By Rohan Patil
Nifty 50 has been trapped in a very narrow range and has formed four small candles over the past four trading sessions which can be indicated as spinning top or indecision over the daily period. As of July 28, the benchmark has been trading in a bullish channel pattern and continues to trade in a higher higher lower formation. On September 6, prices register their highest ever level of 17429 and are capped below the upper band of the ascending channel pattern on the daily interval.
India’s merchandise exports in August 2021 amounted to USD 33.14 billion, an increase of 45.17% from USD 22.83 billion in August 2020 and an increase of 27.5% from to 25.99 billion USD in August 2019: Ministry of Trade and Industry (support for the economy).
The advancing stocks outnumbered those dropping 957 to 728 and 70 ended unchanged; on the BSE, 1755 increased and 1281 decreased, while 145 ended unchanged on the NSE. India VIX, which measures the implied volatility of Nifty 50 options, fell 3.24% to 13.94.
Thirteen of the 19 sector indicators compiled by the ESB ended up, led by the S&P BSE Telecom index by more than 2%. The Power, Metal, Utilities, FMCG, IT and Basic Material indices also rose between 0.6% and 1.2%.
The Momentum RSI oscillator (14) is set in an overbought zone which is above 70 levels on the daily chart. Whenever the index or a stock is in a bull run and the indicator shows an overbought scenario, one can expect a lateral correction over time in the meter.
Nifty support is placed in the lower band of the ascending channel pattern which is placed near 17,000 levels over the daily period. Resistance is capped below the upper band of the pattern and the breakout above 17450 will open the 17600 gate levels over the next few trading sessions.
After breaking above its rectangular pattern, Bank Nifty most likely ended its comeback near its trendline support on the daily period. The concept of polarity shift is observed at the current junction as the previous resistance level acts as an area of immediate support for the banking index.
The banking index continues to trade above its 21-day exponential moving average on the daily chart and serves as the anchor for the index. The Momentum RSI oscillator (14) reading in a very wide range between 55 and 65 levels over the weekly period indicates the probability of a breakout of the range on the upper side.
On the weekly chart, prices are trading above the upward sloping trendline support and higher higher lower formation is well intact over a wider period. Bank Nifty could see short-term buying after experiencing a slight correction.
Even if Bank Nifty corrects for some reason, it should be viewed as a buying opportunity.
Bank Nifty support is placed near the 36100 – 36000 levels and the upside resistance should be capped near the 37500 levels.
Canara Bank: BUY
CMP: Rs 157.50 | Objective Rs 169 | Stop Loss Rs. 152
The stock was trading within the symmetrical triangle pattern over the past six months within a range of 135 to 152 levels over the weekly period. Canara Bank exited a symmetrical triangle pattern at 488 levels on September 3 and prices registered a decisive breakout which suggests a trend change from lateral to bullish.
The stock is trading above its 21, 50, and 100-day exponential moving averages over the daily period, which is positive for prices in the short term. The MACD indicator reads above its center line with a positive cross above its signal line. The Momentum RSI oscillator (14) is showing almost 60 levels, indicating that the positive dynamics will want to continue.
Container Corporation of India: BUY
CMP: Rs 743 | Objective Rs 800 | Stop Loss Rs. 710
On the daily chart, the stock took support near its 21-day exponential moving average and rebounded with confirmation of volume. CONCOR gave a reverse head and shoulder breakout on the daily interval on September 2 and prices were able to close above its neck line support. It has maintained itself near its highest standard of living, which confirms the strong positive feelings in the medium and long term.
Due to the recent smart rally, prices were able to close above its 21 and 50 day exponential moving average on a daily scale. Majority of indicators and oscillators showed positive divergence with the highest formation on the daily chart.
(Rohan Patil is Technical Analyst at Bonanza Portfolio. The opinions expressed are those of the author. Please consult your financial advisor before investing.)