By Rohan Patil
Nifty 50 has been trapped within a very narrow range and has formed four small candles during the last four trading sessions, which can be indicated as a spinning top formation or indecision on the daily time frame. Since July 28, the benchmark index is trading in a rising channel pattern and continues to trade in a higher top higher bottoms formation. On September 6, prices register their lifetime high of 17429 and are capped under the upper band of the rising channel pattern on the daily interval.
India’s merchandise exports in August 2021 was USD 33.14 billion, an increase of 45.17% over USD 22.83 billion in August 2020 & an increase of 27.5% over USD 25.99 billion in August 2019: Ministry of Commerce & Industry (Supportive for economy).
Advancing stocks outnumbered falling ones by 957 to 728 and 70 ended unchanged; on the BSE, 1755 rose and 1281 declined, while 145 ended unchanged on the NSE. The India VIX, which measures the implied volatility of Nifty 50 options, was down 3.24 % to 13.94.
Thirteen of 19 sector gauges compiled by the BSE ended higher led by the S&P BSE Telecom index over 2 per cent gain. Power, Metal, Utilities, FMCG, IT and Basic Material indices also rose between 0.6 – 1.2 per cent.
Momentum oscillator RSI (14) is settled in an overbought zone which is above 70 levels on the daily chart. Whenever the index or any stock is in a bull run and indicator is showing an overbought scenario one can expect a sideways time-wise correction in the counter.
The support for the Nifty is placed at the lower band of the rising channel pattern which is placed near the 17000 levels on the daily time frame. The resistance is capped under the upper band of the pattern and the breakout above 17450 will open the gate 17600 levels in the coming trading sessions.
After a breakout above its rectangle pattern Bank Nifty has most likely completed its throwback near its trend line support on the daily time frame. The change of polarity concept is seen at the current junction as the earlier resistance level is acting as an immediate support zone for the banking index.
The banking index continues to trade above its 21-day exponential day moving average on the daily chart and is acting as an anchor point for the index. Momentum oscillator RSI (14) is reading in a very range between 55 – 65 levels on the weekly time frame indicates the probability of the range breakout on the higher side.
On the weekly chart, prices are trading above upward slanting trend line support and a higher high higher low formation is well intact on the broader time frame. Bank Nifty may witness buying in the near term after it has seen a small correction.
Even if Bank Nifty corrects for some reason, it should be considered a buying opportunity.
The support for the Bank Nifty is placed near 36100 – 36000 levels and the upside resistance is likely to be capped near 37500 levels.
Canara Bank: BUY
CMP: Rs 157.50 | Target Rs 169 | Stop Loss Rs. 152
The stock was trading within the symmetrical triangle pattern for the last six months within the range of 135 – 152 levels on the weekly time frame. Canara Bank has broken out of a symmetrical triangle pattern at 488 levels on 03rd Sept and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Stock is trading above its 21, 50 & 100- day exponential moving averages on the daily time frame, which is positive for the prices in the near term. The MACD indicator is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
Container Corporation of India: BUY
CMP: Rs 743 | Target Rs 800 | Stop Loss Rs. 710
On the daily chart, the stock took support near its 21-day exponential moving average and bounced back with volume confirmation. CONCOR has given an inverted head & shoulder pattern breakout on the daily interval on 2nd Sept and prices have been able to close above its neckline support. It has sustained near its lifetime high which confirms the strong positive sentiments for the medium to long term.
Due to the recent smart rally prices have been able to close above its 21 & 50- day exponential moving average on a daily scale. The majority of the indicators and oscillators have shown positive divergence with the higher high formation on the daily chart.
(Rohan Patil is a Technical Analyst at Bonanza Portfolio. Views expressed are the author’s own. Please consult your financial advisor before investing.)