Nifty may continue to trade weak below 30 daily EMA; Marcio can give 5% return in short term

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By Jaydeb DeyStewart & Mackertich Wealth Management Ltd

The Nifty yesterday ended 0.49 percent down at 10,360.15. Day long choppy movement within a tiny range led to a bearish candle on the daily chart. It continues facing resistance on rise around Nifty dual resistance zone of 10,440 to 10,480.

Chart pattern with position of indicators suggests, Nifty may face difficulty to break through the critical resistance of 10,480. Needless to say 10,330 may continue to serve as the major support on the downside.

Narrowing trading range in previous three trading sessions is a critical aspect and suggests trend reversal is not so far away. However, we prefer being cautious on rise given the fact that Nifty is still unable to breakout the 30 daily EMA. Below 10,330, next support is placed around 10,290.

On the Nifty hourly chart; it closed below the 100 hourly EMA placed around 10,390. This might be an indication of weakness that may drag down the benchmark index towards 10,330 and 10,290.

Nifty patterns on multiple time frames show, Nifty may continue to trade on the weaker side as long as it trades below 30 daily EMA, now placed around 10,460. Downside supports are placed around 10,330 and 10,290.

The Bank Nifty previous day ended 0.24 percent down at 24,791.85. It continues facing resistance around 25,000, while the downside support is placed around 24,480.

Based on thorough technical study, the research firm has recommended Marico which can give up to 5% return in the short term:

Marico | Rating: Sell | Target: Rs 290, stop loss: Rs 314 | Return: 5%

The stock is showing weakness after reacting down from the short-term downward trend line resistance placed around Rs 312. Currently the stock is trading below the 200 daily EMA placed around Rs 308. Rising negative open interest in previous three sessions makes the bear case even stronger.

Based on the above mentioned observations, we recommend Marico as a strong sell on rise for the near-term downside target of Rs 290.

Disclaimer: The author is Technical Analyst, Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision.