Nifty strategy; Tilaknagar, Physicswallah among 3 stock picks by Angel One

Hitesh Rathi of Angel One advocates adopting a strategy where dips in Nifty could be bought into, while rallies towards key resistance zones can be utilised to consider short positions.

Disclaimer: This article is written by Hitesh Rathi, technical analyst (equity & derivatives), Angel One. Views expressed are his own. Readers' discretion is advised. 

Nifty outlook

 It was yet another disappointing week of trade for NIFTY, as losses extended for the fifth consecutive week. The curtailed trading week, however, began on an encouraging note, but the optimism was short-lived as sellers effectively utilised higher prices, resulting in prices retesting key support levels. Thereafter, some buying emerged, which helped prices stay afloat above the crucial 23,000-mark and eventually secure a weekly close at the 23,346-mark, registering a loss of 0.22 per cent. As highlighted in our prior commentaries, prices hovering close to crucial swing supports, coupled with oversold readings across market breadth and technical indicators, have helped the index stage a bounce over the past few days. A quick glance at the weekly charts also indicates a clear rejection from the 23,100–23,000 band, pointing towards the presence of strong demand at lower levels. However, this recovery has had little impact on the overall technical structure, with the setup continuing to remain cautious. It would therefore be safe to say that we are not yet out of the woods. As long as the index holds above the aforementioned support band, prices could continue to inch higher, albeit at a grudging pace, given the presence of strong supply at higher levels. Since prices have now retraced more than 50 per cent of the down bar witnessed earlier this week, while the broader trend continues to remain aligned to the downside, the ongoing secondary retracement could extend towards the 23,500–23,600 band. In such a scenario, we advocate adopting a strategy where dips could be bought into, while rallies towards key resistance zones can be utilised to consider short positions. In terms of levels, while 23,100-23,000 band remains a sacrosanct support level, immediate support can be found in the 23,250-23,200 zone. On the flip side, immediate resistance is likely to be encountered in the 23,450-23,500 band, while the 23,600 level, which was a prior support, now likely to act as a resistance now, following the principle of polarity. A smart recovery seems to have ensued in broader markets today, with breadth cooling off significantly on both NIFTY 50 and NIFTY 500 universe. While the trend still remains aligned to the downside on the NIFTY, venturing into relatively strong stocks, with suitable risk management in place, could turn out to be a fruitful adventure going forward. 

Stock recommendations for today (September 21)

 Tilaknagar Industries View: Bullish Last Close: ₹570  Following a price breakout on the candlestick charts across all timeframes, accompanied by very high volumes, the stock has since undergone a retest of its breakout zone. The retracement has occurred on very low volumes, pointing towards an absence of significant supply and indicating that the breakout remains technically healthy. On the Point & Figure charts as well, the stock has invalidated a prior bearish setup comprising a Weak Breakout and a Bearish Anchor Column, indicating a clear shift in control from sellers towards buyers. Hence, we recommend to BUY Tilaknagar Industries around ₹565-560 | SL: ₹495| TGT: ₹645-650 UNO Minda View: Bullish Last Close: ₹1,284  A sharp bounce back following the retest of the recent breakout in UNOMINDA, where the stock also retested its 200 DSMA, indicates the presence of strong buying interest at lower levels and suggests that buyers continue to remain in control. The formation of a Bullish 100 per cent Pole on the Point & Figure charts, right from its 10-column moving average, provides further confirmation of the underlying strength in the stock. Adding to the positive setup, the formation of a Bullish Swing Engulfing pattern on the 1 per cent Renko charts, where the stock also retested its 40-brick Moving Average, further indicates that the stock could march higher in the coming days. Hence, we recommend to UNOMINDA around ₹1,285-1,280 | SL: ₹1,135| TGT: ₹1,438-1,450 

Physicswallah

 

View: Bullish Last Close: ₹136  After taking support at an upward sloping trendline, which has cushioned prices on multiple occasions, PWL has now triggered a bullish price breakout on its Candlestick charts. A follow-through Double Top Breakout on the 1 per cent Point & Figure charts, following the formation of a Bullish-Bearish Pattern Reversal, provides further confirmation of the resumption of its uptrend. A follow-through Swing Breakout on the 1 per cent Renko charts provides additional confirmation that buyers continue to remain in control of the stock, suggesting that higher prices could be witnessed in the coming sessions. Hence, we recommend to BUY Physicswallah around ₹136-135 | SL: ₹125 | TGT: ₹155-158