Nifty has formed a Doji candle, suggesting indecision. Also since February 3, Nifty has failed to provide a close above its 20-day average. The index will continue to remain choppy as long as it stays below the 17,500-17,600 hurdle zone.
India VIX has rallied to near 23 levels. Higher VIX levels are likely to keep the short-term structure uncertain. Bank Nifty quickly recovered to post the daily high above 38,000, however, the failure to hold higher levels stalled the intraday rally.
The metals index lost 2%. The appearance of multiple bearish candles ensures the influence of the resistance in play. Therefore, a negative follow-up action could release additional downside potential.
Recommendations
Buy lemon tree hotels near Rs 51.5-52
Stop-loss: Rs 48
Objective: Rs 60
The series of ascending highs and lows remains intact. Positive follow-up action from today’s bullish candle could lift the stock back to Rs 60 levels.
Sell Divis lab February future near Rs 4,300
Stop-loss: Rs 4,380
Objective: Rs 4,130
The recent rally has found strong resistance near Rs 4,600. A quick decline then ensures resumption of the multi-month downtrend.
(The author is CMT, Technical Analyst – Institutional Equities, YES Securities.)
