Benchmark index Nifty50 shut shop flat on the expiry trade of the August series. However, the index did gain 5.4 per cent this series as the money chased largecap stocks, while midcap and smallcap stocks underwent profit booking.
Following this sharp up move, the index has entered a narrow sideways consolidation phase between 16,590 on the downside and 16,700 on the upside. A breakdown from the lower end of the range could trigger profit booking, dragging the index to levels of 16,470-16,360. However, a successful breakout and sustained trade beyond the upper end of the range, i.e. 16,700 would extend the up move to levels of 16,780-16,900.
Moreover, the technical indicator RSI has turned below the 60 level after making a negative divergence, indicating a weakening uptrend that may first trigger minor profit booking before it resumes its uptrend.
Equity recommendation
Britannia: BUY
CMP: Rs 3,930
Target: Rs 4,100
Stop loss: Rs 3,840
The stock has resumed the uptrend after breaking out of a bullish flag pattern on good volumes. Technical indicator RSI has turned upwards after forming a positive divergence, confirming the bullishness.
Cholamandalam Finance: BUY
CMP: Rs 531
Target: Rs 580
Stop loss: Rs 500
The stock has resumed the uptrend after making a double bottom and is now on the verge of a breakout from a W pattern. Further, volumes have been good in the recent up move, confirming the bullishness in the stock. RSI is also suggesting bullishness going forward.
(Aditya Agarwala is Senior Technical Analyst, YES Securities. Views are his own.)
