Time to go short: Bharti Airtel and TCS are in slide mode

Special to Firstpost

S&P CNX Nifty (4,651.60): The price action in the week to 16 December was in line with expectations and the downtrend gained momentum once the crucial bearish trigger level of 4,800 was breached on Friday.

The index is now hovering near the 24 November low of 4,639, a breach of which would lend further momentum to the downtrend. The bullish trigger level, for positional longs, would now stand revised to 5,100 from the prior level of 5,400.

As emphasised in earlier weeks, a breakout above 5,100 would give us the licence to hunt for long positions from a portfolio perspective, but it does not mean that one should rush-in once the breakout happens.

Any subsequent pull-back, after the breakout past 5,100, would be a buying opportunity. For now, the Nifty appears headed to the major support at 4,350, as highlighted in the chart. Any rally would be a shorting opportunity for a target of 4,350.

CNX Bank Index (8,171.90): Along with the Nifty, the Bank Index too was mauled during Friday’s trading. The index now appears to be headed to the short-term support at 7,320. Individual stocks such as Axis Bank, State Bank of India and HDFC Bank have breached crucial supports, justifying the case for a slide in the Bank Index.

Any attempts to pull back may run into resistance at 8,350. The index has to move above the 9,300 to indicate a reversal of the medium-term downtrend.

Tata Consultancy Services (Rs 1,143.50): This stock, along with others from the technology sector, has been a relative outperformer in recent months. The rally in the past few months is, however, a pull-back within a downtrend.

The price action of Friday indicates a reversal of the recent uptrend and also the resumption of the medium-term downtrend. The stock could slide to the major support at Rs 1,050.

Investors may pare exposures while aggressive traders may consider short positions on rally, with a stop-loss at Rs 1,210, for a target of Rs 1,050.

Bharti Airtel (Rs 336.30): The stock is in a downtrend and the price action on Friday indicates that the bearish trend would gain momentum now. There is a strong resistance at the Rs 350-355 range. A breakout past this range would indicate a reversal of the downtrend.

Else, a a slide to the near-term support at Rs 295 appears likely. Short positions may be considered on a rally, with stop-loss at Rs 355, for target of Rs 295.

(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.)