Positional trend on Nifty is bearish, resistance at 16,200: HDFC Securities

After forming "Doji" candlestick pattern on Monday, Nifty index has formed bullish "Engulfing" candlestick pattern on the daily chart, which indicates the short-term trend reversal. Many large cap stocks got oversold, which helped Nifty to show some pullback after deep cut.

Short-term resistance for the Nifty is seen at its 5-days EMA, which is currently placed at 16,204. Far resistance is seen at 16,500. Positional trend of Nifty is still bearish with lower tops and lower bottoms and, therefore, it would be advisable to trade longs with trailing stop loss. Support for the index is seen at 15,800.

Stock recommendations:

Gujarat Alkali (657.95) | Target: Rs 705 | Stop-loss: Rs 620

The stock has formed higher top preceded by higher bottom on the daily line chart. It surged more than 5 per cent with rising volumes on Tuesday and has surpassed the resistance derived from 10-days EMA. RSI oscillator has also turned bullish on the daily chart.
 

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The stock has bounced back from the support derived from upward sloping trend line on the daily chart. It has also surpassed the 10-days EMA resistance. On Monday, the stock formed bullish "Hammer" candlestick pattern on the daily charts, which indicates short-term trend reversal. Indicators and oscillators have also turned bullish on the daily charts.

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Disclaimer: Disclaimer: Vinay Rajani is Senior Technical & Derivative Analyst at HDFC Securities. Views are personal. He holds no positions in the stocks.