Bulls took a breather as benchmark indices entered a consolidation phase following a sharp runup in prices recently. Further, Nifty50 index is now sitting at overbought levels and formation of a Hanging Man candlestick pattern after a sustained rally suggests that bouts of profit booking can be witnessed in the coming sessions.
Index has failed to cross the 17,430 level in back to back to trading sessions. Therefore, this will now act as an immediate hurdle going ahead and failure to break out of this resistance may trigger profit booking, dragging the index lower to levels of 17,250-17,170 with an intermediate support at 17,300.
On the flip side, a sustained trade above 17,430 will extend the up move to levels of 17,510. However, the technical indicator RSI turning south from 80 levels and formation of a Hanging Man candlestick pattern at the top suggests benchmark indices could remain subdued, while stock-specific outperformance will continue
Equity recommendations
Escorts: BUY
CMP: Rs 1,397
Target: Rs 1,480
Stop loss: Rs 1,350
The stock has resumed uptrend after breaking out the neckline of a bullish Head & Shoulder pattern on good volumes. Technical indicator RSI has turned upwards after taking support at the 60-level, suggesting strength in the stock.
Fine Organic Industries: BUY
CMP: Rs 3,077
Target: Rs 3,250
Stop loss: Rs 2,960
The stock is on the verge of a breakout from a consolidation phase resistance placed at Rs 3120 level. However, strong volume buildup in the run to breakout suggests that the breakout should follow. Technical indicator RSI crossing the 60-level is also suggesting that a successful breakout is on cards going forward.
(Aditya Agarwala, Senior Technical Analyst, YES Securities. Views are his own.)
