Nifty close below 14,416 would be bearish for short-term: Vinay Rajani

Nifty outlook
 

On May 3, 2021, Nifty bounced back sharply from the day’s low and formed bullish candle on the daily chart. On the same day, Nifty hit a low of 14,416, which happens to be the 61.8 per cent retracement of the entire pullback seen from 14,151 (Low of April 22, 2021) to 15,044 (High of April 29, 2021). Any close below 14,416 would violate the crucial support of the golden ratio and in that case, we can expect Nifty to enter in to a bearish territory. Below 14,416, Nifty could slide towards next support of 14,150. In short term, we can expect stock-specific bullish moves in mid-cap and small-cap segment and those should be traded with appropriate stoploss.

Stock picks

Buy Natco Pharma (Rs 933): | Target: Rs 1,020 | Stop-loss: Rs 850

The stock price has broken out from bullish “Pennant” pattern on the daily charts. Rising volumes during the breakout has validated the upside breakout. It has been trading above important moving average parameters, indicating uptrend on all time frames. Pharma sector has been one of the best performing sectors and is still holding its strength. The stock price has broken out from the consolidation which held for last four weeks. Indicators and oscillators like RSI, MACD and DMI have turned bullish

on short term charts

Buy HPCL (Rs 242): | Target: Rs 262 | Stop-loss: Rs 228

In the last seven weeks, the stock price has formed strong base around 228 odd levels by registering multiple bottoms. On May 4, 2021, the stock rose more than 2.5 per cent with good volumes, and surpassed the resistance of 241, which has resulted in to a breakout from the narrow consolidation, which held for seven weeks. Indicators and oscillators have turned bullish on the daily charts.
Disclaimer: Vinay Rajani is Senior Technical and Derivative Research Analyst at HDFC Securities. The analyst doesn't have any holding in the stock. Views are personal