Nifty Auto (CMP: 7464) Positive Bullish Harami pattern at a strong support zone (Lower end of the Channel as well as the 50% Fibonacci retracement level) Technical Overview: The overall Automobile space enjoyed a good bull run (began in September 2009) for nearly six years. This spectacular rally seemed to have exhausted around the 9000 mark as we saw a decent profit booking taking place after posting a new all time high of 9110.50 in the inaugural month of calendar year 2015. Since last thirteen months, the Auto index is undergoing a Price-wise as well as a Time-wise corrective phase, which we believe could be a healthy development in the longer run. At this juncture, we can observe this index vacillating within the boundaries of a small Downward Sloping Channel ever since it posted a new all time high in January 2015. Due to recent correction, the Auto index violated the lower end of the mentioned channel; but, managed to regain the position above the 7000 mark on a weekly closing basis. Technically speaking, the weekly chart depicts a Bullish Harami pattern at the lower end of the channel, which coincides with the Super Trend indicator as well as 50% Fibonacci retracement level of the previous large up move (from 4858 to 9110.50) on the monthly chart. On the smaller degree (daily) chart, the momentum oscillator and the Parabolic SAR are positively poised; indicating a probable bounce towards 7750 7800 in the near term. However, considering multiple technical tools, traders are advised to reassess their positions once the index manages to approach these mentioned levels. It s advisable to trade with a positive bias as long as important support levels of 7147 remain intact on a closing basis. ( 2 )
M & M (CMP: `1238) Positive Prices rebounding from strong support along with the weekly RSI-Smoothened oscillator With a broader view, this stock has been oscillating within a wide trading range of `1279 to `1090 since September 2014. This price development can be termed as a Consolidation Phase of the larger degree up trend. Within this span of sixteen months, the stock prices rebounded on five occasions after testing the lower end of the `1090. Thus, `1090 has become a sheet anchor and can be now considered as a strong support zone. On the daily chart, we observed a breakout from the multiple resistance zone of `1230 on a closing basis; indicating an immediate up move towards `1345. Momentum traders should trade with a positive bias as long as `1179 level remains unbroken. ( 3 )
Hero MotoCorp (CMP: `2701.25) Positive Positive development within the consolidation phase Rising RSI Another preferred pick from the automobile space would be Hero MotoCorp. The weekly chart exhibits a broad consolidation phase within the trading range of `2750 to `2300 around the 89 EMA. However, within this sideways move, we witnessed a breakout from the near term resistance of `2600 on the daily chart. Thus, considering the ongoing momentum, this stock can give a very good up move once it surpasses the 2738 mark on a closing basis. In this scenario, an immediate up move towards `2850 `2900 cannot be ruled out. It s advisable to trade with a positive bias even if the stock corrects a bit from current level. We can now observe a strong support at `2600 `2490 levels. ( 4 )
Tata Motors (CMP: `318.85) Range bound Higher lows on RSI We have witnessed a relentless fall from the February 2015 high of `606.28. The stock prices tanked more than 50% in merely seven months; leading to a distortion of all time frame charts. After testing its monthly 89 EMA level of `279.10, the stock managed to give a v-shaped recovery towards the 400 mark. Once again, this decent recovery got sold into as we witnessed yet another sharp corrective move to break its previous low of `279.10. However, this violation of previous swing low was very short lived as the stock prices rebounded immediately to regain the 300 mark with an ease. If we meticulously observe the weekly chart, it can be seen that the recent bounce in stock prices came after precisely testing the Downward Sloping Trend Line support of `265. At this juncture, we do not see any reversal on the chart; but, it s advisable to wait for a bullish development to happen on the chart as we do not expect a significant fall from current level considering a possibility of Positive divergence in the RSI-Smoothened oscillator. ( 5 )
Maruti Suzuki (CMP: `3520.80) Exit on rallies Quarterly Chart Hanging Man An occurrence of this pattern on quarterly chart does not bode well for bulls This stock has clearly outperformed its peer counters over the past couple of years. We witnessed a massive price appreciation from the major breakout level of `1800 in merely twenty one months. However, this stupendous rally seems to have apprehended as we witnessed a complete nosedive in past couple of months. In this course of action, a Hanging Man Japanese candlestick pattern on quarterly chart got activated. This pattern has a bearish implication and is considered as a strong reversal sign. As a result, this earlier outperforming stock has now turned an Exit on Rallies candidate. However, having said that, considering a strong support of weekly 89 EMA along with the deeply oversold condition of momentum oscillator, we may see a short term relief rally towards `3900 `4100. We advise traders to use this probable bounce back to exit their existing long positions. ( 6 )
Apollo Tyres (CMP: `162.45) Positive A corrective down move in this stock got arrested around the 130 mark as we witnessed a formation of Bullish Wolfe Wave pattern on weekly chart (please refer to the exhibit). The mentioned pattern got completed around the 5 th point, which is the 141.20% retracement level of the previous up move from `153.47 (point 3) to `233.40 (point 4). The stock has also managed to find a support around the weekly 200 SMA, which coincides with the reversal zone of the Bullish AB=CD pattern followed by a formation of Bullish Hammer on weekly chart. In addition, the RSI smoothened oscillator confirmed a positive crossover with its average from oversold territory; indicating strength in the counter. Thus, traders may accumulate this stock on a correction up to `145 as we expect a continuation of this ongoing optimism towards `180-185 levels. Strong support for the stock is placed around `133 127. ( 7 )
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