound action in the last few months, the stock price has witnessed a decisive downside breakout of the crucial trend line support around Rs 4500 levels-as per weekly timeframe chart. The current decline also indicate a downside breakout of 200 day EMA around Rs 4450 levels. The volume has expanded during downside breakout, which signal heavy buildup of short positions and daily 14 period RSI moved below the crucial levels of 40. With this negative chart pattern, one may expect further weakness in the stock price ahead.
One may look to create shorts in APOLLOHOSP MAY FUTURE at CMP (4038), add more on rise up to Rs 4150, wait for the downside target of Rs 3700 in the next 2-3 weeks. Place a stoploss of Rs 4225.
(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)
More Details