DSIJ's Technical Picks: Nifty Finally Breaks Down

The NSE Nifty has flattered to deceive, as the long drawn out resilience has turned out to be a fallacy. A breakdown below the 5155-5182 mark has finally given a directional bias to the market, and a rather clear one, i.e. downward. The short-term trend has clearly turned negative, and the decline has been sharp and swift as a direct consequence of the 11-week sideways movement, which in hindsight, can be termed as a distribution pattern. A rather deeply oversold situation could result in a recovery. However, it remains to be seen whether this anticipated bounce will sustain or not, as the underlying trend has turned distinctly weak while support comes in at the 4835 and 4750 levels.

The Mid- and Small-Caps have been reflecting a similar weakness, as they too have given downward breakouts, with the latter a wee bit better than the former. Banks have virtually collapsed and Capital Goods have also continued to remain weak. Consumer Durables have clearly been better over the last fortnight, while FMCG has wilted a bit but has still been relatively solid. Pharma too has been one of the better sectors. IT, however, continues to flounder. Metals have been slipping again, and Realty continues to gradually decline.

The Nifty has finally given a downward breakout. While important levels have been broken on the downside, indicating the possibility of a further fall, a recovery of sorts could be on the horizon sooner rather than later.

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COLGATE PALMOLIVE Buy CMP - Rs 1215.25
1st Target: 1335 (4-6 weeks) | 2nd Target: 1400 (12-14 weeks) | Stoploss: 1155(cls)

Colgate Palmolive bottomed out by posting an intra-week low of Rs 447 during the week ended 29th May, 2009, and these levels have rarely been seen since. The scrip launched into an intermediate uptrend to peak at an intra-week high of Rs 996 during the week ended 12th November, 2010. It couldn’t sustain these levels for long, and declined to post an intra-week low of Rs 783.20 during the week ended 4th February, 2011. The scrip commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 1165 during the week ended 4th April, 2012.

Currently, Colgate Palmolive seems set to stage an upmove after a minor weekly consolidation. With even the daily picture looking better, a further upside from these levels cannot be ruled out.

Trading Pointers:

Indicators: MACD-Buy | RMI-Buy | Stochastic-Buy | ROC-Buy | RSI-Buy
Support: 1180, 1115 | Resistance: 1300, 1400
BSE Code - 500830 | 55-Week EMA: 1012.56

HPCL Buy CMP - Rs 304.55
1st Target: 335 (4-6 weeks) | 2nd Target: 350 (12-14 weeks) | Stoploss: 290 (cls)

HPCL peaked at an intra-week high of Rs 323.35 during the week ended 26th March, 2010, and declined to post an intra-week low of Rs 293.25 during the week ended 30th April, 2010. The scrip launched into an intermediate uptrend, peaked at an intra-week high of Rs 375 during the week ended 4th June, 2010, only to enter a corrective phase, and declined to post an intra-week low of Rs 333.10 during the week ended 18th June, 2010. It staged a rally to peak at an intra-week high of Rs 555.45 during the week ended 17th September, 2010, and entered a corrective phase thereafter. Currently, the stock has reversed its direction after receiving significant support from the Rs 300 level. A weekly close above the Rs 318 level would mean the possibility of a further upside from here.

Trading Pointers:

Indicators: MACD-Buy | RMI-Buy | Stochastic-Buy | ROC-Sell | RSI-Buy
Support: 300, 278 | Resistance: 318, 343
BSE Code - 500104 | 55-Week EMA: 321.37

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IDEA Sell CMP - Rs 81.15
1st Target: 71 (4-6 weeks) | 2nd Target: 67 (12-14 weeks) | Stoploss: 86 (cls)

Idea bottomed out by posting an intra-week low of Rs 48.65 during the week ended 4th June, 2010, commenced a short-term uptrend, and rallied to peak at an intra-week high of Rs 79.90 during the week ended 17th September, 2010. The scrip entered a corrective phase to actually bottom out by posting an intra-week low of Rs 55.65 during the week ended 4th March, 2011. It moved sideways before recovering to peak at an intra-week high of Rs 103.65 during the week ended 9th September, 2011, only to decline from here.

Currently, the scrip seems to be on the verge of resuming its lower top, lower bottom formation on the daily charts, indicating the possibility of a further downside from these levels.

Trading Pointers:
Indicators: MACD-Sell | RMI-Sell | Stochastic-Buy | ROC-Sell | RSI-Sell
Support: 78, 72 | Resistance: 88, 94
BSE Code - 532822 | 55-Week EMA: 86.35

RAYMOND Sell | CMP - Rs 363.20
1st Target: 323(4-6 weeks) | 2nd Target: 310 (12-14 weeks) | Stoploss: 383 (cls)

Raymond bottomed out by posting an intra-week low of Rs 195 during the week ended 11th June, 2010. The scrip took support at the Rs 195 (support) level, recovered smartly, and peaked by posting an intra-week high of Rs 246.30 during the week ended 9th July, 2010. It declined from here, struggled a bit, finally overcame its recently-posted high, entered a medium-term uptrend, appreciated to peak at an intra-week high of Rs 458 during the week ended 29th October, 2010, and entered a corrective phase.

Currently, the scrip could be continuing its short-term downtrend. With the oscillators looking negative, a further downside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Sell | RMI-Sell | Stochastic-Sell | ROC-Sell | RSI-Sell
Support: 359, 323 | Resistance: 381, 408
BSE Code - 500330 | 55-Week EMA: 363.61