NIFTY Trend Score

NIFTY ended the day positive for the fourth day in a row. The Index is entering into a long term uptrend after 2 weeks moving average crossed over the 52 weeks moving average.

A sustained follow through action is required otherwise the fate of this signal will be similar to the past signals. Since 2011, we have four long term buy signals fizzling out due to lack of upward velocity in prices.

A good follow through action requires the Index to cross its near term resistance at 5250 followed by a breakout above 5350. A sustainable price action above 5350 will open the way for the NIFTY to test 5600 level (a trend deciding level). A successful and sustained breach of that level on the upside will be the final nail in the coffin of the bear market and we may the Index heading towards its historic highs at 6300. Naturally, this does not happen in a day and at this moment what matters most is the breach of 5250 resistance on the upside.

The Index is well supported at 5200 level and the next major support is at 5000 level. We recommend going long on the weakness.

A couple of stocks are looking set for a rally. The first and foremost is RELIACE. This chronic underperformer is getting ready for a revival on a longer term basis. As you can see on the chart, the stock has stopped making new lower lows and is reluctant to go below Rs 700.00. We believe, the stock has enough potential to test its major resistance zone at Rs 850-900 provided we get a sustained price action above Rs 750 level. Major support zone is at Rs 720-700. We recommend going long on the stock on weakness.

CAIRN, another Oil & Gas sector stock, is looking good on short to medium term basis. The trending profile of this stock is much better than RELIANCE. The price pattern is indicating that the three months old consolidation pattern is nearing its end. A confirmation will come if CAIRN closes above Rs 340 level on closing basis. Post this breakout; we expect the stock to test its recent highs in the region of Rs 360 and Rs 400. Major supports zone is at Rs 330-310. We recommend going long on weakness.