Sharp pullback negates the possibility of a down trend
From the low of 14,222, the Nifty50 index registered sharp recovery towards 14,546 in a short span of time. This recovery has recouped more than 62 per cent of the entire fall which was registered from 14,653 to 14,222. Retracement of more than 62 per cent is considered as a negation of a primary down move. Bullish trend of Nifty has now got new support at 14,222 and with that stoploss longs should be held.
Buy Ashok Leyland (119.5) | Target: Rs 127 | Stop-loss: Rs 114
The stock has broken out from a "bullish flag" pattern on the daily chart. It has also remained as one of the best performing stocks from the auto sector in the last couple of months. It is placed above all important moving averages with Indicator and Oscillator setup being bullish on daily and weekly chart.
Buy Tata Steel (682) | Target :Rs 720 | Stop-loss: Rs 660
The stock price has formed bullish "Hammer" candlestick pattern on the daily chart with higher volumes. Primary trend of the stock has been bullish. The metal sector has also been holding the strength from last many months. Short-term moving averages are trading above medium to long term moving averages.
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