What's in store for the markets this week
A breakout above 5,650 or a fall below 5,350 would set the tone for the next major move in the Nifty, where as the price pattern in the past few trading sessions indicates that BSE's Friday's recovery process is incomplete.
Special to Firstpost
S&P CNX Nifty (5486.35): After a brief consolidation, the Nifty managed to stage a sharp recovery on Friday. The recent price action suggests that the index could rally to the immediate resistance at 5,590.
The short-term trend would be bearish until the index closes above the major resistance point at 5,650. As long as the index trades below 5,650, there would be a strong case for a test of the short-term support at 5,350.
To summarise, a breakout above 5,650 or a fall below 5,350 would set the tone for the next major move in the Nifty. The range-bound action would persist until either of these levels gets breached.
BSE Sensex (18,326.09): The price pattern in the past few trading sessions indicates that Friday's recovery process is incomplete and the BSE Sensex could rally to the short-term resistance level of 18,615.
The index, however, has to move past the major resistance at 19,010 to indicate reversal of the short-term downtrend. Unless 19,010 is crossed, the Sensex would be vulnerable to a slide to the major support at 17,800.
It would, therefore, be safer to take profits or reduce long positions at higher levels. Positional longs can be considered either closer to the support at 17,800 or on a breakout past 19,010. Infrastructure Development Finance Company (Rs 137.30): The stock was amongst the top gainers during Friday's trading. During the sell off in February, the stock took support at Rs 115, indicating a lot of buying interest at these levels.
The recent downward correction since the 6 April high of Rs 167 was arrested at Rs 125.55 on 17 May, indicating that buyers are aggressively stepping-in to buy this stock.
The gradual pick-up in trading volumes witnessed in the past three trading sessions confirms buying interest in the stock.
Long positions may be considered at current levels and on weakness, with a stop-loss at Rs 112 and target price of Rs 159.
Raymond (Rs 344):The share has been trading in an upward sloping trend channel. It took support and bounced off the lower parallel of this trend channel on Thursday. The short-term outlook is bullish and a rally to the immediate resistance at Rs 372 appears likely.
The stock may be bought at the current level as well as on declines, with a stop-loss at Rs 316.
Disclosure/Disclaimer: 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.
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The rupee-dollar chart shows that the pressure is downward for the rupee. A significant move could take the rupee all the way down to 56.50.