Nifty may retest critical support around 10,700; Buy BPCL for the short term

“A sell-off in the last hour of trade on Monday indicates that the Nifty may once again challenge its downside support placed around 10,700 and 10,670 levels,” says Jaydeb Dey of Stewart & Mackertich Wealth Management

Jaydeb Dey

The Nifty ended Monday 0.55 percent lower at 10,762.45. It opened on a stronger note above the 10,800 mark, fell from its high of 10,831, before ending the session in the red.

Ending the session below 10,780 may again initiate a downward wave towards dual supports placed around 10,700 and 10,670 levels. Hence, cautious trading is advised. Broader patterns suggest the benchmark index may continue oscillating in the narrowing price band and find an escape route.

Downside pivotal supports are placed around 10,700 and 10,670 levels. On the upside, major resistances are placed around 10,830 and 10,860 levels.

On the Nifty hourly chart, the index ended the session at its 10-day exponential moving average placed around 10,760. A sell-off in the last hour implies it may once again challenge its downside support placed around 10,700 and 10,670 levels.

Nifty patterns on multiple timeframes show it fell from the day’s high of 10,831 before ending the session with a bearish Marubozu candle. Hence, retesting downside critical supports placed around 10,700 and 10,670 is likely.

The Bank Nifty ended Monday 0.59 percent lower at 26,609.70. It ended the session below 26,650 with a bearish candle. It may again challenge its downside supports placed around 26,500 and 26,300 levels, while its upside resistance is placed around 26,800.

Based on a thorough technical study, the research firm recommends BPCL in the near term:

Bharat Petroleum Corporation | Rating: Buy | Target: Rs 426, stop loss: Rs 395, Return: 4%

The stock reacted down from recent high of Rs 429 and is again approaching towards critical support placed around Rs 405. Broader chart pattern suggests, it may again find support in the critical zone of Rs 405-400, the previous multi-bottom area.

Based on above mentioned observations, the firm recommends BPCL as a buy on dips for the short term up side target of Rs 426.

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