Observation: After showing weakness amidst a choppy trend in the last three sessions, Nifty witnessed a sharp upside bounce on Tuesday and closed the day higher by 149 points.
Nifty opened on Tuesday on an upside gap of 40 points and showed further up move during early part of the session. It later shifted into a range move with positive bias during the afternoon and continued with upside momentum towards the end to settle near the high. The opening upside gap remains unfilled.
We observe a formation of long bull candle that has covered last three sessions decline in one day. This is positive indication.
We are now observing an attempt of upside breakout of a triangle pattern at 10,850 levels. Nifty is also making an attempt to move above the key resistance as per the concept of change in polarity.
Hence, Nifty sustaining above 10,900-10,925 levels for the next couple of sessions could open up more upside for the market ahead.
Conclusion & Strategy: The short term trend of Nifty seems to have reversed up firmly, after a choppy trade of the last few sessions.
Nifty needs to sustain above this upside breakout for the next couple of sessions to confirm more upside for the near term.
Torrent Power Ltd (CMP-269.25) - BUY
The stock price has been moving in a sideways consolidation movement in the last few weeks. Currently making an attempt to stage upside breakout of Rs. 270-272 levels in Tuesday’s session. Hence a further up move from here could be a sharp upside for the near term. Daily RSI is also showing positive indication. One may look to buy Torrent Power Ltd at CMP (Rs 269.25), add more on dips down to Rs. 257, hold for the upside target of Rs 298 over the next 3-4 weeks. Place a stop loss at Rs 250.
Engineers India Ltd (CMP-126.50) – BUY
After showing a sharp up move in December 2018, the stock price has slipped into a gradual weakness amidst a sideways range in the last few weeks. Tuesday ’s sharp upside bounce from the lows of Rs 120.50 could be indicating a bottom reversal in the stock trend. Volume has expanded during this upside reversal and a momentum oscillator like DMI/ADX are showing positive indication. Buying can be initiated in Engineers India Ltd at CMP (Rs 126.50), add more on dips down to Rs 121, hold for the upside target of Rs 139 for the next 3-4 weeks. Place a stop loss at Rs 117.50.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.