Indian benchmark Indices, following a series of lower lows and lower highs in the past few weeks, have now started forming higher lows and higher highs. The indices closed in the green for the second session in a row. Further, Nifty50 index is also trading above the high of previous week and 20-DMA resistance placed at 14,580 is indicating bullishness. A sustained trade beyond the next resistance hurdle at 14,680-14,700 will extend the uptrend to levels of 14,800, which happens to be the 50-DMA and neckline of a Wolf Wave pattern. A further breakout from the bullish pattern may take the index to 15,000 levels.
However, if bears push the index lower from this resistance zone of 14,680-14,700, it may trigger profit booking to levels of 14,550-14,500. Technical indicator RSI has also turned upwards after forming a positive divergence, confirming that the markets have entered a bullish territory. Therefore, corrections or minor profit booking can be used as an opportunity to initiate long trades.
Equity recommendation
Divis Labs: BUY
CMP: Rs 3,909
Target: Rs 4,200
Stop loss: Rs 3,750
The stock is on the verge of a breakout from a trendline resistance placed at Rs 3,915 to enter into an uncharted territory. A successful breakout on healthy volumes will trigger an up move to levels of Rs 4,200. Moreover, the RSI has turned upwards from the upper end of the bulls zone, i.e,. 60, confirming the strong bullishness dominant in the stock.
Bajaj Finserv: BUY
CMP: Rs 10,090
Target: Rs 10,550
Stop loss: Rs 9,850
The Stock has resumed its upward journey after breaking out of a consolidation phase. A trade above Rs 10,150 will extend the up move to levels of Rs 10,550. The RSI is also suggesting a continuation of the uptrend.
Aditya Agarwala is
Senior Technical Analyst, YES Securities. Views are his own.
