Up or down? Nifty, Sensex are stuck in uncertain zone

Special to Firstpost

S&P CNX Nifty (5,084.25): The index did a whole lot of nothing during the week gone by. From the attached daily chart, it is apparent that the index has struggled to get past the centreline of the trend channel.

A breakout above this line could trigger a rally to the major resistance at 5,230. The index, however, has to close above the major resistance of 5,450 to indicate a reversal of the medium-term downtrend. View Chart

Until the Nifty moves above 5,450, there would be a strong case for a re-test or even a fall below the 26 August low of 4,720. A close below 4,910 would be an early sign that the journey towards 4,720 is underway.

The next significant trading opportunity in the index would pop up on a breakout past 5,170 or a fall below 4,900.

BSE Sensex (16,933.83): The index is still confined within the trigger levels of 16,400 and 17,350 mentioned last week. A breakout past either of these levels would set the tone for the next significant move.

The chart pattern in large-cap stocks such as Tata Motors, JSW Steel, and Hindustan Unilever indicate scope for a further upside move. Long positions may be considered on weakness, in these stocks.

Shriram Transport Finance (Rs 676.65): The stock has been consolidating in the Rs 580-730 range in the past few months. The price action in the last few trading sessions indicates that buyers are keen to step-in at the Rs 640-650 range. View Chart

The completion of a “bullish key reversal day” pattern on Friday confirms buying interest at the above-mentioned support zone. Long positions may be considered with a stop-loss at Rs 635, for an initial target of Rs 725.

A breakout above Rs 730 would trigger a rally to the major resistance at Rs 780.

Havells India (Rs 359.30): The stock bounced off the key support at Rs 310 on 28 August and has since been in a minor uptrend. The short-term outlook is bullish and price weakness may be used to buy the stock, with a stop loss at Rs 329.

A breakout past the immediate resistance at Rs 373 would trigger a rally to the major resistance at Rs 400. As long as the stock trades above Rs 305, there would be a strong case for a rally to the major resistance-cum-target of Rs 400.

(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 interest in the instruments featured in the column.)