Chart: Why a new life high for Nifty appears slim at the moment

Special to Firstpost

CNX Nifty (6,056.15): The market sentiment remained bearish during the week gone. There was, however, some relief on Thursday when the index closed in the green after seven consecutive days of weakness.

The short-term outlook is positive and the index could see a recovery to 6,220-6,250 range. The recent fall has pushed the Nifty to an oversold level, strengthening the case for a rally. The chances however of an immediate rally to new life-time high appear slim as the index has a strong resistance to contend at 6,275-6,330.

As long as the Nifty trades below 6,350, there would be a strong case for a slide to the major support at 5,750-5,800 range. From a short-term trading perspective, long positions may be considered with a stop loss below Wednesday’s low for a target of 6,220. A fall below 5,955 would suggest that the Nifty is in a hurry to test its support zone at 5,750-5,800.

CNX Bank Index (10,811.20): The short-term outlook for this index too is positive from a short-term perspective. The bank index could rally to the short-term resistance at 11,250-11,300 and a breakout past 11,350 could stretch the target to 11,650. The private sector banking stocks come across the prime candidates to propel the bank index to higher levels.

Axis Bank and ICICI Bank are top candidates for the short-term traders to bet on the long-side. The short-term positive view would be under threat if the bank index falls below the support at 10,350. A fall below this support would have bearish connotation and could push the index to 9,500-9,650.

Bank of Baroda (Rs.606): The recent short-term downward correction was arrested right at the support at Rs 566 on Wednesday. The follow-up buying on Thursday suggests that the stock could seek higher levels from a short-term perspective. Short-term traders may consider long positions with a stop loss at Rs.565 and target of Rs 660. Above Rs 660, the stock could rally to the major resistance at Rs.678. Long position may be considered in a staggered fashion, especially on weakness, in order to reduce the risk.

[caption id=“attachment_1233277” align=“aligncenter” width=“600”] Above Rs 660, the stock could rally to the major resistance at Rs.678. Long position may be considered in a staggered fashion, especially on weakness, in order to reduce the risk.[/caption]

Bharti Airtel (Rs.340): This stock too has stabilized after a short-term downward correction. The price action in the last couple of trading sessions suggests that the stock could seek higher levels form a short-term perspective. Long position may be considered with a stop loss at Rs 328 and target of Rs 360. Any weakness may be used to add to exposures. A move beyond Rs.360 could help the stock seek the next target of Rs 372.

(The views and recommendations featured in this column are based on the 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.)