Breach of 21,900 may trigger further weakness for Nifty

Where is the Nifty headed this week?
A negative candle was formed on the daily chart, which was placed at the edge of moving below the immediate support of 21,900. The downside breakout of the daily 10/20 period exponential moving average (EMA) and ascending trend line is intact, and the market is finding resistance around 22,200 levels. Nifty, on the weekly chart, formed a long negative candle, which indicates the formation of a bearish engulfing-type pattern. Nifty, on the weekly chart, placed at the edge of moving below the strong support of the 20-week , around 21,915. This is not a good sign. The near-term trend of Nifty is weak. A decisive move below 21,900 could open sharp weakness down for the next support of 21,500-21,400 levels.

What should do?
One may look to book profit from long positions and also start creating fresh short positions in Nifty and stocks. At lows, one may find an opportunity to book a profit of shorts around 21,500-21,400. One may place a stop loss for trading short positions around 22,250-22,300. Stocks with negative bias include Tata Motors, M&M, Indian Oil, HPCL, SAIL, Tata Steel, PFC, Biocon and DLF.

SHILPA ROUT
AVP - TECHNICAL RESEARCH, PRABHUDAS LILLADHER

Where is the Nifty headed this week?
Nifty option chain suggests good support zones around 21,750 which should act as a strong support base going ahead. But on every decline with this support, we should see 21,500 being claimed again and 21,800 eventually once before the pre-election rally. The option chain suggests PE writers being aggressive at 21,800/20,000 strikes on a weekly and monthly basis, with 22,500/23,000 call writers also adding very strong positions. Overall put call ratio, also being neutral, adds a hint to the trend reversal again for the bull run to continue the coming week.

What should investors do?
Last week, Nifty held the level of 21,900 and was trading in the range of the 21,900-22,200 zone, with strong resistance at 22,200 - 22,300 levels. Closes above 22,300 levels will confirm the positive bias. Until then, we are in the range of 400 points as of now, and trading in a rangebound market. A decisive breach of 50-DMA will further trigger another breakdown towards the 21,500 level. Buy BEL for a target of Rs 210 with support at Rs 180 levels. Buy JK Cement for a target of Rs 4,500 with a stop loss of Rs 4,000. Buy India Cements for a target of Rs 230 with a stop loss of Rs 198. Buy Balrampur Chini for a target of Rs 380 with a stop loss of Rs 350.

APURVA SHETH
HEAD OF MARKET RESEARCH, SAMCO SECURITIES

Where is the Nifty headed this week?
Nifty has formed a bearish engulfing candle on weekly charts. It has also breached the rising trendline drawn from October ’23 lows. The weekly RSI is also trending lower after forming a bearish divergence. All of these suggest bears are likely to remain in control. Bulls have some hopes if they are able to sustain above 21,900 levels. For the upward momentum to sustain, they must pull the Nifty above 22,200.

What should investors do?
Markets are at a crucial juncture right now. Overall, the breadth has weakened exceptionally and is in oversold territory. Thus, a bounce-back could be due in mid-cap and small-cap stocks. However, only fundamentally strong stocks might be able to recover. So, investors must not expect a broad-based rally any time soon. Stocks from sectors like FMCG, pharma and IT too could give you some protection. Traders can look for long-term opportunities in ITC, AU Bank and Kotak Bank in the coming week.