Nifty outlook & two stock ideas by Vinay Rajani of HDFC Securities

Hero MotoCorp's stock has broken down below the last six week's price consolidation

Nifty fell for the third consecutive session on Tuesday to close at 15,622. In these three sessions, Nifty has lost almost 400 points, while Bank Nifty has lost more than 1,600 points. Nifty has reached very near to its 50 days EMA, which could provide support at 15,550 odd levels. However, on the upside, 15,700-15,750 would act as strong resistance in days to come. It would be advisable to utilise the resistance levels to initiate fresh short sells.

Buy TCS (Rs 3,203): | Target Rs 3,360 | Stop loss: Rs 3,103

The stock has been finding support around Rs 3,150 odd levels for the last seven sessions. It remained resilient amid recent market weakness. On July 20 2021, the stock formed a “Hammer” candlestick pattern, which signs short term trend reversal. It has witnessed a healthy correction from the previous swing high of Rs 3,387 and now seems set to bounce back. IT sector is also expected to outperform for the next couple of weeks. 

Sell HERO MOTOCORP (Rs 2,843): | Target Rs 2,725 | Stop loss Rs 2,900

The stock has broken down below the last six week’s price consolidation. It has violated the crucial support of the upward sloping trend line on the daily chart. The auto sector has been underperforming for the last couple of weeks. Currently, the stock is trading below 20, 50, 100 and 200 days EMA. Daily DMI, RSI and MACD indicators have turned bearish on the daily charts.

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Disclaimer: Vinay Rajani is technical research analyst at HDFC securities; views expressed are personal