From the high of January 18, the Nifty has witnessed a sharp fall of 8 per cent in a small span of time. On January 25th, it hit a low at 16,836 and recovered smartly to close at 17,267. Bank Nifty has got a much stronger technical setup than Nifty and we can expect Banks to outperform in the coming days. 200 days EMA of Nifty is placed at 16,600 odd levels and that can act as positional support. Resistances for the index is seen at 17,415 and 17,593.
Buy ICICI Bank (800) | Target: Rs 860 | Stop-loss: Rs 760
The stock has been running in correction mode for the last five trading sessions. Primary trend of the stock has been bullish with higher tops and higher bottoms. It is placed above all important moving averages, which indicates bullish trend on all time frames. Banking as a sector has been outperforming for a while and technical setup of bank index is much stronger than Nifty. The stock is also developing “flag” kind of pattern on the daily chart.
Buy Gujarat Alkalies & Chemicals (683) | Target: Rs 750 | Stop-loss: Rs 650
The stock is placed above its 50, 100 and 200 days EMA. It is holding its level above the upward sloping trend line on the daily chart. Indicators and oscillators have turned bullish on the daily and weekly chart.
Disclaimer: Vinay Rajani is a Senior Technical & Derivative Analyst at HDFC Securities. Views that of the author.