Nifty may again challenge critical resistance around 10,640; Buy Tata Steel for short term

“Nifty continues consolidating around 50% Fibonacci retracement of the last downfall from the all-time high. Indication of reversal is not visible yet.” says Jaydeb Dey, Technical Analyst at Stewart & Mackertich Wealth Management Ltd.

Jaydeb Dey

The Nifty yesterday ended 0.47 percent up at 10,619.00. Session long consolidation around 10,550 followed by sharp recovery in the last hour led to a Hammer candle on daily chart. Candle pattern suggests, Nifty may once again retest critical resistance placed around 10,640.

Next leg of up-move towards 10,670 is likely if and only if 10,640 gets broken out decisively. Downside supports are placed around 10,560 and 10,530.

On the Nifty hourly chart; it ended with a Flag pattern breakout, which implies Nifty critical resistance placed around 10,640 may again be challenged. Downside supports are placed around 10,560 and 10,530.

Nifty patterns on multiple time frames show; it ended the session with a Hammer candle on the daily chart towards ending the session on a positive not. However, critical resistance of 10,640 has to be taken out on the up-side towards unfolding next leg of up-move up to 10,670.

The Bank Nifty yesterday ended 0.79 percent up at 25,010.90. Upside resistances are placed around 25,100 and 25,250. Downside pivotal support is placed around 24,700.

Based on thorough technical study, the research firm recommends Tata Steel which can give up to 5% return in the near short term:

Tata Steel | Rating: Sell | Target: Rs 600, stop loss: Rs 555, Return: 5%

After reacting down from its recent high of Rs 624, the stock is again approaching towards long-term upward trend line support placed around Rs 570 levels.

Based on above mentioned observations, we recommend Tata Steel as a buy for the short-term upside target of Rs 600.

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