Nifty outlook and top trading ideas by HDFC Securities

Nifty outlook and technical calls by Devarsh Vakil & Vinay Rajani - PCG Desk, HDFC Securities

Nifty View: Nifty is currently hovering around the strong support of upward sloping trend line, adjoining the bottoms of 6 December 2017, 18 December 2017 and 6 February 2018. 200 DMA for the Nifty is currently placed at 10075, which is expected to act as a far Support. Oscillators like MACD, RSI and KST all are in a bearish mode on the short-term charts. Nifty is trading below its 20, 50 and 100 days EMA, which indicates a positional bearish trend. Resistance for the same would remain in the range of 10600-10640. To conclude, It would be advisable to initiate fresh shorts only below 10300 in Nifty, for the downside target of 10100, keeping SL at 10450.

Buy TCS

CMP: Rs 2944.75

Stop Loss: Rs 2850

Target: Rs 3100

In the month of January 2018, TCS broke out on the long-term monthly charts, with a significant rise in volumes. From the bottom of 2,494, TCS rose to 3,259 in the period from 18 December 2017 to 24 January 2018. At present, TCS is placed 10% lower from its all-time high of 3,259. Stock has completed the 50% retracement of the entire 30% upswing. Short term moving averages have been trading above long-term moving averages. Higher tops and higher bottoms are witnessed on the weekly and monthly charts, indicating primary uptrend. Oscillators like MACD, KST and ADX have been showing strength in the medium or long-term chart. Recent price fall seems to be a running correction in overall bullish trend for TCS. Considering the technical evidences discussed above, we recommend buying the stock between 2,945 and 2,900, for the target of 3,100, keeping a stop loss at 2,850 on the closing basis.  

SELL L&T

CMP: Rs 1,290.6

Stop Loss: Rs 1,330

Target: Rs 1240

The stock has formed bearish head and shoulder pattern on the daily chart. On the week ended 2 February 2018, Stock price formed “Gravestone Doji” pattern, indicating a bearish trend reversal. On monthly chart also stock is completing this month’s candle with a bearish formation of “Dark Cloud Cover”, which indicates bearish reversal for the medium term. The stock has recently violated the crucial supports of its 20 and 50 DMA. Oscillators have also turned bearish on the short to medium chart.  Considering the technical evidences discussed above, we recommend selling the stock between 1,291 and 1,320, for the downside target of 1,240, keeping a stop loss at 1,330 on closing basis. 

Disclaimer: The analyst may have positions in any or all the stocks mentioned above.