Selling could intensify if Nifty breaks 18,042: Analysts

The Nifty has closed below its short-term moving average and the broader price structure. According to technical analysts, these indicate a possibility of a bearish head and shoulder pattern formation.

Hence, upside momentum is expected only above the 18,267 level, while the index can witness selling if 18,042 is broken. Stocks such as Siemens, ABB, L&T, Maruti, TVS Motor, Indian Hotels, Apollo Tyre, MRF, Titan, and Havells can be bought for trading purpose, said analysts.

RAHUL SHARMA
HEAD- TECHNICAL & DERIVATIVE RESEARCH, JM FINANCIAL SERVICES

Where is the Nifty headed this week?
Nifty formed a Doji candlestick pattern on weekly chart after almost taking out the resistance at 18,265. Dark cloud cover is seen in Bank Nifty as a reversal is seen on weekly chart, which can trigger a further selloff if 42,500 is broken. Fresh shorts were seen in Nifty on Friday as the cumulative open interest was up 5%, while Bank Nifty saw the closure of long positions as COI was down by 4.8%.

Nifty can witness a fresh downward move if 18,042 is broken, with downside targets at 17,910 and 17,826. On the flip side, if 18,042 does get sustained, we may consolidate for the next 2-3 days before continuing the upward journey breakout, which is placed at 18,265.

What should investors do?
We advise long traders to be cautious below 18,042 in Nifty and 42,500 in Bank Nifty. The money put options can be added once these levels are breached for the downside. Investors can look to buy and add on a possible correction over the next few days near 17,800-17,700 for a 1- to 2-month target of 18,600. We are bullish on consumer durables and cement at current levels, while banks could be under pressure for few sessions. We like Havells and UltraTech Cement on the long side.

CHANDAN TAPARIA
ANALYST-DERIVATIVES, MOTILAL OSWAL FINANCIAL SERVICES

Where is the Nifty headed this week?
The index turned volatile in a range of 200 points between 18,050 and 18,250. Technically, it formed a shooting star pattern weekly, and a bearish candle with a long upper shadow on the daily scale. However, the immediate structure and the pace of momentum got a pause, but the major trend is intact to positive, which will continue to provide a buy-on-decline stance in the market. Now it has to hold above 18,081 zones to extend the move towards 18,250 and 18,400 zones; while on the downside, support exists at 17,887 and 17,777 levels.

Options data suggest a broader trading range between 17,700 and 18,500 and an immediate trading range between 17,900 and 18,300 zones.

What should investors do?
Bank Nifty has formed a bearish candle on a daily scale with a long upper shadow which suggests selling pressure at higher zones. Now it has to hold above 42,750 for a bounce move towards 43,333 and then 43,500 levels, while a hold below 42,500 zones could open some declines towards 42,250 and then 42,000 zones. Sector-wise bullish formation is seen in capital goods, defence, hotel, auto, and tyres stocks. Positive setup are seen in Siemens, ABB, LT, Maruti, TVS Motor, Indian Hotels, Apollo Tyres, MRF, Titan, and Trent.


MEHUL KOTHARI
AVP - TECHNICAL RESEARCH, ANAND RATHI SHARES & STOCK BROKERS

Where is the Nifty headed this week?
Nifty has closed below its short-term moving average. The weekly chart depicts a ‘Shooting Star’ candlestick pattern which has a reversal nature, and the candle has formed at the 61.8% retracement of the crack of 18,000 to 16,800. In addition, the India VIX has turned from a 10-11 zone to near 12 levels. Historically, we have witnessed heavy market volatility once the VIX turns from this zone. Even a broader price structure indicates a possibility of bearish Head and Shoulder pattern formation. Thus, a fresh round of upside momentum can be expected only above the peak of 18,267. On the downside, the immediate support is at 18,000 – 17,800, and the major trend would change below the 17,500 mark.

What should investors do?
Traders are advised to book profits since there could be a sharp corrective move in the coming weeks. One should remain extremely stock specific and go long in individual stocks with a larger time frame only. Stocks like Latent View Analytics and Jubilant Foods are our top picks and can be accumulated with a time frame of 3 – 6 months. Avoid short-term long bets.