Nifty ending the week above 10,780 is positive; buy Ambuja Cements

The stock has been in a mid-term downtrend for the past several weeks. In the last session, it touched its long-term upward trend line support placed at around 215, and ended in the red.

The Nifty ended the previous session 0.84 percent up at 10,806.50. Consolidation below 10,780, followed by sustained buying in the last hour of trade, led the index to end the session with a bullish body candle. Ending the last session of the week above 10,780 implies that the bulls are gaining strength once again.

Last week’s bearish shooting star candle has been invalidated by a successful close by the Nifty above 10,780. On the weekly chart, the index ended 1.77 percent higher. The chart pattern suggests that 10,780-10,750 may now act as the critical support zone.

Ending the week with a bullish body candle above 61.8% Fibonacci retracement of the entire downfall from the Nifty's all-time high to its recent low of around 9,950, signifies that upward momentum is likely to continue. The next points of resistance will likely be 10,820 and 10,880.

On the hourly charts, despite negative divergence, the Nifty continues hitting higher highs. It is trading well above all the critical moving averages. and therefore, buying on dips is advised.

Nifty ended the week above its critical resistance placed at around 10,780, which increases the possibility of the next up-move towards 10,820 and 10,880.

The Bank Nifty ended the previous session 1.08 percent higher at 26,413.15. It ended the session with a bullish Marubozu candle, and is likely to continue this momentum as long as it trades above 26,100. Upside critical resistance for the index is placed around 26,460.

Based on a thorough technical study, we recommend the following stocks that could return up to 4 percent in the short term:

Ambuja Cements | Rating: Buy | Target: Rs 226, stop loss: Rs 211, Return: 4 percent

The stock has been in a mid-term downtrend for the past several weeks. In the last session, it touched its long-term upward trend line support placed at around 215, and ended in the red. Weekly as well as the daily charts look extremely oversold. Hence, a counter pullback is likely.

Based on the above mentioned observations, we recommend Ambuja as a buy on dips for the short-term down side target of 226.

Capital Ways Investment Adviser

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