Nifty to consolidate in 10,680-10,780 range today; Buy BPCL for the short term

Jaydeb Dey

The Nifty ended Friday 0.37percent lowerat 10,696.20. It opened the session on a positive note, fell from the days high 10764.75 and consolidated in a narrow price band. Failure to breakout from its critical resistance placed around 10,780 led the index to close nearits second support placed around 10,680 levels.

On the weekly chart, it ended 0.86percenthigher with a Spinning Top candle. This candle pattern suggests nervousness among traders and investors is not over yet. The index will now consolidate in the price band of 10,680-10,780 before the next leg of upmove towards 10,840 levels.

Traders and investors are advised to buy on dips as long as critical supports are intact. Immediate critical support is placed around 10,680 levels. Its 30-day exponential moving average (EMA) on the daily chart is placed around 10,610 levels.

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The Nifty became a laggard in the latter half of the trade and finished off Friday’s session on a weaker note. However, downside critical supports placed around 10,610 and 10,680 are well intact as of now. Its 200 EMA is placed around 10,615 levels.

Nifty patterns on multiple timeframes show that it finished off the week around the 10,700 mark with a Spinning Top candle, which points towards volatility in the first half of the week. However, buy-on-dips is advised as long as critical supports are intact.

The Bank Nifty ended Friday 0.98percentlower at 26,692.80. It reacted down from Fridays high of 26,996 before finishing off the last session of the week with a bearish candle. Downside pivotal support is placed around 26,600. Upside resistances are placed around 27,000.

Based on a thorough technical study, we recommend the following stock which can offer 7percent return in the short term:

BPCL | Rating: Buy | Target: Rs 435, stop loss: Rs 390, Return: 7%

The stock ended the week with a consolidation breakout. It ended the week with a bullish body candle above critical resistance placed around 400. Candle pattern along with position of leading indicators suggests, the stock is likely to test 30 EMA on weekly chart placed around 437 levels.

Based on above mentioned observations, we recommend BPCL as BUY on dips for the short-term target of 435.

Disclaimer: The author is Technical Analyst at Stewart & Mackertich Wealth Management Ltd. The views and ideas expressed above may have been suggested to the clients of Stewart & Mackertich Wealth Management Ltd. It is advised that investors/traders should consult with their Certified Experts before taking any investment decision
First Published on Jun 4, 2018 09:42 am

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