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TECHNICAL RESEARCH ANALYST, HDFC SECURITIES
The underlying trend of Nifty continues to be range-bound and the key overhead resistance of 12350-12400 is unlikely to be broken before the index shows any meaningful downward correction, said technical analysts. Jubilant Foodworks, Wipro, ICICI Bank, Maruti & Tata Motors are some of the top short-term picks.
Where Are We: A small negative candle was formed on Friday with a gap-down opening. This is placed just after the long bull candle of Thursday. This pattern indicates a range-bound movement in Nifty below the key overhead resistance of 11350. We observe a triangle pattern at highs, which has been developing for 5-6 sessions. A breakout/ breakdown of such patterns could determine a near-term direction (up 12280 and down 12190).
What Is In Store: The Nifty is now placed near the key overhead resistance of long-term trend line of around 12350-12400 levels. Hence, this area is going to be a key hurdle for the market on the way up. The present range movement could be similar to the previous two top reversal patterns (mid of April 2019 and early June 2019). There is a possibility of another 1 or 2 weeks of range movement or false upside breakout attempt, before showing downside correction.
What Could Investors Do: The underlying trend of Nifty continues to be range-bound at the highs. Though, Nifty is placed near the key resistance, there is no indication of a reversal pattern at highs. But, the daily/ weekly chart patterns signal a limited upside. The key overhead resistance of 12350-400 is unlikely to be broken on the up, before it shows a meaningful downward correction. Buy Jubilant Foodworks for 3-5 weeks at CMP of 1683. Buy Wipro for 3-5 weeks at CMP of 251.
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