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By Subash Gangadharan
On the daily chart, we can see that after recently breaking 15735 lows and hitting a new 52 week low last week, NSE Nifty 50 has bounced back this week. But the rebound did not hold as selling again emerged from resistances and pushed the Nifty index lower. Technical indicators are also not giving positive signals, as the Nifty Index is trading below a 20-day and 50-day downslope SMA. The 14-week RSI is also weakening. Nifty may now be heading towards the next major intermediate support at 14592 in the coming weeks.
Our view would turn ugly if the Nifty manages to clear the resistances at 15565-15707. Traders should wait for strength to emerge before going aggressively long.
The choices below are for the next 15 to 26 trading sessions
Sell Escorts
Escorts are in an intermediate downtrend as they have been making lower highs and lower lows over the past few weeks. Last week, the stock broke down from a trading range and closed below the 50-week SMA. This indicates that the downtrend looks set to continue.
Technical indicators are giving negative signals as the stock is now trading below the 20-day and 50-day SMA. And both of these moving averages are down. Momentum readings like the 14-day RSI are in decline mode and not oversold, implying potential for more declines.
We therefore expect the stock to correct further in the coming sessions. Sell between levels 1475-1485. CMP is 1479.9. The stop loss is at 1605 while the downside target is at 1300.
Sell Sun Pharmaceutical Industries
Sun Pharma is in an intermediate downtrend as it has been making lower highs and lower lows over the past few weeks. Last week, the stock broke below the 50-week SMA and the 200-day EMA. After a slight pullback this week, the stock has started to fall again. This indicates that the downtrend looks set to continue.
Technical indicators are giving negative signals as the stock is now trading below the 20-day and 50-day SMA. And both of these moving averages are down. Momentum readings like the 14-week RSI are also in decline mode and not oversold, implying further downside potential.
We therefore expect the stock to correct further in the coming sessions. Sell between levels 805-815. CMP is 809.95. The stop loss is at 851 while the downside target is at 750.
(Subash Gangadharan is Senior Technical and Derivatives Analyst at HDFC Securities. Opinions expressed are those of the author. Please consult your financial advisor before investing.)
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