Buy Wockhardt Pharma, sell Kotak Mahindra Bank, says Sacchitanand Uttekar

Nifty outlook and top trading ideas for today’s trade:

 

Nifty Outlook

 

The bullish sequence of higher tops & higher bottoms got violated for the first time since 26th December 2016. A breach below the recent swing low of 9,560 amplified the pace of the decline as Nifty saw a sharp move towards 9,473.45 on the first trading day of the week itself. Though yesterday’s action was confined within its previous days session there is no strong reversal pattern evident on the daily scale. On the flipside the Bearish Belt Hold formation with a high around 9,647.65 remains a strong resistance. Therefore the trend is now expected to remain sideways for a while with a probable trading range of 9,650-9,700 on the higher side while the lower band could evolve around 9,450-9,430 for a while. Due to developing ambiguity on the immediate scale it’s prudent to remain light & adequately hedged for any further unforeseen consequence while trading mean reversion would be prudent in the coming weeks.

 

Stocks

 

WOCKHARDT PHARMA - BUY

CMP:  Rs 588

Stop Loss:  Rs 560

Target:  Rs 640

 

After declining for a straight 4 months in a row the stock has shown some resilience near 560 zone as it consistently saw some buying interest emerging near the zone.  The occurrence of the Hammer pattern near the support validated this fact while the recent occurrence of a ‘Harami Cross’ re-confirmed the strength in the support. The setup displays early signs of a double bottom formation & provides a decent reward to risk opportunity for fresh longs.

 

KOTAK MAHINDRA BANK - SELL

CMP:  Rs 972

Stop Loss:  Rs 998

Target:  Rs 930

 

On the daily scale the Rising Wedge formation coupled with the negative divergence indicates a mature pattern for a likely breakdown. Even on the weekly scale the recent occurrence of a Bearish Cross at the peak of the upmove compliments the setup. The pattern indicates a target upto 930 therefore traders could utilize bounce if any towards 980-985 to create shorts with a stop above 1004.

 

Disclaimer: The author Sacchitanand Uttekar is AVP – Technical (Equity) at Tradebulls. He may / may not have position(s) in the stocks mentioned.