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On the daily scale the occurrence of an ‘Engulfing Bearish’ formation at the upper end of the range re-affirms the likely oscillation within the broad range of 10,000-9,700 to continue. Traders should resort to mean reversion strategy & look for bearish signs at the upper end of the range. Based on the time tools the ongoing consolidation is about to terminate in the coming week as the evidence in hand suggests the next probable potential reversal zone signal could occur post September 8. Until then adhere to mean reversion approach & expect the consolidation mode to continue for yet another week before the index breakouts from the range.
ICICI PRUDENTIAL LIFE INSURANCE.- BUY
CMP: Rs 441.20
Stop Loss: Rs 413
Target: Rs 553
Post 7 weeks of a decline the stock has witnessed a strong bull candle on the weekly scale. The recent occurrence of a Bullish Hammer near its weekly retracement support also augurs well for the secular upmove to remain firm. On the daily scale the convergence of the 5 & 20 EMA indicates likely momentum in the coming days. Positional longs for 3-4 months could be initiated with a stop loss below 413 for an move towards 553.
MAHANAGAR GAS - BUY
CMP: Rs 1109
Stop Loss: Rs 1040
Target: Rs 1255
Positive sector outlook & breakout from the continuation formation on the weekly scale augurs well for the secular upmove to remain intact. The breakout is well supported with volumes & could push the stock towards 1255 & hence trading longs could be also be considered with a stop below 1255.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.