Nifty slide isn't over; so chill with Bharat Forge, Ranbaxy

Special to Firstpost

S&P CNX Nifty (5,295.55): After a subdued price action for the best part of the week to 30 March, it was heartening to see the sharp rally on Friday. While there is a case for the continuation of the minor upward move that started on Friday, there is no reason to conclude that the recent downward correction is over.

As observed in recent weeks, the index has to move past the key trigger level of 5,500 to confirm a resumption of the uptrend. Until the index moves past this number, there would be a strong case for a test of the crucial support at 5,050.

[caption id=“attachment_261879” align=“alignleft” width=“380” caption=“Those itching to take equity exposures may wait for at least a breakout past the intermediate swing high of 5,386 before committing fresh funds.”]  [/caption]

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Those itching to take equity exposures may wait for at least a breakout past the intermediate swing high of 5,386 before committing fresh funds.

CNX Bank Index (10,212.75): As anticipated last week, the index dropped to the support level of 9,900 and staged a sharp recovery on Friday. The rally on the last trading day of the week does not, however, alter the view that the index is in a short-term downward correction. A move past the bullish trigger level of 10,950 is a prerequisite to confirm the resumption of the uptrend.

Long-term investors may use price weakness to build exposures in the banking sector in a staggered fashion. Stock such as Andhra Bank, State Bank of India, Axis Bank and Union Bank are the top picks from the sector.

Bharat Forge (Rs 321): The stock has been in an uptrend since 20 December. The technical set-up suggests that the stock could rally to the short-term resistance at Rs 360. Long positions may be considered at current levels as well as on declines, with a stop-loss at Rs 280 and target of Rs 360.

The uptrend will gain momentum on a breakout past Rs 360 and the stock could then target the major resistance at Rs 385.

Ranbaxy Laboratories (Rs 469): The short-term outlook is bullish and a rally to the immediate resistance at Rs 520 appears likely. It is positive to note that the stock took support at the green upsloping line displayed in the chart.

[caption id=“attachment_261877” align=“alignleft” width=“600” caption=“It is positive to note that the stock took support at the green upsloping line displayed in the chart.”]  [/caption]

Long positions may be considered on weakness, with a stop-loss at Rs 389, for a target of Rs 520. A breakout past Rs 520 could trigger a rise to the next resistance at Rs 560.

(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.)