Bears took control of Dalal Street, dragging the Nifty50 index sharply lower, below the crucial mark of 18,000 and the 20-DMA which was acting as a stop loss line for the ongoing uptrend. Further, the headline index ended the October F&O series below 17,900 levels with a massive cut of 354 points forming a large bearish candlestick indicating the bull trend reversal. Sustained trade below 17,900 in the coming trading sessions will trigger deeper corrections to levels of 17,730-17,600.
However, on the flip side if bulls manage to take Nifty50 back above the 17,970-level, which is the previous pivot low will now act a resistance on the way up. A short-covering rally may play out taking the index higher to the levels of 18,120-18,200. Moreover, in the event of a major correction 17,600-17,550 levels will be the key support area to watch out for, where a cluster of lows and 50-DMA is placed and this may act as a reversal point for this corrective move.
Equity recommendation
BUY at CMP Rs 652
Target: Rs 710
Stop Loss: Rs 615
The stock is on the verge of a breakout from a consolidation upper-end, suggesting a resumption of uptrend is on cards. Further, RSI indicator is also confirming the bullishness building up in recent times.
L&T Finance Holdings
SELL at CMP Rs 81.20
Target: Rs 74
Stop Loss: Rs 86
The stock has resumed its downward journey after retesting the neckline of the channel breakdown indicating weakness. RSI has also moved below the 40-level suggesting weakness.
(The author, Aditya Agarwala is Senior Technical Analyst at YES Securities. Views are his won.)
