Nifty has witnessed contradicting patterns in the recent past keeping the direction un-clear. Starting with a 'Spike' followed by a 'Piercing Line' which are bullish in nature (indicating support around 7500), Nifty also formed a 'Gravestone Doji' followed by a 'Bearish Engulfing' on the upside. This concludes 8100 to be a good resistance. The lower base of 7500 is not only a short term support but also an important level below which positions should be reduced.
Target : Rs 170
Stop Loss: Rs 210
Capital goods has been weakening on our sector rotation model. BHEL saw a breakdown from the continuation pattern indicating further weakness. BHEL could be participated on the short side with a stop at Rs 210 for a pattern target upto Rs 170.
Target : Rs 475
Stop Loss: Rs 529
The occurrence of 'Bearish Engulfing' post the pullback re-confirmed the swing resistance near Rs 530. The pattern indicates the downtrend to resume again & the stock to retest its swing low at 450. Recent setup provides a good reward to risk opportunity for fresh shorts with a stop loss above Rs 529 for a short term target upto Rs 475 followed by Rs 450.
Target : Rs 1250
Stop Loss: Rs 1040
Amidst the ongoing volatility Infosys has witnessed stable price performance so far & the recent up move indicates developing momentum. Infosys could be added as a portfolio buy with a 10% to 15% upside over 1-2 months. A short term up move could be participated with a stop at Rs 1040.
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Shubham Agarwal is a head of Quantitative Research, Motilal Oswal Securities