Buy these two stocks for near term gains while Nifty reverses upside trend

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By Nagaraj Shetti

After showing an upside bounce in the last three sessions, Nifty reversed down sharply on Wednesday and closed the day with a hefty loss of around 265 points. After opening on a negative note, Nifty slipped into weakness in the early part of the session. It later shifted into a range move with an attempt of upside recovery. The sharp intraday weakness triggered in the later part and the Nifty closed near the lows.

Nifty is forming lower highs and lows on the daily chart and is expected to revisit the lower gap support of 14350 in the short term. This could also mean further down move below the crucial weekly 10 period EMA as per weekly chart at 14580 levels. 

Previously, this moving average has offered good support for the market in the subsequent weeks and led to upside bounce in past. Hence, Nifty not finding support of this moving average this time could mean chances of broad-based weakness beginning in the market.

The short term trend of Nifty seems to have reversed down after a small upside bounce. Next lower levels to be watched around 14350-14300 in the next few sessions before showing another round of small upside bounce from the lows. Any pullback rally could find resistance around 14675-14750. 

Buy Sequent Scientific Ltd – (CMP Rs 248.05) 

The downward correction of the last five weeks seems to have completed in the stock price, as per weekly timeframe chart. The stock price has witnessed sharp upside bounce on Tuesday-Wednesday and closed higher. This pattern indicate an attempt of upside breakout after a down trend. This action could be a near term bottom reversal for the stock trend around Rs 215-220 levels. The weekly 10 period EMA is continuously offering support for the stock price and the recent upside bounce has occurred from near this support around Rs 225 levels. The momentum oscillator shows positive indication.

Buying can be initiated in SEQUENT at CMP (Rs 248.05), add more on dips down to Rs 238, wait for the upside target of Rs 272 in the next 3-4 weeks. Place a stoploss of Rs 232.

Buy Balrampur Chini Mills Ltd – (CMP Rs 218) 

The prices of this Sugar stock has been in a sharp uptrend over the last few weeks. The decline of last week seems to have regained in this week, as stock price surged up by 7% as of now. Further upmove from here could result in an upside breakout of the hurdle of Rs 226 levels and that could open more upside for the short term. Weekly 14 period RSI has turned up from near 60 levels, which indicate strength of an upside momentum. Volume has started to expand with upside in the stock price.

Buying can be initiated in Balarmpur Chini at CMP (218), add more on dips down to Rs 210, wait for the upside target of Rs 240 in the next 3-4 weeks. Place a stoploss of Rs 203.

(Nagaraj Shetti is a Technical Research Analyst at HDFC securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)