Nifty continues to retain its higher highs sequence for third straight trading session; however, so far it has lacked the required strength in momentum to surpass the resistance level of 12,000 which still has a strong hold by the call writers. Strong rollover data along with seasonality factor analysis for July compliments for a strong bull case scenario to unfold. It has been observed that 7/10 instances since 2008 the month of July have registered strong positive returns MoM (month-on-month).
Fanning of 5 and 20 Double Exponential Moving Average (DEMA) along with relative strength index (RSI) sustaining above 50 with fresh 14 periods high post retest of its signal line supports the overall setup for resumption of bullish momentum in the coming sessions.
A decisive move above 12,040 could push Nifty towards 12,200 while any dips below 11,800 ahead of the Budget could trigger an unwinding pressure and push the index lower towards 11,650. Only a breach below 11,650 levels could derail the larger bullish structure in place. Hence, the short term traders are advised to retain their longs with a stop below 11,650 on a closing basis from here on.
Stock: INDUSIND BANK
CMP: Rs 1,462
The stock has recently witnessed ‘Double Bottom’ on the weekly scale along with a Bullish Hammer formation. Since then, it has been stable and consolidating around Rs 1,349 levels also by attaining close above its 10-DEMA after multiple unsuccessful attempts in the past seven trading sessions. Daily RSI is surpassed above its signal line (9 EMA); hence, follow through momentum is expected in the coming sessions with stock targeting its 50 DEMA placed around Rs 1,517 levels. It can be bought with a stop placed below Rs 1,436 levels for Rs 1,517 to be obtained in the coming sessions.
Stock: RELIANCE INDUSTRIES (RIL)
CMP: Rs 1,282
Reliance Industries (RIL) is on the verge of breaking out from the ongoing ‘falling Wedge’ formation. It has managed to retain its close above its 5 DEMA post seeing a reversal from its pattern support near Rs 1,240. Prevailing “Bullish Divergence” on Daily RSI relative to price suggests the larger move on the upside is in the offing. It is expected to target Rs 1,340 level as indicated by the Wedge formation. Hence, it could be bought with a stop placed below Rs 1,250 for a larger rally to unfold on the upside in the coming sessions.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.