By Nagaraj S. Shetti

After showing sharp weakness on the rise on Tuesday, Nifty shifted into a sustainable upside bounce on Wednesday and closed the day higher by 304 points. After opening with an upside gap of 297 points, the market showed the volatile movement of intraday up and down swings for the better part of the session. The intraday upmove sustained towards the end and Nifty closed near the highs. The opening upside gap remains unfilled.

A small positive candle was formed on the daily chart with a lower shadow. Technically, this pattern signals an upside bounce in the market after a reasonable downward correction. Nifty is currently placed at the lower area of the crucial opening downside gap of 5th Aug around 24350 levels and a sharp upmove from here could fill this gap around 24685 levels.

Conclusion

The short-term trend of Nifty seems to have reversed on the upside. A Follow-through upmove is required from here to consider this as a short-term bottom reversal pattern. A decisive move above 24400 levels could pull Nifty towards another resistance of 24700 levels quickly. Immediate support is at 24050 levels.

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Buy Intellect Design Arena – (CMP Rs 945)

After a sharp downward correction in the last few weeks, the IT stock Intellect has witnessed a sustainable upside bounce so far this week. The overall chart pattern indicates the formation of a bullish hammer-type candle pattern on the weekly chart. The stock price seems to have formed a key bottom reversal at the uptrend line support of around Rs 890. The overall chart pattern indicates more upside for the stock price ahead. Buying can be initiated in Intellect at CMP (945), add more on dips down to Rs 915, and wait for the upside target of Rs 1050 in the next 3-5 weeks. Place a stoploss of Rs 885.

Buy Ramkrishna Forgings – (CMP Rs 934)

The downward correction of the last few weeks seems to have been completed in this forging stock- Ramkrishna Forgings, as the stock price witnessed a decisive upside breakout on Wednesday. The stock price has moved above the daily 10/20-day EMA and we observe a larger degree higher bottom formation on the daily timeframe chart. Volume has expanded during the upside breakout and RSI shows a positive indication. Buying can be initiated in Ramkrishna Forgings at CMP (934), add more on dips down to Rs 900, and wait for the upside target of Rs 1040 in the next 3-5 weeks. Place a stoploss of Rs 880.

(Disclaimer: Nagaraj Shetti is a Technical Research Analyst with HDFC securities. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)