Nifty breached and closed below its 50-DEMA (double exponential moving average) placed at 10,824 forming large bearish candle. The bearish implications of 'false breakout' above the two-month long consolidation kicked in while the index is expected to drift towards the consolidation support of 10,600 in the coming sessions. Weekly relative strength index (RSI) continues to mark higher highs while strong bullish reversal patterns at consolidation support reaffirms the prevalent bullish bias. Hence, shorts should be avoided for now while short-term traders should wait for exhaustion at lower levels to reinitiate longs in coming sessions.
Stock: Indian Oil Corp
CMP: Rs 129.90
The stock breached below the consolidation support placed at Rs 132 levels that have been intact since past 10 trading sessions. Occurrence of a 'Bearish Belt Hold' candle along with breach below consolidation support suggests the stock might continue its down move till Rs 117 price confluence support in the coming sessions. Significant call writing witnessed at Rs 130 to Rs 135 strike price reaffirms the bearish outlook for the stock. Traders can short the stock for Rs 117 to be obtained in the coming sessions with stop placed above Rs 136 levels.
Stock: Colgate Palmolive (India)
CMP: Rs 1249
The stock is moving lower after attaining new life highs around Rs 1,355 levels. Long-term channel resistance coincided with the life highs and the throwback post new life highs indicate test of channel support placed around Rs 1,157 levels. Occurrence of a 'Bearish Belt Hold' candle along with breach and close below its 50-DEMA compliments the view of lower prices in coming sessions. Traders can short the stock in anticipation for a test of lower channel support around Rs 1,160 levels to be obtained with the stop placed above Rs 1,280 levels.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.