Nifty’s configuration remains low, expect another fix: HDFC Securities

For the past few weeks, the Nifty has been in correction mode. The downtrend was confirmed when the support at 17,613 was broken.

On the daily chart, we see that Nifty remains in a downtrend despite the rebounds observed during the last two sessions. The index continues to make lower highs and lower lows in recent weeks. The 20-day SMA also continues to trade below the 50-day SMA, indicating a negative moving average crossover. Weekly momentum readings like the 14-week RSI are also in decline mode.

While we remain open to pullback rallies, we expect the Nifty to eventually decline over the next few sessions. A larger correction is likely once all 16,782 brackets are broken.

Stock selections:

Buy Fluor Navin

Navin Fluorite has shown relative strength this week. While the Nifty Index lost 0.32 percent, Navin Fluorite gained 8.1 percent. In the process, the stock also broke out of its recent trading range thanks to healthy volumes.

Technical indicators are giving positive signals as the stock trades above the 20 day SMA. Daily momentum indicators like the 14-day RSI have also rebounded and are now in a bullish mode, which bodes well for the continuation of the uptrend.

With the intermediate technical setup looking positive, we believe the stock has the potential to move up and out of its previous intermediate highs in the coming weeks and therefore recommend a buy between the 3,740 and 3,760 level. The CMP is Rs 3,751. The stop loss is at Rs 3,510 while the targets are at Rs 4,130.

Buy GSPL

GSPL is in an intermediate uptrend as it continues to hit higher highs and lows in recent months. After recently correcting and finding support at the 50-week SMA, the stock rebounded this week thanks to above-average volumes.

Technical indicators are giving positive signals as the stock trades above the 200 day EMA. Daily momentum indicators like the 14 day RSI have also rebounded and are now in a bullish mode, which bodes well for the continuation of the uptrend. With the intermediate technical setup looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 310-315 levels. The CMP is Rs 312.85. The stop loss is at Rs 300 while the targets are at Rs 350.



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Disclaimer: Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities.

Note: the choices below are for the next 15 to 26 trading sessions

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