After four months of rangebound trading, Nifty has finally broken out from an Ascending Triangle pattern on the daily chart and also sustained above the same for second consecutive session which is a very positive development.
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Projections of the breakout indicate Nifty has the potential to move higher towards the 11,600 levels. Every long position should be protected with a stop loss below 10,750 levels.
Going forward, if Nifty manages to hold above the 11,050-11,100 zone convincingly, it could trigger the midcap and smallcap stocks to play catch up in the near term.
Bank Nifty, on the other hand, has also rallied sharply and has now reached the crucial resistance zone of 27,700. A break above this level could lead to a fresh breakout for the index on the daily chart. Important support is now seen around the 27,000 levels.
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Ceat: Buy| Target: Rs 1,233| Stop Loss: Rs 1,080| Upside 9%
The stock has been trading in a narrow trading band for the past week forming an inverse Flag pattern on the daily chart. However, the stock has finally broken out from the upper end of the range and has negated the inverse Flag pattern indicating a strong upmove is in the offing. We expect the stock to rally towards its potential target of Rs 1233 in the medium term.
Manappuram Finance: Buy| Target: Rs 115| Stop Loss: Rs 98.5| Upside 11%
The stock has shown immense strength and has finally broken out from a classic Cup and Handle pattern on the daily chart. The price outburst has been accompanied by a smart uptick in traded volumes.
It has also surpassed it’s the term 200-DEMA and closed above the same. We expect the stock to rally towards its potential target of Rs 115 in the medium term.
Havells India: Buy| Target: Rs 800| Stop Loss: Rs 722| Upside 7%
The stock has clearly broken out from a multiyear breakout on the weekly chart accompanied with a smart uptick in traded volumes. One can consider accumulating the stock on every decline. Hold long position with a stop loss at Rs 722 on a closing basis.
(The author is a Senior Technical Analyst, IIFL)
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First Published on Feb 8, 2019 08:19 am