From the all-time high of 18604 achieved on 19 October, till 29 October 2021, the Nifty has seen a decline of up to 17,613. In just these 9 days, the Nifty has seen a fall of 5 percent from the upper levels. Nifty also made an intermediate top of 18,342 during this fall. Which came out as a lower top on the daily chart. After this lower top, we also got to see the lower bottom of 17968 on 28 October 2021. Apart from this, Nifty has also broken its 20 Day SMA for the first time after 30 July 2021.
Along with this, Bank Nifty also recorded a fall of more than 8 percent in just 5 sessions. It fell from an all-time high of 41,829 to a level of 38,426. However, there was a bigger fall in Bank Nifty than Nifty. Nevertheless, Bank Nifty managed to stay above the 20-Day SMA on the medium term chart due to its higher relative stress.
On November 1, a sharp bounce back was seen in the market. Nifty managed to close with a gain of 1.55 per cent and Bank Nifty 1.85 per cent. However, in yesterday’s trade, Nifty managed to close around the day’s high level. But there is a great possibility that after this rise, once again the market may see a decline. The 20 Day SMA of Nifty is located at 18,040. Whereas 38.2 percent of this entire 5 percent fall is located at the Fibonacci retracement 17951.
On the derivatives front, the second largest open interest is being seen at the strike price of 18000. Bearish lower term and lower bottom formation is also forming on the daily chart. This is an indication that Nifty is not free from troubles yet. However, if Nifty closes above 18050, then we will see the next resistance around 18,342. If Nifty even crosses 18,342 then the possibility of a fall will end.
For the week ended October 22, Nifty Mid and Small Cap indices formed a bearish engulfing pattern on the weekly chart and it still persists. Keeping this in mind the pull back rally should be used to lighten positions in mid cap and small cap stocks.
If we look at Bank Nifty, it has seen a recovery of more than 3.7 percent from last week’s low. While the Nifty has seen a recovery of less than 2 per cent in the same period. It is expected that Bank Nifty will perform better than Nifty in the coming days.
If you look at different sectors, then banks and auto seem to be the best. At the same time, pullback rally can be seen in IT, FMCG, Pharma too in the short term. Based on these technical analysis, we are of the opinion that we will see action in select stocks in the market. But traders are advised to take a cautious decision and keep some profits in their pocket at higher levels. If Nifty slips below 17,500, then we can see a decline up to 17,000.
HDFC Securities’s Vinay Rajani today’s short term picks, which can make strong earnings in 2-3 weeks
Federal Bank: Buy | LTP: Rs 98 | Buy this stock with a stop loss of Rs 91 for a target of Rs 115. It can see a rise of 17.3% in 2-3 weeks.
Indian Bank: Buy | LTP: Rs172 |Buy this stock with a stop loss of Rs 155 with a target of Rs 200 and give a return of 16.3 per cent in 2-3 weeks.
L&T Technology Services: Buy | LTP: Rs 4,903 |Sell this stock with a stop loss of Rs 4,540 for a target of Rs 5,400, it can give a return of 10.1 per cent in 2-3 weeks.
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