Bears dominated the D-Street for the second day in a row as benchmark index Nifty ended trade with a cut of 120 points, a decline of almost 300 points in just two trading sessions. The index also broke down from a trendline support formed, joining recent highs placed at 15,700 levels, indicating weakness dominant currently.
Bulls, however, did manage to keep the index above its 50-DMA placed at 15,578, which is going to act as a key support line going ahead. A sustained trade back above the 15,700 level could trigger a short covering rally taking the index to levels of 15,800-15,840.
On the flipside, failure to keep its head above the immediate hurdle of 15,700 may extend profit booking, dragging the index lower to levels of 15,578-15,500. Momentum indicator, RSI on a shorter time frame has turned northwards from extreme oversold territory, suggesting that a short covering rally cannot be ruled out in the coming sessions.
Equity recommendation
Berger Paints: BUY
CMP: Rs 865
Target: Rs 915
Stop loss: Rs 830
The stock has resumed uptrend after breaking out of a narrow consolidation phase and trendline resistance on good volumes. Technical indicator RSI turning upwards from the 60-level suggests extended upside in the stock.
Maruti: BUY
CMP: Rs 7,232
Target: Rs 7,600
Stop loss: Rs 7,050
The stock has turned upwards after taking support at the 61.8% Fibonacci retracement level following its recent correction, which also happens to be the 50-DMA. Further, it continues to make higher highs and higher lows, suggesting bullishness. RSI has also turned upwards from the lower end of the bull zone, i.e, 40, suggesting an up move from here on.
Aditya Agarwala is Senior Technical Analyst, YES Securities. Views are his own.
