Near term trend for Nifty has turned bearish, says HDFC Securities

Nifty outlook and technical calls by Nandish Shah, Senior Technical & Derivatives Analyst at HDFC Securities:

Nifty View 
Targets: 11,495 & 11,320
Stop Loss: 11,760

Nifty has breached the crucial support of 11,600 on Monday with bearish oscillator set up,  which can be considered as a short-term bearish trend reversal.  This has also resulted into a violation of 5 and 10 DMA in

Oscillators have been showing sign of weakness in the index for the last couple of weeks, but earlier there was no confirmation from the price side, as Nifty remained above the support levels. RSI had been trading in the overbought zone not only on the daily but also on the weekly and monthly charts. There had been a development of RSI negative divergence on the daily, weekly and monthly charts, which indicates the weakening of the bullish Momentum and distribution on higher levels. Nifty Mid-caps and Small Indices which were showing strength since the last few days, fell sharply yesterday where they both fell by over 2.5% Advance-Decline ratio stood at 0.38 levels, lowest since 16-July.

Considering the technical evidence discussed above, we believe that, short-term trend for Nifty has turned bearish and could see downside levels of 11,495 and 11,320. Stop-loss in Nifty shorts should be kept at 11,760.

Sell CEAT 
CMP: Rs 1,325
Target: Rs 1,240
Stop loss: Rs 1,375

The stock has broken down from the consolidation which held for last one month. Volumes have gone up significantly along with price fall. The stock has been trading below 20,  50  and  200  DMA, indicating a positional downtrend. Oscillators have been showing weakness on the daily chart. We recommend selling Ceat for the downside target of 1240, keeping SL at 1375.

Buy Mahindra CIE 
CMP: Rs 278
Target: Rs 300
Stop loss: Rs 265

Stock price has broken out on the daily chart on Monday by closing above the stiff resistance level of 270 to close at three year high.  Momentum Indicators and Oscillators like RSI and MACD have turned bullish on the daily and weekly charts. The stock has been trading above its 20, 50 and 200 DMA, indicating positional uptrend. We recommend buying Mahindra CIE for the upside target of 300, keeping SL at 265.

Disclaimer: The analyst may have positions in any or all the stocks mentioned above.