Stock Market

Any correction will be a buy-on-dip opportunity

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By Nagaraj Shetti Where are We After showing a consistent upmove in the last 7-8 sessions, the Nifty slipped into weakness on Friday and closed lower.

A long bear candle was formed on Friday at a new swing high of 11,572, which signals profit taking from the highs.

Technically, this action could be considered as a near-term reversal pattern at the highs and one may expect some more weakness in the coming sessions.

We observe formation of higher tops and bottoms as per daily timeframe chart.

Currently, Nifty seems to have formed a new higher top of the sequence.

As per this pattern, one may expect further weakness in the next few sessions, which is going to be a buy-ondips opportunity for the near term. What is in Store A high wave type candle pattern was formed as per weekly timeframe chart at the new swing high of 11,572 levels.

Having moved up sharply in the previous 3-4 weeks, Nifty shows profit booking, post upside breakout.

Ideally, such profit booking ends up resulting in a small downward correction, without really damaging the prior uptrend of the underlying. What can Investors Do The near term up-trend of Nifty seems to have halted at the hurdle.

We are likely to see some more weakness this week, but this expected downward correction is going to be a buy-on-dip opportunity for the near term.

Immediate support to be watched are at 11,250-200 levels, which is likely to attract buying interest in Nifty over the next 1-2 weeks.

In the next upmove, Nifty could retest the recent high or break above it.

Banking, pharma, oil gas and capital goods sectors are expected to outperform in the near term. The author is Technical Research Analyst, HDFC Securities.




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