Pullback rally may not last; stay cautious at higher levels: HDFC Sec

UTILIZE RALLIES TO REDUCE TRADING LONGS IN NIFTY AND BANKNIFTY

Nifty managed to hold above the low of 13,131, which was registered on December 21, 2020, and ended up forming a "Harami" candlestick on the daily charts on Tuesday. In case of such formations, movement of the following day depends on which direction market opens. Probability of trend remaining in the direction where markets open remains high after "Harami" candle formation.  The recent recovery seems more like a dead cat bounce which could last for some more time but it would be advisable to remain cautious at higher levels. Nifty has got strong resistance at 13,600, while Bank Nifty has got strong resistance at 30,200-odd levels. However, sectors like IT and Pharma could outperform in the existing pullback.

Buy LARSEN TUBRO INFOTECH (3,573) | Target: Rs 3,750 | Stop-loss: Rs 3,490

The stock price has broken out from the "cup and handle" pattern on the daily charts in line-with IT sector's outperformance. It surged more than 5 per cent with jump in volumes on Tuesday. The stock is placed above all important moving averages. Indicators and oscillators are also showing strength.
 

BUY PERSISTENT SYSTEMS (1,388) | Target: Rs 1,470 | Stop-loss: Rs 1,330

The stock price has broken out from the narrow consolidation which held for last 7 sessions. It surged 6 per cent with jump in volumes on Tuesday. The stock price has formed rounding bottoms formation on daily and weekly charts. Short-term moving averages are trading above medium to long term moving averages.

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Disclaimer: Vinay Rajani is Technical Research Analyst at HDFC Securities. The analyst doesn't have any holding in the stock. Views are personal.