Nifty view and stock call by HDFC Securities: Sell SBI, LIC Housing Finance

The pullback which was seen from 7,511 to 9,889 seems to have ended and primary downtrend has started for Nifty

Follow up selling after “Island Reversal” pattern indicates resumption of a downtrend in Nifty

On May 4, Nifty formed bearish “Island Reversal” pattern on the daily charts. In the next session of May 5, the index witnessed a follow up selling with momentum, which confirmed the bearish reversal. The pullback which was seen from 7,511 to 9,889 seems to have ended and primary downtrend has started. Immediate support for the Nifty comes at 8,980, followed by 8,700.  Resistance has shifted down to 9,450 and can be kept as a stoploss in any short positions of Nifty.

Stock recommendation:

SELL SBI (171.4): | Target Rs. 162 | Stop-loss Rs 177
 

The stock price has registered a new 52-week low with higher volumes. It has also broken down below the consolidation which was there for last 7 weeks between 198 and 173. Indicators and Oscillators setup is bullish on short to medium term charts. BankNifty Index has been underperforming and likely to continue with the same.

SELL LICHSGFIN (256): | Target Rs. 240| Stop-loss Rs 264

The NBFC space has been under pressure for the last couple of months and has been underperforming along with the banks. The stock has formed bearish triple top formation around 290 on the daily charts. Meanwhile, the stock price has broken down below the upward sloping trend line support on the daily charts with healthy volumes.

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Disclaimer: Vinay Rajani is Technical Analyst at HDFC Securities. Views are personal.