Special to Firstpost
S&P CNX Nifty (5,086.85): As anticipated last week, the Nifty index made a decisive move which effectively puts an end to the listless activity witnessed in the past few weeks. Friday’s fall below the prior swing low at 5,135 is a sign of weakness.
The index could now slide to the next support in the 4,850-4,900 range. The bearish view would be in force until the index closes above the positive trigger level of 5,390. Click here to view the chart.
The deterioration in the technical structure of quite a few index heavyweights, the ones from the banking universe in particular, is a cause of concern. Stocks from the two-wheeler sector too have displayed a penchant for seeking lower levels.
Given this backdrop, investors may avoid fresh equity exposures while those already invested may buy some protection via the options route.
CNX Bank Index (9,802.35): The crack in this index played a key role in pulling down the Nifty on Friday (4 May). The short-term outlook remains bearish and a test of the immediate support at 9,250 appears likely.
Any signs of recovery may be used to take short positions in the index, with a stop-loss at 10,600. Fresh investment in banking stocks may be avoided while those having significant exposure to the sector may consider put options as a risk control measure.
Power Finance Corporation (Rs 154.75): The stock has been in a downtrend since it touched a high of Rs 223.80 on 17 February. The recent chart patterns indicate the bearish trend could continue and the stock could test the immediate support at Rs 132.
Short positions may be considered with a stop-loss at Rs 174, for a target of Rs 132. The downtrend would gain momentum on a fall below Rs 132 and the stock could test the major support at Rs 120. Click here to view the chart.
Axis Bank (Rs 1,009.85): After hitting a high of Rs 1,309 on 21 February, the stock has been in a downtrend, marked by a sequence of lower highs and lower lows. The recent price action suggests that the stock could fall to the short-term support at Rs 900.
The bearish view would be invalidated on a close above Rs 1,140. Short positions may be considered on a rally, with a stop-loss at Rs .1,150 for a target of Rs 900.
(The views and recommendations featured in this column are based on a technical analysis of historical price action. There is a risk of loss in trading. The author may have positions and trading interest in the instruments featured in the column.)